1. travel
2. tourist destinations
3. africa

FORM 2A
LISTING STATEMENT
This Listing Statement must be used for all initial applications for listing and for Issuers resulting
from a fundamental change. CNSX requires prospectus level disclosure in the Listing
Statement (other than certain financial disclosure and interim Management's Discussion and
Analysis) and can require that the Issuer include additional disclosure.
General Instructions
(a)
Please prepare this Listing Statement using the format set out below. The sequence of
questions must not be altered nor should questions be omitted or left unanswered. The
answers to the following items must be in narrative form. When the answer to any item
is negative or not applicable to the Issuer, state it in a sentence. The title to each item
must precede the answer.
(b)
In this form, the term “Issuer” includes the applicant Issuer and any of its subsidiaries.
(c)
In determining the degree of detail required, a standard of materiality should be applied.
Materiality is a matter of judgment in a particular circumstance, and should generally be
determined in relation to an item's significance to investors, analysts and other users of
the information. An item of information, or an aggregate of items, is considered material
if it is probable that its omission or misstatement would influence or change an
investment decision with respect to the Issuer's securities. In determining whether
information is material, take into account both quantitative and qualitative factors. The
potential significance of items should be considered individually rather than on a net
basis, if the items have an offsetting effect. This concept of materiality is consistent with
the financial reporting notion of materiality contained in the Handbook.
(d)
Terms used and not defined in this form are defined or interpreted in Policy 1 –
Interpretation.
(e)
For Issuers that are re-qualifying for listing following a fundamental change, provide
historic and current details on
(i)
the Issuer
(ii)
all other companies or businesses that are involved in the fundamental
change (the “target”); and
(iii)
the entity that will result from the fundamental change (the "New Issuer").
Information concerning the Issuer that was contained in the most recent Listing
Statement may be incorporated by reference, but this statement must indicate if any
of the information in the prior statement has changed (e.g. describing a business that
will no longer be undertaken by the New Issuer). Information concerning assets or
lines of business of the target that will not be part of the New Issuer's business
should not be included.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 1
(f)
This Listing Statement provides prospectus-level disclosure. It will be amended from
time to time to reflect any changes to the prospectus disclosure requirements. If
changed, the new form is to be used for the next listing statement the Issuer is required
to file. The Issuer does not have to amend a listing statement currently on file to reflect
any new disclosure requirements.
1.
Table of Contents
1.1
Include a table of contents with the following headings:
1.
2.
3.
4
5.
6.
Table of Contents ................................................................................................................. 2
Corporate Structure .............................................................................................................. 3
General Development of the Business ................................................................................. 3
Narrative Description of the Business .................................................................................. 5
SELECTED CONSOLIDATED FINANCIAL INFORMATION ...................................... 9
Management's Discussion and Analysis ............................................................................ 11
Annual MD&A ..................................................................................................................... 11
INTERIM MD&A FOR THE THREE MONTHS ENDED MAY 31, 2014 ................... 19
7. Market for Securities .................................................................................................... 28
8. Consolidated Capitalization ....................................................................................... 28
9. Options to Purchase Securities ................................................................................ 29
10. Description of the Securities ................................................................................... 30
11. Escrowed Securities .................................................................................................. 31
12. Principal Shareholders ............................................................................................. 32
13 Directors and Officers ................................................................................................... 32
14. Capitalization ............................................................................................................... 35
15. Executive Compensation ......................................................................................... 39
16. Indebtedness of Directors and Executive Officers ........................................... 41
17. Risk Factors ................................................................................................................ 41
18. Promoters ..................................................................................................................... 53
19. Legal Proceedings ..................................................................................................... 53
20. Interest of Management and Others in Material Transactions ....................... 53
21. Auditors, Transfer Agents and Registrars .......................................................... 53
22. Material Contracts ...................................................................................................... 53
23. Interest of Experts ...................................................................................................... 53
24. Other Material Facts .................................................................................................. 54
25. Financial Statements ................................................................................................. 54
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 2
2.
Corporate Structure
2.1
The Issuer’s full corporate name is Silk Road Ventures Ltd. (formerly OLE
Remediation Ltd.), having its registered office and its principal place of business at
1150-789 West Pender Street, Vancouver, British Columbia, V6C 1H2.
2.2
Silk Road Ventures Ltd. (formerly OLE Remediation Ltd.) (the “Company” or the
“Issuer”) was incorporated under the Business Corporations Act of British Columbia on
May 15, 2012 as a wholly owned subsidiary of 0922519 B.C. Ltd. (“BC519”). On May
22, 2012, the Company entered into an arrangement agreement (the “Arrangement
Agreement”) with BC519, for the purposes of divesting certain non-core assets of BC
519 (the “Arrangement”), which BC519 assigned. As consideration for this asset, the
Company issued 6,038,667 common shares, which shares were distributed to the
BC519 shareholders who held BC519 shares on the share distribution record date as
of October 1, 2012. BC519 received shareholder approval to the arrangement at a
special meeting of shareholders held on July 6, 2012. The final court approval to the
plan of arrangement was obtained on August 3, 2012. The Company completed the
share distribution on October 22, 2012.
The details of the plan of arrangement, pro-forma financial statements and all other
relevant supporting documents are provided in an information circular prepared by
0922519 B.C. Ltd. dated June 8, 2012, and filed on June 21, 2012 on SEDAR at
www.sedar.com. under the profile of 0922519 B.C. Ltd.
Pursuant to a resolution passed by the shareholders of the Company on June 27,
2013, the Company consolidated its share capital on the basis of six and one half (6
1/2) old shares into one (1) new share. On August 22, 2013, the consolidation was
effective and the Issuer changed its name from OLE Remediation Ltd. to Silk Road
Ventures Ltd.
2.3
The Issuer has no subsidiaries.
2.4
The Issuer is not re-qualifying following a fundamental change nor is it proposing an
acquisition, amalgamation, merger, reorganization or arrangement.
2.5
This section is not applicable as the Issuer was incorporated in British Columbia.
3.
General Development of the Business
3.1
The Issuer was incorporated under the Business Corporations Act (British Columbia)
on May 15, 2012 and operates from its registered and head office located at 1150-789
West Pender Street, Vancouver, British Columbia, V6C 1H2. Pursuant to a plan of
arrangement between the Company and BC519 dated May 22, 2012, BC519 assigned
the OGC License Agreement dated April 19, 2012 with OLE Global Clean Ltd and
$2,500 to form the principal business of the Company under the arrangement
agreement.
The Company issued 6,038,667 common shares, which shares were distributed to the
BC519 shareholders who held BC519 shares on the share distribution record date on
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 3
October 22, 2012. BC519 received shareholder approval to the arrangement at a
special meeting of shareholders held on July 13, 2012. Effective August 22, 2013 the
Issuer consolidated its share capital on the basis of six and one half (6 1/2) old shares
consolidated into one (1) new share resulting in 929,023 shares issued and changed
its name from OLE Remediation Ltd. to Silk Road Ventures Ltd. On that date it also
closed a private placement of $220,000 at a price of $.02 per share resulting in
issuance of 11,000,000 shares to total 11,929,023 issued shares. Subsequently, the
company raised $5,000,000 at $.10 per share and on June 3, 2014 issued 50,000,000
common shares to bring the total issued share capital to 61,929,023 shares.
The Company has not proceeded in developing the business originally entered into
pursuant to the OGC License Agreement and does not intend to pursue that business.
Mr. Alisher Ali, Director, CEO and Chairman of the Board. Mr. Ali was appointed as
Chairman and Director December 27, 2012, and as CEO April 23, 2013. Mr. Ali is the
founder of Silk Road Finance, an investment group focused on early frontier markets.
Mr. Ali has over 18 years of investment management, investment banking and
advisory experience in emerging and frontier markets like Russia, Kazakhstan,
Azerbaijan, Mongolia, Myanmar and Mozambique. The company plans to utilize Mr.
Ali’s extensive experience and contacts in Central Asia, South East Asia and East
Africa to gain access to attractive business and investment opportunities in high
growth frontier markets.
The Company intends to develop, acquire and form joint ventures in financial services
businesses in Kazakhstan, Myanmar, Mongolia, Mozambique and other high growth
frontier markets.
Although Management has formulated its development strategy, no specific business
acquisition has been made and there is no basis to estimate a cost or timeline.
Management expects to commence and complete business acquisitions within six of
the date of this Listing Statement.
The Company has used the large part of the proceeds of the $5 million private
placement to invest in publicly listed, large-cap companies, providing exposure to high
growth industries in emerging and frontier markets like financial services,
telecommunications, technology and natural resources. As the Company identifies
and closes business acquisitions as well as seeds startup businesses, the funds
currently invested in the actively managed portfolio of publicly listed securities will be
redeployed into venture capital and private equity principal investments.
3.2
The Issuer has not completed an acquisition or disposition in its history.
3.3
Other than as disclosed in this Listing Statement, the Issuer is not aware of any trends,
uncertainties, demands, commitments or events which are reasonably likely to have a
material effect on the Issuer’s business, financial condition or results of operations.
See Risk factors section 17.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 4
4
4.1
4.2
Narrative Description of the Business
General
The Issuer is an investment company focused on identifying and pursuing attractive
business and investment opportunities in global frontier markets. Over the next twelve
months, the Company intends to develop three main lines of businesses: 1) principal
investments in both public and private companies operating in frontier and emerging
markets; 2) asset management services and 3) advisory services.
Investment Theme: Frontier Markets
Over the last two decades, the dynamic economic growth in countries such as China,
India, Russia, Brazil, Mexico, Turkey and Indonesia transform the group of 20 largest
emerging markets into the main growth engine of the global economy. According the
International Monetary Fund (IMF), the GDP of the emerging markets and developing
economies have risen to 56% of the global GDP in 2013, eclipsing that of the developed
economies.
However, as the major emerging markets expand the size of their economies, they are
face many structural headwinds and finding it increasing challenging to maintain
historically high rates of economic growth. According the IMF, such emerging markets
heavyweights like Brazil, Russia and Mexico will grow only 1-3% in 2014 and 2015. The
world’s largest developed economies - the US, the EU and Japan - are also expected to
expand by same modest 1-3% growth rates in 2014 and 2015, based on the IMF
projections. Therefore, it is not surprising that the IMF estimates that 19 out of the
world’s 20 fastest growing countries with the highest projected compounded annual
growth rate (CAGR) from 2013 through 2017 are so-called frontier markets (among
emerging markets, only China made to this list, none of developed economies are even
remotely close). The IMF expects these 19 frontier markets to grow by whooping 8%14% per annum during the five-year period, albeit many of them start from a low base.
Frontier markets are countries with investable stock markets that are less established
than those in the emerging markets. Nigeria, Kenya, Vietnam are among more
developed frontier markets. Some frontier markets do not have functional stock markets
or have bourses only in their rudimentary stage. Investors seek opportunities in frontier,
or pre-emerging markets due to availability of potentially high, long term returns, albeit
with higher risks compared with developed and mainstream emerging markets. Frontier
market investments often have a low correlation to developed markets and thus can
provide additional diversification to global investors.
Many large emerging markets were frontier markets at one point in their economic
development (South Korea in ‘60s, Turkey in ‘70s, China in ‘80s and Russia in ‘90s). In
fact, the United States has been a frontier market in the 19th century. Such evolutionary
economic transition is set to continue and a number of current frontier markets are
expected to graduate to the level of emerging markets. Through successful economic
policies, utilization of natural and human resources, attracting foreign investments and
actively developing local capital markets, these frontier markets can experience multiyear strong economic growth and wealth creation. Early foreign investors have an
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 5
opportunity to participate in business and investment opportunities in such dynamically
growing frontier markets.
4.3
Investment Strategy: Catalyst-Driven Frontier Markets
Alisher Ali, Chairman & CEO of Silk Road Ventures, has developed an investment
theme defined as “catalyst-driven frontier markets.” There are over 100 countries
globally which can be described as frontier markets. However, not all of them represent
investable opportunities for international investors due to a number of factors such as
modest size of economy, limited or declining natural resources, internal or regional
conflicts, remoteness from major economic centers, lack of trading partners among
major economies, business unfriendly government policies and existing or imminent
sanctions by developed countries.
Mr Ali and his team have conducted extensive analysis of below 75 frontier markets in
Asia, Eastern Europe & CIS, the Middle East, Africa, Central and Latin America.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Algeria
Angola
Argentina
Armenia
Azerbaijan
Bahrain
Bangladesh
Belarus
Bolivia
Botswana
Bulgaria
Cambodia
Cameroon
Chad
Costa Rica
16. Cote d'Ivoire
17. Croatia
18. Cuba
19. Cyprus
20. DRCongo
21. Ecuador
22. Estonia
23. Ethiopia
24. Georgia
25. Ghana
26. Iran
27. Iraq
28. Jamaica
29. Jordan
30. Kazakhstan
31. Kenya
32. Kyrgyzstan
33. Lao P.D.R.
34. Latvia
35. Lebanon
36. Libya
37. Lithuania
38. Madagascar
39. Malawi
40. Malta
41. Mauritius
42. Moldova
43. Mongolia
44. Morocco
45. Myanmar
46. Mozambique
47. Namibia
48. Nepal
49. Niger
50. Nigeria
51. Oman
52. Pakistan
53. Panama
54. Romania
55. Rwanda
56. Senegal
57. Serbia
58. Slovakia
59. Slovenia
60. Sri Lanka
61. Sudan
62. Syria
63. Tajikistan
64. Tanzania
65. Timor-Leste
66. Tunisia
67. Turkmenistan
68. Uganda
69. Ukraine
70. Uruguay
71. Uzbekistan
72. Venezuela
73. Vietnam
74. Zambia
75. Zimbabwe
In order to identify a selected number of “catalyst-driven frontier markets” from this
very large group, the following criteria have been applied:

Significant, largely untapped natural resources and/or sizable population

Historical economic underperformance (to be followed by strong “catch-up’ phase)

Reform-reminded government policies and conducive business environment

Close economic and trade links with BRICS economies

Strong financial support by major economies and multilateral financial institutions

Major foreign investments in key industries with spillover effect across the economy

Existence or imminent launch of local stock market with foreign participation
Based on these criteria, the following four “catalyst-driven frontier markets have been
identified:
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 6




Kazakhstan
Myanmar
Mongolia
Mozambique
Moreover, Argentina may be poised to meet these above criteria, should the election in 2015 to
bring much-anticipated economic reforms.
4.4
Planned Lines of Businesses
The Company has developed the strategy to establish three main lines of businesses:
1) principal investments in both public and private companies operating in frontier and
emerging markets; 2) asset management services and 3) advisory services.
4.4.1
Principal Investments
The Company intends to identify and invest in long term attractive investment
opportunities in Kazakhstan, Myanmar, Mongolia, Mozambique and other catalystdriven frontier markets. The Company has identified several targeted industries,
including financial services, media & technology, property services and other high
growth sectors. The Company plans to build strong management teams, seek joint
ventures with successful local entrepreneurs and add value through access to capital
and bringing international operational expertise to businesses in frontier markets.
4.4.2
Asset Management
The Company intends to develop or acquire an asset management business
exclusively focused on global frontier markets. As an asset class, frontier markets
currently represent only very small percentage of asset allocation among institutional
and private investors. As frontier markets are continued to be among the world’s
fastest growing economies, the Company expects global investors in coming years to
allocate more capital to investment strategies that provide exposure to frontier
markets. The Company intends to build a strong investment management team and
launch a number of investment funds focused on various asset classes in frontier
markets.
4.4.3
Advisory Services
The Company intends to develop advisory services business, focused on helping to
grow portfolio companies and realize shareholder value. Many businesses in frontier
markets do not only lack access to capital but also they often have limited exposure to
international industry best practices. The Company intends to bring professionals with
international experience to assist portfolio companies in successfully executing
business strategies and timely capturing market opportunities in frontier markets.
4.5
Capital Allocation
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 7
The Company has raised $5,220,000 in two private placements. The Company has the
following capital allocation plan.
1
2
3
Milestones
Obtain Listing in Canada
Target Date
Estimated Cost
September, 2014
Reserve for acquisitions
November, 2014
$125,000
$4,000,000
Working Capital
$875,000
TOTAL
$5,000,000
The Company intends to raise more capital in the next twelve months in order to invest in its
planned three lines of businesses through organic growth and acquisitions as well as to deploy
capital to pursue opportunities for principle investments.
Portfolio Holdings
The Issuer has the current portfolio with following holdings of publicly listed securities:
Holding
Ticker
Exchange Value*
Turquoise Hill Resources
TRQ US
NYSE
602,490
Halyk Bank
HSBK LI
LSE
603,225
Tullow Oil Plc
TLW LN
LSE
275,297
Turkcell
TKC US
NYSE
527,947
Qiwi Plc
QIWI US
Nasdaq
581,867
Baidu Inc
BIDU US
Nasdaq
697,516
Yoma Strategic
YOMA SP SGX
655,500
Centerra Gold
CG CN
TSX
550,760
TOTAL VALUE
* Market values based on closing prices as of September 15, 2014
** Based on exchange rates as of September 15, 2014
Name of Company
Value (C$)**
666,053
666,865
493,937
583,645
643,254
771,104
573,235
550,760
4,948,853
Short Description of Business
Turquoise
Resources
Hill Turquoise Hill Resources is developing the world-class Oyu Tolgoi gold
and copper mine in Mongolia.
Halyk Bank
Halyk Savings Bank of Kazakhstan is the largest commercial bank in
Kazakhstan.
Tullow Oil Plc
Tullow Oil plc is an oil & gas exploration and production company. The
Company is known for its oil find successes, especially in East Africa.
Turkcell
Turkcell Iletisim Hizmetleri AS (Turkcell) is the leading mobile operator
across a number of emerging and frontier markets including Turkey,
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 8
Kazakhstan, Azerbaijan, Georgia and Moldova.
Qiwi Plc
QIWI plc is an instant payment operator for consumers in emerging and
frontier markets.
Baidu Inc
Baidu, Inc. operates an internet search engine in China and expanding into
other emerging markets such as Brazil and Thailand.
Yoma
Strategic Yoma Strategic Holdings is an investment holding company engaged in real
Holdings
estate, agriculture, automotive dealership, and luxury tourism businesses
primarily in Myanmar.
Centerra Gold
Centerra Gold Inc. is a gold mining company. The Company is engaged in
the production of gold and related activities, including exploration,
development, mining and processing in the Kyrgyz Republic, Mongolia,
Turkey and China.
5.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
5.1
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND MANAGEMENT’S
DISCUSSION AND ANALYSIS
Annual Information
The information below has been extracted from the audited financial statements of Silk Road
Ventures Ltd., for the year ended February 28, 2014 and the period from incorporation on May
15, 2012 to February 28 2013.
Please refer to the Issuer’s management’s discussion and analysis for the period ended
February 28 2014 for a full discussion of the data below including, among other matters, the
comparability of data and changes in accounting policies.
For the Year
Ended February
28, 2014
$
Expenses
From May 15, 2012,
date of Incorporation
to February 28, 2013
$
(95,050)
(26,165)
109,325
-
14,275
(26,165)
Other item
Unrealized gain on marketable securities
Net Income (Loss) and Comprehensive Income (Loss)
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 9
Total Assets
2,521,193
12,427
-
-
Total Long Term Liabilities
5.2
SELECTED QUARTERLY INFORMATION
The Company was a wholly owned subsidiary of BC519 until October 22, 2013, on July 10,
2013 the Company changed its year end from April 30 to February 28. Interim Financial reports
were filed quarterly as of July 30, 2012, October 31, 2012, and January 31, 2013. The first
interim statement following the Companys new financial year end is for the three months ended
May 31. 2013
Net Income
(Loss) and
Comprehensive
Income (Loss)
Total Assets
Long term
Liabilities
5.3
Three
months
ended
Three
months
ended
Three
months
ended
Three
Months
ended
Four Months
ended
From
Incorporation
May 2012 to
February
28, 2014
November
30, 2013
August
30, 2013
May 31,
2013
February 28,
2013
October 31,
2012
$
$
$
$
$
$
62,573
(21,873)
(19,039)
(7,386)
(16,797)
(8,137)
2,521,193
159,286
188,734
9,693
12,427
939
-
-
-
-
-
-
Dividends
There are no restrictions on the Issuer’s ability to pay dividends. The Issuer has not paid
dividends in the past, and has no present intention of paying dividends in the future.
5.4
Foreign GAAP
In 2010, the Canadian Institute of Chartered Accountants (“CICA”) Handbook was
revised to incorporate International Financial Reporting Standards (“IFRS”), and requires
publicly accountable enterprises to apply such standards effective for years beginning on
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 10
or after January 1, 2011. Accordingly, the Issuers financial statements are prepared in
accordance and in compliance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (“IASB”) and interpretations of
the International Financial Reporting Interpretations Committee (“IFRIC”).
6.
Management's Discussion and Analysis
Annual MD&A
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF THE COMPANY’S FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 2014
INTRODUCTION
General
Silk Road Ventures Ltd. (formerly Ole Remediation Ltd.) (the “Company”) was incorporated on
May 15, 2012 in British Columbia pursuant to a Plan of Arrangement (the “Arrangement
Agreement”) between the Company and 0922519 B.C. Ltd. (“BC0922519”) dated May 22, 2012.
Under the Arrangement Agreement, BC0922519 assigned the License Agreement (see also
Note 7) and $2,500 to the Company. As consideration for this asset, the Company issued
6,038,667 common shares (pre-consolidation) to the shareholders of BC0922519 on October 1,
2012. BC0922519 received shareholder approval to the arrangement at a special meeting of
shareholders held on July 6, 2012 (see also Note 4).
The name of the company was changed to Silk Road Ventures Ltd. effective August 22 nd, 2013.
The Company is reviewing investment opportunities for financial services business in frontier
markets. The address of the Company’s corporate office and principal place of business is 500900 Hastings Street West, Vancouver, British Columbia.
Frontier countries across Asia, Africa and Americas have experienced strong economic growth
rates in the last decade on the back of commodities boom, government reforms and foreign
capital inflows. Starting from a low base, these countries are expected to maintain high growth
momentum in the next decade.
The Company intends to capitalize on a wide range of investment opportunities in selected
frontier markets by backing ventures and making acquisitions in high growth industries such as
financial services, telecom, media, and property sectors. The Company plans to build strong
management teams, seek joint ventures with successful local entrepreneurs and add value
through access to capital and bringing international operational expertise to businesses in
frontier markets.
Silk Road Ventures Ltd.’s head office and registered and records office address is at 1150 – 789
West Pender St., Vancouver, BC V6C 1H2.
Basis of Discussion & Analysis
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 11
This management discussion and analysis (“Annual MD&A”) is dated as of July 21, 2014 and
should be read in conjunction with the audited financial statements of the Company as at
February 28, 2014.
Our discussion in this Annual MD&A is based on the Audited Financial Statements prepared in
accordance with International Financial Reporting Standards. (“IFRS”). Unless expressly stated
otherwise, all financial information is presented in Canadian dollars.
All statements other than statements of historical fact in this Annual MD&A are forward-looking
statements. These statements represent the Company’s intentions, plans, expectations and
beliefs as of the date hereof, and are subject to risks, uncertainties and other factors of which
many are beyond the control of the Company. These factors could cause actual results to differ
materially from such forward-looking statements. Readers should not place undue reliance on
these forward-looking statements. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect subsequent events or circumstances.
THE COMPANY AND BUSINESS
The Company is not proceeding with the business under the OGC License Agreement. The
license agreement is cancelled and there are no obligations or liabilities from the agreement.
Mr. Alisher Ali, Director, CEO and Chairman of the Board. Mr. Ali was appointed as Chairman
and Director December 27, 2012, and as CEO April 23, 2013. Mr. Ali is Founder of Silk Road
Finance, an investment group focused on early frontier markets. Through Silk Road Finance,
Alisher founded Eurasia Capital and Mandalay Capital, investment banking advisory firms
dedicated to Mongolia and Myanmar respectively. Mr. Ali has over 18 years of investment
management, investment banking and advisory experience in emerging and frontier markets
including Russia, Kazakhstan, Azerbaijan, Mongolia and Myanmar. Alisher received his Master
of International Affairs from Columbia University and an MBA from Oxford University.
Ms. Sylvia Saw McKaige, Director, is an independent Director. Ms. Mckaige’s appointment was
announced April 23, 2013 and is the founder and director of Salween Group, a media
communications and marketing company that specializes in helping global brand execute
campaigns and content partnerships with local language media in emerging markets. Ms.
McKaige’s broad experience over 15 years with CNBC Asia makes her extremely well informed
and connected in the frontier target region as well as a discerning independent Director. Sylvia
holds an MBA from UCLA Anderson School of Management and National University of
Singapore, and a Bachelor of Arts degree from the National University of Singapore.
The appointment of Mr. Ali has brought additional business opportunities for review by the
Company; In addition the Company has concluded a private placement of $200,000 in the
shares of the company at a price of $.02 a share. In addition 1,000,000 common shares were
issued at a price of $0.02 per share for the settlement of an advance of $20,000 received from a
director in the prior year. A change in the name of the company to Silk Road Ventures Ltd. was
completed during the period.
The Company is developing its business plan to acquire or build a financial services business
focused on frontier markets.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 12
SELECTED ANNUAL INFORMATION
For the Year
Ended February
28, 2014
$
From May 15, 2012,
date of Incorporation
to February 28, 2013
$
Expenses
4,394
-
Management Fees
35,000
12,500
Professional Fees
28,196
8,666
Regulatory and Transfer Agency Fees
13,597
4,999
Rent
9,000
-
Provision for taxes receivable
4,863
Administration and Other Expenses
(95,050)
(26,165)
109,325
-
14,275
(26,165)
Other item
Unrealized gain on marketable securities
Net Income (Loss) and Comprehensive Income (Loss)
The Company had not fully commenced active operations as of February 28, 2014. During the
year it reorganized its share capital by share consolidation on the basis of 1 new share for each
6.5 shares in order to raise capital for the purpose of its business plan to invest in Frontier
market opportunities.
Expenses are expected to be the same in the following year as the baseline for maintain the
company.
Additional Disclosure for Venture issuers without Significant Revenue
Management Fees of $35,000 were charged by a company controlled by a Director and Officer.
Professional Fees of $28,196 include audit fees of $9,748, accounting fees of $8,975 legal fees
of $9,473.
Administration and other include $4,394 in administration and the balance in sundry expenses.
Rent of $9,000 is for the office at 500 – 900 W Hastings and previously for an office located at
1500 W Hastings.
Regulatory and Transfer Agency Fees are entirely amounts paid to Computershare, Sedar,
Securities Commissions and the filing administrator from financial statement filings, annual
general meeting, share consolidation and name change.
LIQUIDITY AND CAPITAL RESOURCES
Financial Position
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 13
February 28, 2014
$
February 28, 2013
$
214,347
2,306,846
6,757
3,625
2,045
-
2,521,193
12,427
10,255
6,592
328
10,583
29,500
36,092
222,500
2,300,000
(11,890)
2,510,610
2,500
(26,165)
2,536,525
2,521,193
12,427
Assets
Current
Cash
Prepaid Legal Expenses
Taxes Recoverable
Short Term Investments
Total Assets
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts Payable and Accrued Liabilities
Due to Related Parties
Shareholders’ Equity:
Capital Stock
Shares Subscribed
Retained Earnings (Deficit)
Total Liabilities and Shareholders’ Equity
THIS SPACE INTENTIONALLY LEFT BLANK
Changes in Cash Position
For The Year Ended
February 28, 2014
$
From May 15, 2012, date
of Incorporation to
February 28, 2013
$
Cash (used in) /provided by:
(82,716)
(25,243)
2,487,827
32,000
(2,197,521)
-
Net cash used in operating activities
Net cash provided by financing activities
Net cash used in investing activities
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 14
Change in cash
Cash , beginning
Cash, end
207,590
6,757
6,757
-
214,347
6,757
The Company’s Directors have provided necessary working capital and subscriptions for
investment had commenced transfer to the company in the period, subsequent to the period the
Company closed a total investment of $5,000,000 for which it issued 50,000,000 shares at a
price of $.10 per share.
Effective July 10, 2013 the Company gave notice under Section 4.8(2) of National Instrument
51-102 (Continuous Disclosure Obligations) that the Corporation has decided to change its
financial year end from April 30 to February 28:
.
SELECTED QUARTERLY INFORMATION
RESULTS OF OPERATIONS
The Company was a wholly owned subsidiary of BC519 until October 22, 2013, on July 10,
2013 the Company changed its year end from April 30 to February 28. Interim Financial reports
were filed quarterly as of July 30, 2012, October 31, 2012, and January 31, 2013. The first
interim statement following the Companys new financial year end is for the three months ended
May 31. 2013
Three
Months
ended
Management
Fees
Professional
Fees
Administration
& Other
Expenses
Rent
Regulatory and
Transfer
Agency Fees
Three
Months
ended
Three
Months
ended
Three
Months
ended
Three
Months
ended
Four
Months
ended
From
Incorporation
May 2012
to
May 31,
2013
February
28, 2014
November
30, 2013
August
30,
2013
May 31,
2013
February
28,
2013
October
31, 2012
$
$
$
$
$
$
$
13,425
23,750
3,750
3,750
3,750
5,000
7,500
7,850
13,255
6,748
5,918
2,275
7,435
-
2,506
(3,930)
1,950
6,009
365
-
-
4,650
7,500
1,500
-
-
-
-
4,705
1,314
7,925
3,362
996
4,362
637
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 15
Provision for
taxes
receivable
171
4,863
Unrealized gain
on marketable
securities
473,098
109,325
Net Income
(Loss) and
Comprehensiv
e Income
(Loss)
441,055
62,573
Other item
(21,873)
(19,039)
(7,386)
(16,797)
(8,137)
The company held its annual general meeting in July 2013 and put a name change and share
consolidation in effect in September so expenses tended to rise in the fall and decline again
near the year end.
ACCOUNTING POLICY & SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The consolidated financial statements have been prepared using accounting policies, judgments
and estimates consistent with those used in the audited consolidated financial statements for
the year ended February 28, 2014. During the year ended February 28, 2014, no new policies
have been adopted and no changes have been made to accounting judgments and estimates.
Please refer to the annual consolidated financial statements for additional information.
ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
A number of new IFRS standards, and amendments to standards and interpretations, are not
yet effective for the year ended February 28, 2014, and have not been applied in preparing the
consolidated financial statements. None of these standards are expected to have a significant
impact on the consolidated financial statements of the Company. Please refer to the annual
consolidated financial statements for additional information.
Financial Instruments
The Company’s financial instruments consist of cash, marketable securities, accounts payable
and due from (to) related parties; the fair values of which are considered to approximate their
carrying value due to their short-term maturities or ability for prompt liquidation.
The Company’s risk exposures and the impact on the Company’s financial instruments are
summarized below:
Market risk is the risk of loss that may arise from changes in market factors such as interest
rates, investment fluctuations, and commodity and equity prices. Market conditions will
cause fluctuations in the fair values of financial assets classified as fair value through profit
or loss and cause fluctuations in the fair value of future cash flows of other financial
liabilities. The Company is exposed to market risk in trading its marketable securities, and
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 16
unfavourable market conditions could result in dispositions of marketable securities at less
than favourable prices. The Company’s marketable securities are accounted for at
estimated fair values and are sensitive to changes in market prices, such that changes in
market prices result in a proportionate change in the carrying value of the Company’s
marketable securities. Management closely monitors commodity prices, individual equity
movements, and the stock market to determine the appropriate course of action to be taken
by the Company. The result of sensitivity analysis shows an increase or decrease of 5% in
the market price, with all other variables held constant, could have decreased or increased
the Company’s net income (loss) by approximately $115,000 (2013 -$nil).
The Company’s investments in marketable securities are denominated in foreign currencies
as follows: $1,559,254 denominated in United States dollars (“US$”) and $314,007
denominated in United Kingdom pound sterling (“GBP”). The result of sensitivity analysis
shows an increase or decrease of 5% in exchange rates, with all other variables held
constant, could have increased or decreased the net loss and comprehensive loss by
approximately $115,000 (2013 - $Nil).
Financial instruments that potentially expose the Company to credit risk are cash and cash
equivalents and advances to parent company. To minimize the credit risk on cash the
Company places the instrument with a high credit quality financial institution. However, as at
February 28, 2014, cash and cash equivalents substantially exceed the amounts covered
under federal deposit insurance. Additionally, management does not believe that there is
significant credit risk arising from the advances to parent company, the maximum exposure
to loss arising from these advances is equal to their total carrying amounts.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities. The Company’s approach to managing liquidity risk is to
ensure that it will have sufficient liquidity to meet liabilities when due. As at February 28,
2014, the Company had cash balance of $214,347 and current liabilities of $10,255. All of
the Company’s financial liabilities have contractual maturities of less than 30 days, and are
subject to normal trade terms. Management is considering different alternatives to secure
adequate debt or equity financing to meet the Company short term and long term cash
requirement.
Interest risk is the risk that the fair value or future cash flows will fluctuate as a result of
changes in market risk. The Company’s sensitivity to interest rates is currently immaterial.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Company holds marketable
securities that are denominated in a currency other than Canadian dollar. A change in
foreign currency exchange rates can have an impact on net income (loss) and
comprehensive income (loss).
Share Capital
The total number of common shares issued and outstanding as at February 28, 2014 was
11,929,023 and is 61,929,023 at the date of this report.
As at the date of this report there were no stock options or warrants outstanding.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 17
Future Cash Requirements
The Company’s future capital requirements will depend on many factors, including, among
others, cash flow from operations. Should the Company pursue other business opportunities,
the Company may need to raise additional funds through debt or equity financing. If additional
funds are raised through the issuance of equity securities, the percentage ownership of current
shareholders will be reduced and such equity securities may have rights, preferences, or
privileges senior to those of the holders of the Company’s common stock. No assurance can be
given that additional financing will be available, or that it can be obtained on terms acceptable to
the Company and its shareholders. Accordingly, the Company is investigating various business
opportunities that ideally will increase the Company’s positive cash flow.
RELATED PARTY TRANSACTIONS
Management fees of $35,000 (2013 - $12,500) were charged by a company controlled by Chief
Financial Officer (CFO). As at February 28, 2014, the Company had $328 due to a company
controlled by a director (2013 – $29,500 due to a director and a company controlled by a
director).
During the year ended February 28, 2014, rental fees of $9,000 (2013 - $Nil) were also charged
by a company controlled by CFO.
1,000,000 shares were issued on October 24, 2013 to settle an amount of $20,000 due to a
company controlled by a director (Note 6).
During the year ended February 28, 2014, the Company transferred $2,350,000 to Eurasia
Capital LLC (“Eurasia”), a company where the CEO is the chairman of the board. Eurasia
Capital is an investment brokerage operating in Mongolia. As at February 28, 2014, The
Company had marketable securities with a fair value of $2,306,845 (2013 - $nil) (see Note 5)
and cash of $152,479 (2013 - $nil) held in the brokerage account operated by Eurasia Capital.
RISKS AND UNCERTAINTIES
Start Up Venture
As a start up venture the Company’s prospects are affected by the risks, expenses, and
difficulties frequently encountered by companies in the growth stage, particularly companies in
highly competitively markets. As an early growth-stage company, the risks faced by the
Company include, but are not limited to, evolving and unpredictable business models and
growth management. To address these risks, the Company must, among other things, expand
its customer base, implement and successfully execute its business and marketing strategy,
continue to develop and upgrade its processes, respond to competitive developments, and
attract, retain, and motivate qualified personnel. There is no assurance that it can be profitable
in the future.
The success of the Company is dependent upon certain factors that may be beyond
Managements control. For example, should the company fulfill its intention to be an investment
vehicle for emerging market investment its business will be subject to much greater political,
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 18
currency, and liquidity risk than if it was making comparable investments in the Canadian
domestic economy. Also the level of overhead and administration expense may be higher
generally with greater geographic distances between the location of management and the
company’s operations as well as translation, accounting, and legal costs attributed to doing
cross border business. If the Company is unable to fund any such investment or otherwise fails
to invest in an active business or investment of value, its business, financial condition or results
of operations could be materially and adversely affected.
Conflicts of Interest
Certain of the directors of the Company also serve as directors and/or officers of other
companies involved in marketing and financial corporations. Consequently, there exists the
possibility for such directors to be in a position of conflict. Any decision made by such directors
involving the Company will be made in accordance with their duties and obligations to deal fairly
and in good faith with the Company and such other companies. In addition, such directors will
declare, and refrain from voting on, any matter in which such directors may have a conflict of
interest.
INTERIM MD&A FOR THE THREE MONTHS ENDED MAY 31, 2014
INTRODUCTION
General
Silk Road Ventures Ltd. (formerly Ole Remediation Ltd.) (the “Company”) was incorporated on
May 15, 2012 in British Columbia pursuant to a Plan of Arrangement (the “Arrangement
Agreement”) between the Company and 0922519 B.C. Ltd. (“BC0922519”) dated May 22, 2012.
Under the Arrangement Agreement, BC0922519 assigned the License Agreement (see also
Note 7) and $2,500 to the Company. As consideration for this asset, the Company issued
6,038,667 common shares (pre-consolidation) to the shareholders of BC0922519 on October 1,
2012. BC0922519 received shareholder approval to the arrangement at a special meeting of
shareholders held on July 6, 2012.
The name of the company was changed to Silk Road Ventures Ltd. effective August 22 nd, 2013.
The Company is reviewing investment opportunities for financial services business in frontier
markets. The address of the Company’s corporate office and principal place of business is
1150-789 West Pender St., Vancouver, British Columbia.
Frontier countries across Asia, Africa and Americas have experienced strong economic growth
rates in the last decade on the back of commodities boom, government reforms and foreign
capital inflows. Starting from a low base, these countries are expected to maintain high growth
momentum in the next decade.
The Company intends to capitalize on a wide range of investment opportunities in selected
frontier markets by backing ventures and making acquisitions in high growth industries such as
financial services, telecom, media, and property sectors. The Company plans to build strong
management teams, seek joint ventures with successful local entrepreneurs and add value
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 19
through access to capital and bringing international operational expertise to businesses in
frontier markets.
Silk Road Ventures Ltd.’s principal executive office is located at 500-900 Hastings Street West,
Vancouver, British Columbia. The Company's registered and records office address is 1150 –
789 West Pender St., Vancouver, BC V6C 1H2.
Basis of Discussion & Analysis
This management’s discussion and analysis (“MD&A”) is dated as of July 30, 2014 and should
be read in conjunction with the unaudited condensed interim financial statements of the
Company together with the related notes for the three months ended May 31, 2014, and the
audited financial statements of the Company together with the related notes for the year ended
February 28, 2014
Our discussion in this MD&A is based on the Financial Statements for the three months ended
May 31, 2014 prepared in accordance with International Financial Reporting Standards.
(“IFRS”). Unless expressly stated otherwise, all financial information is presented in Canadian
dollars. The financial statements and MD&A have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting, as issued by the
International Accounting Standards Board (IASB), and as such do not include all of the
information required for full annual financial statements.
All statements other than statements of historical fact in this MD&A are forward-looking
statements. These statements represent the Company’s intentions, plans, expectations and
beliefs as of the date hereof, and are subject to risks, uncertainties and other factors of which
many are beyond the control of the Company. These factors could cause actual results to differ
materially from such forward-looking statements. Readers should not place undue reliance on
these forward-looking statements. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect subsequent events or circumstances.
THE COMPANY AND BUSINESS
The Company is not proceeding with the business under the OGC License Agreement. The
license agreement is cancelled and there are no obligations or liabilities from the agreement.
Mr. Alisher Ali, Director, CEO and Chairman of the Board. Mr. Ali was appointed as Chairman
and Director December 27, 2012, and as CEO April 23, 2013. Mr. Ali is Founder of Silk Road
Finance, an investment group focused on early frontier markets. Through Silk Road Finance,
Alisher founded Eurasia Capital and Mandalay Capital, investment banking advisory firms
dedicated to Mongolia and Myanmar respectively. Mr. Ali has over 18 years of investment
management, investment banking and advisory experience in emerging and frontier markets
including Russia, Kazakhstan, Azerbaijan, Mongolia and Myanmar. Alisher received his Master
of International Affairs from Columbia University and an MBA from Oxford University.
Ms. Sylvia Saw McKaige, Director, is an independent Director. Ms. Mckaige’s appointment was
announced April 23, 2013 and is the founder and director of Salween Group, a media
communications and marketing company that specializes in helping global brand execute
campaigns and content partnerships with local language media in emerging markets. Ms.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 20
McKaige’s broad experience over 15 years with CNBC Asia makes her extremely well informed
and connected in the frontier target region as well as a discerning independent Director. Sylvia
holds an MBA from UCLA Anderson School of Management and National University of
Singapore, and a Bachelor of Arts degree from the National University of Singapore.
The appointment of Mr. Ali has brought additional business opportunities for review by the
Company; In addition the Company has concluded a private placement of $200,000 in the
shares of the company at a price of $.02 a share. In addition 1,000,000 common shares were
issued at a price of $0.02 per share for the settlement of an advance of $20,000 received from a
director in the prior year. An additional $5,000,000 was received for share subscriptions which
closed subsequent to the period. A change in the name of the company to Silk Road Ventures
Ltd. was completed during the period.
The Company is developing its business plan to acquire or build a financial services business
focused on frontier markets.
THIS SPACE INTENTIONALLY LEFT BLANK
RESULTS OF OPERATIONS AND SUMMARY OF QUARTERLY RESULTS
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 21
For the Three
For the Year
Months Ended
Ended
May 31, 2014 February 28, 2014
Expenses
Administration and Other Expenses
Management Fees
Professional Fees
Regulatory and Transfer Agency Fees
Rent
Provision for Taxes Receivable
Other Item
Interest Income
Unrealized Gain on Marketable Securities
Net Income (Loss) and Comprehensive Income (Loss)
From May 15, 2012
Date of Incorporation
to February 28, 2013
$
$
$
2,506
13,425
7,850
4,705
4,650
171
(33,306)
4,394
35,000
28,196
13,597
9,000
4,863
(95,050)
12,500
8,666
4,999
(26,165)
1,262
473,098
474,361
109,325
109,325
441,055
14,275
(26,165)
The Company had not fully commenced active operations as of May 31, 2014. During the prior
year it reorganized its share capital by share consolidation on the basis of 1 new share for each
6.5 shares in order to raise capital for the purpose of its business plan to invest in Frontier
market opportunities.
Expenses are expected to be the same in the following year as the baseline for maintain the
company.
Additional Disclosure for Venture issuers without Significant Revenue
Management Fees of $13,425 were charged by a company controlled by a Director and Officer.
Professional Fees of $7,850 include accounting fees of $2,850 legal fees of $5,000.
Administration and other include $1,403 in administration and the balance in sundry expenses.
Rent of $4,650 is for the office at 500 – 900 W Hastings and previously for an office located at
1500 W Hastings.
Regulatory and Transfer Agency Fees are entirely amounts paid to Computershare, Sedar,
Securities Commissions and the filing administrator from financial statement filings, annual
general meeting, share consolidation and name change.
LIQUIDITY AND CAPITAL RESOURCES
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 22
Financial Position
May 31, 2014
May 31, 2013
$
$
ASSETS
Current Assets
Cash
Prepaid Expenses
Tax Recoverable
Due from Related Parties
Marketable Securities
1,221,531
10,000
7,500
4,423,439
2,073
5,000
2,620
-
TOTAL ASSETS
5,662,470
9,693
10,479
328-
7,087
20,000
12,425
10,806
39,512
222,500
5,000,000
429,165
2,500
(32,319)
5,651,665
(29,819)
5,662,470
9,693
For the Three
Months Ended
May 31, 2014
For the
Three
Months
Ended May
31, 2013
$
$
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities
Loan Payable
Due to Related Parties
Shareholder's Equity (Deficiency)
Capital Stock
Shares Subscribed
Deficit
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY
Changes in Cash Positio
Cash provided by (used in):
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 23
Operating activities
Net cash used in operating activities
(49,320)
(3,966)
(1,643,495)
(718)
Net cash provided by financing activity
2,700,000
-
Increase (decrease) in cash
1,007,185
(4,684)
214,347
6,757
1,221,531
2,073
Net cash used in investing activity
Cash, beginning of the period
Cash, end of the period
The Company’s Directors have provided necessary working capital and subscriptions for
investment had commenced transfer to the company in the period, during the current period the
Company received subscriptions for investment of $5,000,000 for which it subsequently issued
50,000,000 shares at a price of $.10 per share.
Effective July 10, 2013 the Company gave notice under Section 4.8(2) of National Instrument
51-102 (Continuous Disclosure Obligations) that the Corporation has decided to change its
financial year end from April 30 to February 28:
THIS SPACE INTENTIONALLY LEFT BLANK
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 24
SELECTED QUARTERLY INFORMATION
RESULTS OF OPERATIONS
Expenses
Administration and
Other Expenses
Management Fees
Professional Fees
Regulatory and
Transfer Agency Fees
Rent
Provision for Taxes
Receivable
Other Item
Interest Income
Unrealized Gain on
Marketable Securities
Net Income (Loss)
and Comprehensive
Income (Loss)
Three
Months
Ended
May 31,
2014
Three
Months
Ended
February
28, 2014
Three
Months
Ended
November
30, 2013
Three
Months
Ended
August 31,
2013
Three
Months
Ended
May 31,
2013
Three
Months
Ended
February
28, 2013
From
Incorporation
May 2012 to
October 31,
2012
$
$
$
$
$
$
$
2,506
13,425
7,850
(3,930)
23,750
13,255
1,950
3,750
6,748
6,009
3,750
5,918
365
3,750
2,275
5,000
7,435
7,500
-
4,705
4,650
1,314
7,500
7,925
1,500
3,362
-
996
-
4,362
-
637
-
171
4,863
-
-
-
-
-
1,262
-
-
-
-
-
-
473,098
109,325
-
-
-
-
-
441,055
62,573
(21,873)
(19,039)
(7,386)
(16,797)
Significant Accounting Policies
ACCOUNTING POLICY & SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The consolidated financial statements have been prepared using accounting policies, judgments
and estimates consistent with those used in the audited consolidated financial statements for
the year ended February 28, 2014. During the period ended May 31, 2014, no new policies
have been adopted and no changes have been made to accounting judgments and estimates.
Please refer to the annual consolidated financial statements for additional information.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 25
(8,137)
ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
A number of new IFRS standards, and amendments to standards and interpretations, are not
yet effective for the period ended May 31, 2014, and have not been applied in preparing the
consolidated financial statements. None of these standards are expected to have a significant
impact on the consolidated financial statements of the Company. Please refer to the annual
consolidated financial statements for additional information.
Financial Instruments
The Company’s financial instruments consist of cash, marketable securities, accounts payable
and due from (to) related parties; the fair values of which are considered to approximate their
carrying value due to their short-term maturities or ability for prompt liquidation.
The Company’s risk exposures and the impact on the Company’s financial instruments are
summarized below:
Market risk is the risk of loss that may arise from changes in market factors such as interest
rates, investment fluctuations, and commodity and equity prices. Market conditions will
cause fluctuations in the fair values of financial assets classified as fair value through profit
or loss and cause fluctuations in the fair value of future cash flows of other financial
liabilities. The Company is exposed to market risk in trading its marketable securities, and
unfavourable market conditions could result in dispositions of marketable securities at less
than favourable prices. The Company’s marketable securities are accounted for at
estimated fair values and are sensitive to changes in market prices, such that changes in
market prices result in a proportionate change in the carrying value of the Company’s
marketable securities. Management closely monitors commodity prices, individual equity
movements, and the stock market to determine the appropriate course of action to be taken
by the Company. The result of sensitivity analysis shows an increase or decrease of 5% in
the market price, with all other variables held constant, could have decreased or increased
the Company’s net income (loss) by approximately $190,000 (2013 -$nil).
The Company’s investments in marketable securities are denominated in foreign currencies
as follows: $3,523,237 denominated in United States dollars (“US$”) and $331,299
denominated in United Kingdom pound sterling (“GBP”). The result of sensitivity analysis
shows an increase or decrease of 5% in exchange rates, with all other variables held
constant, could have increased or decreased the net loss and comprehensive loss by
approximately $190,000 (2013 - $Nil).
Financial instruments that potentially expose the Company to credit risk are cash and cash
equivalents and advances to parent company. To minimize the credit risk on cash the
Company places the instrument with a high credit quality financial institution. However, as at
May 31, 2014, cash and cash equivalents substantially exceed the amounts covered under
federal deposit insurance. Additionally, management does not believe that there is
significant credit risk arising from the advances to parent company, the maximum exposure
to loss arising from these advances is equal to their total carrying amounts.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities. The Company’s approach to managing liquidity risk is to
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 26
ensure that it will have sufficient liquidity to meet liabilities when due. As at May 31, 2014,
the Company had cash balance of $1,221,531 and current liabilities of $10,806. All of the
Company’s financial liabilities have contractual maturities of less than 30 days, and are
subject to normal trade terms. Management is considering different alternatives to secure
adequate debt or equity financing to meet the Company short term and long term cash
requirement.
Interest risk is the risk that the fair value or future cash flows will fluctuate as a result of
changes in market risk. The Company’s sensitivity to interest rates is currently immaterial.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Company holds marketable
securities that are denominated in a currency other than Canadian dollar. A change in
foreign currency exchange rates can have an impact on net income (loss) and
comprehensive income (loss).
Share Capital
The total number of common shares issued and outstanding as at May 31, 2014 was
11,929,023 and is 61,929,023 at the date of this report.
As at the date of this report there were no stock options or warrants outstanding.
Future Cash Requirements
The Company’s future capital requirements will depend on many factors, including, among
others, cash flow from operations. Should the Company pursue other business opportunities,
the Company may need to raise additional funds through debt or equity financing. If additional
funds are raised through the issuance of equity securities, the percentage ownership of current
shareholders will be reduced and such equity securities may have rights, preferences, or
privileges senior to those of the holders of the Company’s common stock. No assurance can be
given that additional financing will be available, or that it can be obtained on terms acceptable to
the Company and its shareholders. Accordingly, the Company is investigating various business
opportunities that ideally will increase the Company’s positive cash flow.
RELATED PARTY TRANSACTIONS
Management fees of $13,425 (2013 - $3,750) were charged by a company controlled by Chief
Financial Officer (CFO). The management fees also represent key management compensation
incurred during the year. As at May 31, 2014 and February 28, 2014, the Company had $328
due to a company controlled by a director.
During the period ended May31, 2014, rental fees of $4,650 (2013 - $Nil) were also charged by
a company controlled by CFO.
During the period ended May 31, 2014, the Company transferred $1,500,000 to Eurasia Capital
LLC (“Eurasia”), a company where the CEO is the chairman of the board. Eurasia is an
investment brokerage operating in Mongolia. As at May 31, 2014, the Company had marketable
securities with a fair value of $4,423,439 (2013 - $nil) (see Note 5) and cash of $7,963 (2013 $nil) held in the brokerage account operated by Eurasia Capital.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 27
RISKS AND UNCERTAINTIES
Start Up Venture
As a start up venture the Company’s prospects are affected by the risks, expenses, and
difficulties frequently encountered by companies in the growth stage, particularly companies in
highly competitively markets. As an early growth-stage company, the risks faced by the
Company include, but are not limited to, evolving and unpredictable business models and
growth management. To address these risks, the Company must, among other things, expand
its customer base, implement and successfully execute its business and marketing strategy,
continue to develop and upgrade its processes, respond to competitive developments, and
attract, retain, and motivate qualified personnel. There is no assurance that it can be profitable
in the future.
The success of the Company is dependent upon certain factors that may be beyond
Managements control. For example, should the company fulfill its intention to be an investment
vehicle for emerging market investment its business will be subject to much greater political,
currency, and liquidity risk than if it was making comparable investments in the Canadian
domestic economy. Also the level of overhead and administration expense may be higher
generally with greater geographic distances between the location of management and the
company’s operations as well as translation, accounting, and legal costs attributed to doing
cross border business. If the Company is unable to fund any such investment or otherwise fails
to invest in an active business or investment of value, its business, financial condition or results
of operations could be materially and adversely affected.
Conflicts of Interest
Certain of the directors of the Company also serve as directors and/or officers of other
companies involved in marketing and financial corporations. Consequently, there exists the
possibility for such directors to be in a position of conflict. Any decision made by such directors
involving the Company will be made in accordance with their duties and obligations to deal fairly
and in good faith with the Company and such other companies. In addition, such directors will
declare, and refrain from voting on, any matter in which such directors may have a conflict of
interest.
ADDITIONAL INFORMATION
Additional information pertaining to the Company is available on the SEDAR website at
www.sedar.com
7.
Market for Securities
The Issuer’s securities are not listed and posted for trading or quoted on any exchange or
quotation and trade reporting system.
8.
Consolidated Capitalization
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 28
As of the date of this Listing Statement, there are 61,929,023 issued and outstanding common
shares of the Issuer. The outstanding share capital of the Issuer is summarized in the table
below:
Designation of security
Authorized
Outstanding as at August 31, 2014
Common shares
Options
Unlimited
10% of issued
61,929,023
Nil
Total outstanding shares fully diluted
61,929,023
9.
Options to Purchase Securities
9.1
At the annual general meeting of shareholders of the Issuer held on June 27, 2013, the
shareholders approved and adopted an incentive stock option plan for the Issuer on a
going forward basis.
The Issuer’s stock option plan, which makes a total of 10% of the issued and
outstanding shares of the Issuer available for issuance thereunder, consists of the
following provisions:
Number of Shares Reserved. The number of common shares which may be issued
pursuant to options granted under the plan shall not exceed ten (10%) percent of the
issued and outstanding Shares from time to time at the date of grant.
Maximum Term of Options. The term of any options granted under the option plan is
fixed by the board of directors and may not exceed five years from the date of grant.
The options are non-assignable and non-transferable.
Exercise Price. The exercise price of options granted under the option plan is
determined by the board of directors, provided that the exercise price is not less than
the price permitted by the Canadian Securities Exchange or, if the common shares are
not listed on the Canadian Securities Exchange, then such other exchange or
quotation system on which the common shares are listed or quoted for trading.
Amendment. The terms of an option may not be amended once issued under
Canadian Securities Exchange requirements. If an option is cancelled prior to the
expiry date, the Issuer shall not grant new options to the same person until thirty days
have elapsed from the date of cancellation.
Vesting. Vesting, if any, and other terms and conditions relating to such options shall
be determined by the board of directors of the Issuer or the Committee (as hereinafter
defined) from time to time and in accordance with Exchange requirements.
Termination. Any options granted pursuant to the option plan will terminate generally
within ninety days of the option holder ceasing to act as a director, officer, employee,
management company or consultant of the Issuer or any of its affiliates, and within
thirty days generally of the option holder ceasing to act as an employee engaged in
investor relations activities, unless such cessation is on account of death. If such
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 29
cessation is on account of death, the options terminate on the first anniversary of such
cessation. If such cessation is on account of cause, or terminated by regulatory
sanction or by reason of judicial order, the options terminate immediately. Options that
have been cancelled or that have expired without having been exercised shall continue
to be issuable under the option plan. The option plan also provides for adjustments to
outstanding options in the event of any consolidation, subdivision or exchange of the
Issuer’s common shares.
Administration. The option plan is administered by the board of directors of the Issuer or,
if the board of the Issuer so elects, by a Committee (the "Committee"), which Committee
shall consist of at least two board members, appointed by the board of directors of the
Issuer.
Board Discretion. The option plan provides that, generally, the number of the Issuer’s
common shares subject to each option, the exercise price, the expiry time, the extent to
which such option is exercisable, including vesting schedules, and other terms and
conditions relating to such options shall be determined by the board of directors of the
Issuer or the Committee and in accordance with Canadian Securities Exchange
requirements.
As of the date of this Listing Statement, the Issuer has no options issued and
outstanding.
10.
10.1
Description of the Securities
As of the date of this Listing Statement there are 61,929,023 common shares issued and
outstanding. The authorized capital of the Issuer consists of an unlimited number of
common shares, having the following material characteristics:
Common Shares
Holders of the common shares are entitled to vote at all meetings of the Issuer except
meetings at which only holders of a specified class of shares are entitled to vote and are
entitled to dividend from time to time as determined by the directors. Upon dissolution
the shareholders of common shares are entitled to receive the remaining property of the
Company.
The following table sets forth the consolidated capitalization of the Issuer as at the date
of this Listing Statement:
Designation of Authorized
Security
Common shares Unlimited
Outstanding Currently
Convertible
notes
Options
N/A
Nil
6,192,902
Ni
Warrants
N/A
Nil
61,929,023 common shares of the Issuer
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 30
Indebtedness
10.2
N/A
Nil
Prior Sales
On May 15, 2012, and October 1, 2012, the Company issued and redeemed 1 common share
at $1 respectively.
On October 1, 2012, the Company issued 6,038,667 (pre-consolidation) common shares to
BC0922519.
A shareholders’ resolution was passed on June 27, 2013 to consolidate the capital stock on the
basis of six and one half (6 ½) old common shares into one (1) new common share. All share
and per share information included in the financial statements and accompanying notes have
been adjusted to reflect this share split for all periods presented.
On October 24, 2013, the Company issued an aggregate of 11,000,000 common shares at a
price of $0.02 per share for gross proceeds of $220,000 of which $20,000 was composed of
amounts previously advanced to the Company by a related party.
On December 27, 2013, the Company received subscription proceeds of $2,300,000 toward
private placements of 50,000,000 common shares at $0.10 per share
On July 3, 2014 the Company issued 50,000,000 at $0.10 per shares in respect of the total
proceeds received of $5,000,000.
10.3
Stock Exchange Price
The Issuer’s securities are not listed and posted for trading or quoted on any exchange or
quotation and trade reporting system.
11.
Escrowed Securities
As part of its listing application to the CSE, the Issuer will enter into an escrow agreement with
Computershare Trust Company and certain shareholders of the Issuer, including all of the
proposed directors, officers and consultants of the Issuer holding more than 1% of the issued
and outstanding shares of the Issuer, whereby all securities of the Issuer, beneficially owned or
controlled, directly or indirectly, or over which control or direction is exercised by the proposed
directors, officers and consultants of the Issuer, and the respective affiliates or associates of any
of them, will be placed in and made subject to an escrow agreement for a hold period of 36
months from the effective date of the amalgamation.
Pursuant to the escrow agreement, 10% of the total escrowed shares will be released from
escrow on the date the common shares are listed on the CSE, and 15% every six months
thereafter, subject to acceleration provisions provided for in National Policy 46-201 – Escrow for
Initial Public Offerings.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 31
The following table sets out the number of securities proposed to be placed in escrow pursuant
to the escrow agreement among the Issuer, Computershare Trust Company, and certain
shareholders of the Issuer:
Designation of class held in escrow
2,000,000(1)
Common
(1)
Number of securities
held in escrow
Percentage
class
of
3.23%
Currently held by Dildora Ali, spouse of Alisher Ali, CEO and Director.
12.
Principal Shareholders
12.1
As of the date of this Listing Statement, to the best of the knowledge of the
Issuer, no persons who beneficially own, directly or indirectly, or exercise control
or direction over, more than 10% of the voting rights attached to all of the
outstanding shares of the Issuer.
13
Directors and Officers
13.1
Name, Address, Occupation and Security Holding
The following table provides the names, municipalities of residence, position, principal
occupations and the number of voting securities that each director and officer of the
Issuer beneficially owns, directly or indirectly, or exercises control over, as of the date
hereof:
Name and
Municipality of
Residence
Alisher Ali(1),
Ulaanbaatar,
Mongolia
Positions Held
Principal Occupation
with the
During the Last Five
Issuer
Years
Date Appointed
Shareholdings of
or Elected as
the Issuer
Director
Director, CEO Founder of Silk Road
Director since 2,000,000(2)
and Chairman Finance. Previously VP December 20,
3.23%
of the Board of Auerbach Grayson & 2012
Co., New York based
brokerage, Head of
Corporate Finance in
Central Asia and the
Caucasus at Ernst &
Young, investment
banker at Renaissance
Capital and Credit Suisse
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 32
Sylvia Saw McKaige Director
(1)
Singapore,
Singapore
Donald Gordon(1),
North Vancouver,
British Columbia
Chief
Financial
Officer and
Director
Founder and director of
Salween Group, a media
communications and
marketing company;
former Head of Creative
Solutions & Strategic
Content for CNBC Asia
Principal of DAG
Consulting Corp. since
2000; Senior Advisor,
Canadian Securities
Exchange since 2005;
Director and Officer of six
publicly listed companies
and Director of several
other reporting issuers
Director since
Nil
June 27, 2013
Director since
100,851
October 11,
0.16%
2011
Notes:
(1)
Member of the Audit Committee. Mr. Ali is the chair of the Audit Committee.
(2)
Currently held by Didora Ali, spouse of Alisher Ali, CEO and Director.
The above information has been furnished by the respective directors individually.
Conflicts of Interest
Some of the directors and officers of the Issuer are also directors, officers and/or
promoters of other reporting and non-reporting issuers. Accordingly, conflicts of interest
may arise which could influence these persons in evaluating possible acquisitions or in
generally acting on behalf of the Issuer, notwithstanding that they are bound by the
provisions of the Business Corporations Act (Ontario) to act at all times in good faith in
the best interests of the Issuer and to disclose such conflicts to the Issuer if and when
they arise.
Management
Further information on the business experience and professional qualifications of the Issuer’s
directors, officers and promoters is set forth below:
Mr. Alisher Ali
Director, CEO and Chairman of the Board
Mr. Ali was appointed as Chairman and Director December 27, 2012, and as CEO April 23,
2013. Mr. Ali is Founder of Silk Road Finance, an investment group focused on early frontier
markets. Through Silk Road Finance, Alisher founded Eurasia Capital, Mandalay Capital and
Africa Asia Capital, investment banking advisory firms dedicated to Mongolia, Myanmar and
Mozambique respectively. Mr. Ali has over 18 years of investment management, investment
banking and advisory experience in emerging and frontier markets including Russia,
Kazakhstan, Azerbaijan, Mongolia, Myanmar and Mozambique. Alisher received his Master of
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 33
International Affairs from Columbia University and an MBA from Oxford University.
devoting about 50% of his time to the matters related to the Issuer’s business.
He is
Donald Gordon, CFA, MBA
Chief Financial Officer and Director
Donald Gordon, Director, President, CFO has been a Director since May 2012 and is a
corporate finance expert with 30 years experience in various capacities related to venture
capital, investing, and going public.
Mr. Gordon is an independent contractor serving as senior advisor at the Canadian Securities
Exchange conducting business development for the CSE. Mr. Gordon is a director of several
public companies, many of which he serves as director while reorganizing or reactivating
issuers. Mr. Gordon has previously held management positions in corporate finance and
marketing over a 17-year career with the Vancouver Stock Exchange/CDNX (now TSX Venture
Exchange). Mr. Gordon is a past president of the Vancouver Society of Financial Analysts. Mr.
Gordon holds B.A. and MBA degrees from the University of British Columbia and is a CFA
charter holder.
He is devoting about 15% of his time to the matters related to the Issuer’s business.
Ms. Sylvia Saw McKaige
Director
Ms. Sylvia Saw McKaige is an independent Director. Ms Mckaige was appointed on April 23,
2013 and is the founder and director of Salween Group, a media communications and
marketing company that specializes in helping global brand execute campaigns and content
partnerships with local language media in emerging markets. Ms. McKaige’s broad experience
over 15 years with CNBC Asia makes her extremely well informed and connected in the frontier
target region as well as a discerning independent Director. Sylvia holds an MBA from UCLA
Anderson School of Management and National University of Singapore, and a Bachelor of Arts
degree from the National University of Singapore.
She is devoting about 10% of her time to the matters related to the Issuer’s business.
Corporate Cease Trade Orders or Bankruptcies
Other than as disclosed below no director or officer of the Issuer has, within the last ten years
prior to the date of this document, been a director or executive officer of any company (including
the Issuer) that, while such person was acting in that capacity, (i) was the subject of a cease
trade or similar order or an order that denied that company access to any exemption under
securities legislation for a period of more than 30 consecutive days; or (ii) was subject to an
event that resulted, after the director or executive officer ceased to be a director or executive
officer, in that company being the subject of a cease trade or similar order or an order that
denied the relevant company access to any exemption under securities legislation, for a period
of more than 30 consecutive days; or (iii) within a year of that person ceasing to act in that
capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver-manager or trustee appointed to hold its assets.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 34
Mr. Donald Gordon is a director of Tomco Developments Inc., which was subject to a cease
trade order issued by the British Columbia Securities Commission on October 12, 2005, for
failure to file required financial information in the prescribed time. The cease trade order was
revoked on January 13, 2006. Tomco Developments Inc. was cease traded October 7, 2008 by
the British Columbia Securities Commission and January 5, 2009 by the Alberta Securities
Commission for failure to file the audited financial statements for the year ended May 31, 2008
and subsequently has been struck from the Companies Branch Registrar.
Mr. Gordon is a Director of AFG Flameguard Ltd. which was subject to a cease trade order
issued by the British Columbia Securities Commission on May 8, 2014 and the Ontario
Securities Commission on May 26, 2014 for failure to file required annual audited financial
information in the prescribed time and the cease trade order remains in force at the date of this
Listing Application.
Mr. Gordon is a director of Sor Baroot Resources Corp., which is subject to a cease trade order
issue by the British Columbia on August 6, 2014 for failure to file audited financial statements for
the period ending March 31, 2014. The cease trade order remains in force at the date of this
Listing Application.
Penalties or Sanctions
To the best of management's knowledge, no director or officer of the Issuer, or a shareholder
holding sufficient securities of the Issuer to affect materially the control of the Issuer, has been
subject to any penalties or sanctions imposed by a court relating to Canadian securities
legislation or by a Canadian securities regulatory authority or has entered into a settlement
agreement with a Canadian securities regulatory authority relating to trading in securities,
promotion or management of a publicly traded issuer or theft or fraud, or has been subject to
any other penalties or sanctions imposed by a court or a regulatory body that would be likely to
be considered important to a reasonable investor making an investment decision.
Personal Bankruptcies
No proposed director, officer or promoter of the Issuer has, within the 10 years before the date
of this document, become bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver-manager or trustee appointed to hold its
assets.
14.
14.1
Capitalization
The following chart sets out the shareholdings for each class of securities to be listed:
Issued Capital
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 35
Number of
Securities
(non-diluted)
Number of % of Issued
Securities (non-diluted)
(fullydiluted)
Total outstanding (A)
61,929,023
61,929,023
Held by Related Persons or
employees of the Issuer or
Related Person of the Issuer,
or by persons or companies
who beneficially own or control,
directly or indirectly, more than
a 5% voting position in the
Issuer (or who would
beneficially own or control,
directly or indirectly, more than
a 5% voting position in the
Issuer upon exercise or
conversion of other securities
held) (B)
Total Public Float (A-B)
% of
Issued
(fully diluted)
Public Float
100.0%
100.0%
2,100,851
3.3%
3.3%
59,828,172
96.6%
96.6%
Number of outstanding
securities subject to resale
restrictions, including
restrictions imposed by pooling
or other arrangements or in a
shareholder agreement and
securities held by control block
holders (C)
48,000,000
80.9%
80.9%
Total Tradable Float (A-C)
11,828,172
19.1%
19.1%
Freely-Tradable Float
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 36
Public Security holders (Registered)
Class of Security
Size of Holding
Number of holders
Total number of securities
1 – 99 securities
0
0
100 – 499 securities
5
846
500 – 999 securities
1
538
1,000 – 1,999 securities
53
54,615
2,000 – 2,999 securities
2
5,128
3,000 – 3,999 securities
5
18,538
4,000 – 4,999 securities
2
9,231
5,000 or more securities
67
59,890,128
135
59,979,024
Public Security holders (Beneficial)
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 37
Class of Security
Size of Holding
Number of holders
Total number of securities
1 – 99 securities
32
2,305
100 – 499 securities
84
14,351
500 – 999 securities
12
8,650
1,000 – 1,999 securities
61
67,862
2,000 – 2,999 securities
8
19,817
3,000 – 3,999 securities
8
28,306
4,000 – 4,999 securities
6
27,692
5,000 or more securities
96
59,810,041
307
59,979,023
Unable to confirm
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 38
Non-Public Security holders (Registered)
Class of Security
Size of Holding
Number of holders
Total number of securities
1 – 99 securities
0
0
100 – 499 securities
0
0
500 – 999 securities
0
0
1,000 – 1,999 securities
0
0
2,000 – 2,999 securities
0
0
3,000 – 3,999 securities
0
0
4,000 – 4,999 securities
0
0
5,000 or more securities
2
2,100,851
14.2
Securities Convertible Into Common Shares
There are no common shares reserved for issuance pursuant to any outstanding convertible
securities.
15.
15.1
Executive Compensation
Executive Compensation
Management Agreement
Compensation will be paid to certain officers of the Issuer through employment
agreements in connection with the day-to-day management of the business and
operations of the Issuer.
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 39
STATEMENT OF EXECUTIVE COMPENSATION OF THE ISSUER
Summary Compensation Table
The Issuer relies on the board of directors in determining executive compensation and option
based awards to executive officers.
Alisher Ali, Chief Executive Officer and Donald Gordon, Chief Financial Officer were “named
executive officers” (“NEOs” of the Issuer and Sylvia Saw McKaige is a Directors of the Issuer for
the purposes of the following disclosure. The compensation paid to the NEOs and to the
directors in since the incorporation of the Isssuer is as set out in the Summary Compensation
Table.
The board of directors approves option based awards to executive officers. Previous grants of
option-based awards are taken into account when considering new grants however no options
have been granted or proposed to be granted as of the date of this application.
Summary Compensation Table
The following table reflects compensation of each NEO and the directors of the Issuer for its
most recently completed financial year; the period ended February 28, 2014.
Name and
principal
position
Alisher Ali, CEO
Year
Salary
($)
Share
based
award
s ($)
Optio
n
based
award
s
($)
Non-Equity
Incentive Plan
compensation
Annual
Incentive
Plans
Long
term
Incen
-tive
Plans
Pension
value
($)
All
other
compensation
($)
Total
compensation
($)
2014
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2013
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Donald Gordon,
CFO
2014
Nil
Nil
Nil
Nil
Nil
Nil
35,000
35,000
2013
Nil
Nil
Nil
Nil
Nil
Nil
12,500
12,500
Sylvia Saw
McKaige
2014
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2013
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Incentive Plan Awards
The following table provides for each NEO and director for all awards outstanding since the
incorporation of the Issuer
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 40
Name
Option – based
awards
Value vested
during the year ($)
Share – based
awards
Value vested
during the year ($)
Non-Equity
Incentive Plan
compensation
Value earned
during the year ($)
Alisher Ali, CEO
Nil
Nil
Nil
Donald Gordon,
CFO
Nil
Nil
Nil
Sylvia Saw McKaige
Nil
Nil
Nil
Pension Plan Benefits
The Issuer does not provide any pension plan benefits to its executive officers, directors or
employees.
Termination and Change of Control Benefits
There are no written employment contracts between the Issuer and NEOs. There are no
compensatory plan(s) or arrangements(s), with respect to the NEOs resulting from the
resignation, retirement or any other termination of employment of the officer’s employment or
from a change of NEOs’ responsibilities following a change in control. The Issuer has no
change of control benefits. In case of termination of NEOs common law and statutory law
applies with respect to termination and change of control benefits.
There are no other arrangements from those disclosed above under which directors were
compensated by the Issuer during the most recently completed financial year for their services
in their capacity as directors or consultants.
16.
16.1
Indebtedness of Directors and Executive Officers
Aggregate Indebtedness
During the period ended May 31, 2014, $7,500 was transferred as an advance to the CFO
without board approval and will be fully repaid in the subsequent period.
17.
Risk Factors
An investment in the securities of the Issuer is subject to a number of risks, including those
described below, that could have a material adverse effect upon, among other things, the
operating results, earnings, business prospects and condition (financial or otherwise) of the
Issuer. A prospective purchaser of such securities should carefully consider the risk factors set
out below before making a decision to purchase securities of the Issuer. The risks described
herein are not the only risk factors facing the Issuer and should not be considered exhaustive.
Additional risks and uncertainties not currently known to the Issuer, or that the Issuer currently
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 41
considers immaterial, may also materially and adversely affect the business, operations and
condition (financial or otherwise) of the Issuer.
Foreign Exchange Fluctuation
Some of the operations of the portfolio companies may be denominated in currencies other than
the United States or Canadian dollar and therefore the assets of the portfolio companies will
also be subject to fluctuations in foreign currency exchange rates.
Suspension of Trading
Under certain trading conditions it may be difficult or impossible for the Issuer and/or portfolio
companies to liquidate a position. This may occur for example at times of rapid price
movements and when trading is suspended by a relevant stock exchange. In these
circumstances it may be impossible for the Issuer and/or portfolio companies to liquidate or limit
a loss by placing a stop-loss order.
Insolvency
Default or insolvency of a broker may result in positions being liquidated or closed out.
Volatile Markets
Price movements in the capital markets can be volatile and are influenced by, among other
things, national and international political and economic events, changes, in exchange and
interest rates, governmental fiscal policies.
Market Risks
The profitability of a significant portion of the Issuer’s growth strategy depends to a great extent
upon correctly assessing the future course of the price movements of the securities of portfolio
companies. The success or failure of the Issuer will depend upon the ability of the management
to trade profitably. There can be no assurance that the Issuer or any sub-contracted trading
advisors will be able to predict accurately these price movements. Past performance does not
guarantee future results.
Additional Capital
The further development and execution of the Issuer’s business plan may require substantial
additional financing. Failure to obtain sufficient financing may result in delaying or indefinite
postponement of any or all of the Issuer’s deals in place or even a loss of a deal or potential
portfolio company. There can be no assurance that additional capital or other types of financing
will be available if needed or that, if available, the terms of such financing will be favorable to the
Issuer. The Issuer has sufficient resources for its immediate business strategy. The directors of
the Issuer believe that the income forthcoming from its current deals in place during its first two
full operational years will be adequate to satisfy the capital and operating requirements of the
Issuer during the immediate future. Any decrease in the Issuer’s growth rate, shortfalls in
anticipated revenues, increases in anticipated expenses, or significant acquisition opportunities
could have a material adverse effect on the Issuer’s liquidity and capital resources and could
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 42
require the Issuer to raise additional capital from public or private equity or debt sources. There
can be no assurance that the Issuer will be able to raise any such capital on terms acceptable to
the Issuer or at all.
Unforeseen Costs
Should any unforeseen issues occur, the Issuer might not obtain adequate cash flow from its
operations as anticipated. The Issuer may be unable to raise any additional capital on desirable
or acceptable terms. If further financing cannot be sourced in adequate amounts, or secured on
satisfactory terms, then the Issuer may be unable to pursue new projects or to continue
operations at desired levels.
Fluctuations in Quarterly Operating Results
The Issuer may experience variations in its income on a quarterly basis because of many
factors, including seasonal factors affecting costs and delays in income. If revenues do not meet
expectations in any given quarter and the Issuer is unable to adjust spending in a timely
manner, operating results could be affected materially.
Shortage of Working Capital
It is possible that the Issuer will have a shortage of working capital if it is unable to derive
revenue from its clients and portfolio companies or from raising funds from outside sources.
Should this not be sufficient, the Issuer may be required to borrow money as may be necessary
for its business operations.
Market for the Common Shares
There is no existing market for the common shares and no assurances can be given that a
market will develop for the common shares or, if such markets develop that they will continue.
Accordingly, investors may be unable to realize their investment in the common shares.
Market Price of Common Shares
Securities of mid-cap and small-cap companies have experienced substantial volatility in the
past, often based on factors unrelated to the financial performance or prospects of the
companies involved. These factors include macroeconomic developments in North America and
globally and market perceptions of the attractiveness of particular industries. Other factors
unrelated to the Issuer’s performance that may have an effect on the price of the common
shares include the following: the extent of analytical coverage available to investors concerning
the Issuer’s business may be limited if investment banks with research capabilities do not
continue to follow the Issuer; lessening in trading volume and general market interest in the
Issuer’s securities may affect an investor’s ability to trade significant numbers of common
shares; the size of the Issuer’s public float may limit the ability of some institutions to invest in
the Issuer’s securities; and a substantial decline in the price of the common shares that persists
for a significant period of time could cause the Issuer’s securities to be delisted from the
exchange on which they trade, further reducing market liquidity.
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July 6, 2010
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As a result of any of these factors, the market price of the common shares at any given point in
time may not accurately reflect the Issuer’s long-term value. Securities class action litigation
often has been brought against companies following periods of volatility in the market price of
their securities. The Issuer may in the future be the target of similar litigation. Securities litigation
could result in substantial costs and damages and divert management’s attention and
resources.
Future Sales of Common Shares by Existing Shareholders
Sales of a large number of common shares in the public markets, or the potential for such sales,
could decrease the trading price of the common shares and could impair the Issuer’s ability to
raise capital through future sales of common shares.
Dependence on Key Personnel
The Issuer’s success depends upon the continued efforts of its senior management team and its
technical personnel. Such employees may voluntarily terminate their employment with the
Issuer at any time. The Issuer’s success also depends on its ability to attract and retain
additional highly qualified management and technical personnel. The process of hiring
employees with the combination of skills and attributes required to carry out the Issuer’s
strategy can be extremely time-consuming. There can be no assurance that the Issuer will be
able to retain or integrate existing personnel or identify and hire additional personnel. The loss
of the services of key personnel, or the inability to attract additional qualified personnel, could
materially affect the Issuer’s business, financial condition and results of operations.
Political Risks
The Issuer’s current operations are comprised of a multitude of deals, which will be based all
around the world, and as such, the Issuer’s operations are exposed to various levels of political,
economic and other risks and uncertainties. These risks and uncertainties vary from country to
country and include, but are not limited to, currency exchange rates; high rates of inflation; labor
unrest; renegotiation or nullification of existing concessions, licenses, permits and contracts;
changes in taxation policies; restrictions on foreign exchange; and changing political conditions;
currency controls and governmental regulations that favour or require the awarding of contracts
to local contractors or require foreign contractors to employ citizens of, or purchase supplies
from, a particular jurisdiction. Future political actions cannot be predicted and may adversely
affect the Issuer. Changes, if any, in investment policies or shifts in political attitude in the
countries of the Issuer’s clients and portfolio companies may adversely affect the Issuer’s
business, results of operations and financial condition.
Future operations may be affected in varying degrees by government regulations with respect
to, but not limited to, restrictions on production, price controls, export controls, currency
remittance, income taxes, foreign investment, maintenance of claims, environmental legislation,
land use, land claims of local people, water use and mine safety. The possibility that future
governments may adopt substantially different policies, which may extend to the expropriation of
assets, cannot be ruled out.
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July 6, 2010
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The occurrence of these various factors and uncertainties cannot be accurately predicted and
could have an adverse effect on the Issuer’s consolidated business, results of operations and
financial condition.
RISKS RELATED TO THE MARKETS IN WHICH THE ISSUER OPERATES
The Issuer intends to invest in frontier markets
The Issuer intends to invest in business in Myanmar, Mongolia, Mozambique and other frontier
markets (“Targeted Countries”) which are subject to a high level of control by governmental
authorities. The Investments will require consideration of certain risks typically not associated
with investing in the currencies or securities of more developed markets. Such risks include,
among other things, trade balances and imbalances and related economic policies, unfavorable
currency exchange rate fluctuations, governmental imposition of exchange control regulation,
withholding taxes, limitations on the removal of funds or other assets, governmental policies
with respect to possible nationalization of their industries, political difficulties, including
expropriation of assets, confiscatory taxation and social, economic or political instability in
foreign nations. These factors may adversely affect the Issuer’s investments in frontier markets
and result in asset impairments and losses.
Political factors in frontier markets may adversely affect the Issuer’s business
The possibility of political instability and uncertainty could have an adverse impact on the
economies of Targeted Countries and other frontier markets and investors may adopt a more
cautious approach towards these countries. Such factors could adversely affect the Issuer.
Frontier markets are subject to greater risks than more developed markets, and fluctuations in
the global economy, particularly emerging market countries, could disrupt the Issuer’s business,
as well as cause the value of investments to decline.
Economies of frontier countries are influenced by economic and market conditions in other
countries. Moreover, financial turmoil in any emerging market country tends to adversely affect
other emerging and frontier market countries as investors move their money to more stable,
developed markets. As has happened in the past, financial problems or an increase in the
perceived risks associated with investing in frontier economies could dampen foreign
investment in Targeted Countries and adversely affect their economies and the Issuer. A loss of
investor confidence in the financial systems of other emerging markets may cause volatility in
financial markets and economies of Targeted Countries. Any worldwide financial instability could
also have a negative impact on Targeted Countries and other frontier markets.
Selective or other government action may have an adverse effect on the Issuer’s
business and the value of investments in Targeted Countries
Governmental authorities have a degree of discretion in Targeted Countries and at times appear
to act arbitrarily. Government entities may also use common or minor defects in official or other
documentation to delay or invalidate the issue or registrations of rights or licences or to void
transactions. Competitors of the Issuer may receive preferential treatment from the government
and governmental authorities, potentially giving them a competitive advantage. Selective or
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July 6, 2010
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arbitrary government action, if directed at the Issuer’s operations, could have a material adverse
effect on the Issuer’s business, results of operations and prospects and on the value of
investments in Targeted Countries.
The Governments of Targeted Countries has traditionally exercised and continues to
exercise a dominant influence
The Governments in Targeted Countries have traditionally exercised and continues to exercise
a more dominant influence over many aspects of the economy than is the case in some other
countries. Their economic policies have had and could continue to have a significant effect on
market conditions and operational environment of the Issuer’s investee companies.
Corruption could materially prejudice the Issuer
The governments in frontier markets campaigns regularly against crime and corruption.
However, the effectiveness of such campaigns is uncertain. Corruption could potentially
adversely affect the Issuer and the value of the Investments. Examples of corrupt practices
could include false accusations of corruption or other alleged wrongdoing by the Issuer or its
officers, by newspapers, competitors or others in order to gain a competitive advantage or for
other reasons. Should the Issuer find itself the target of these activities, the Issuer may have to
cease or alter certain activities or embark on expensive litigation to enforce its legal rights and
protect its employees which could adversely affect the Issuer’s operations and financial
condition.
Lack of clarity of law and regulations
Much of the legislation and regulations applicable to the investee companies in which the Issuer
will invest is relatively new and untested by judicial process or otherwise. There can be no
certainty that interpretations or rulings of government bodies on which the Issuer or investee
companies have relied may not be challenged by government agencies or others in the future. If
any such challenges were successful, this could materially adversely affect the value of the
Issuer’s Investments.
Legal risks
The legal systems of Targeted Countries, which may be applicable in the context of the
ownership of, or operations or business of, certain Investments may not afford the Issuer the
same level of certainty in relation to issues such as title to property-related rights as may be
achieved in certain other markets
Targeted Countries may have less developed legal systems than more established economies
which could result in risks such as:
 inadequate investor protection;
 a degree of discretion on the part of governmental authorities;
 ignorance or breaches of regulations on the part of other market participants, and the
commitment of local business people, government officials and agencies and the judicial
system to abide by legal requirements and negotiated agreements being more uncertain
than in other markets;
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July 6, 2010
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 the risk of a lack of enforcement of existing regulations;
 effective legal redress in the courts, whether in respect of a breach of law or regulation, or
in an ownership dispute, being more difficult to obtain;
 a lack of judicial or administrative guidance on interpreting applicable rules and
regulations;
 inconsistencies, contradictions or conflicts between and within various laws, regulations,
decrees, orders and resolutions;
 the relative inexperience of the judiciary and courts in modern commercial matters.
There can be no assurance that a difficulty in and/or cost of protecting and enforcing rights will
not have a material adverse effect on the Issuer and its operations.
The Issuer may be subject to withholding taxes
The income and gains of the Issuer may be subject to withholding taxes imposed by foreign
governments for which Shareholders may not receive a full foreign tax credit.
The receipt and maintenance of government permits can be discretionary
Governmental approvals, licences and permits are, as a practical matter, subject to the
discretion of the government agencies in Targeted Countries. There can be no assurance that
the Issuer or any of its or their investee companies will be able to obtain or maintain any
required licences in any jurisdictions for the continued operation of its or their businesses.
GENERAL INVESTMENT RISKS
Inability to find suitable investments
The Issuer’s ability to grow and create value for Shareholders will depend on the availability of
suitable investment opportunities at an acceptable cost, the Issuer’s ability to compete
effectively for these opportunities and the availability of capital to complete such investments.
The success of the Issuer’s investment activities will also depend on the Issuer’s ability to
identify such investment opportunities. No assurance can be given that the Issuer will be able
to locate suitable investment opportunities in which to invest.
Inability to meet investment objectives
There can be no guarantee that the investment objectives of the Issuer will be met. The
Issuer’s ability to achieve its investment objectives may be adversely affected in the event of
any significant government policies and macroeconomic fundamentals in Targeted Countries.
Acquisition of Investments
The acquisition of interests in companies is a key part of the investment strategy of the Issuer.
Investing in companies involves a number of inherent risks. While the Issuer will endeavour to
conduct appropriate due diligence investigations prior to any Investment, assessing the values,
strengths and weakness of companies can be complex and is not certain. Prospective investors
should regard an investment in the Issuer as long-term in nature. As with any investment,
Investments may fall in value and it is possible that the total loss in value of such Investments
FORM 2A – LISTING STATEMENT
July 6, 2010
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(being the value of the initial Investments and, where relevant, any gains or subsequent
Investments made may be lost). Underperformance or failure of one or more of the Investments
may have an adverse effect on the value of the Issuer.
The Issuer will operate in a competitive environment for investment opportunities
The Issuer’s ability to implement its strategy and achieve its desired returns will depend largely
on its ability to identify and invest in suitable companies at satisfactory prices and on
satisfactory terms. The Issuer expects that other entities will compete with it to make the types
of Investments that it plans to make. The Issuer may face significant competition from domestic
and foreign investors, investment funds, and strategic investors.
Many of these competitors may be substantially larger and have greater financial, technical,
transaction execution and marketing capabilities than will be available to the Issuer. Some
competitors may have a lower cost of capital and access to funding sources that are not
available to the Issuer, which may give rise to competitive disadvantages for the Issuer with
respect to investment opportunities. Competitors may also have existing portfolio companies or
other enterprises which, when combined with a potential investment, may give rise to synergistic
benefits for that competitor, enabling it to pay a price higher than the Issuer would be prepared
to pay. A failure by the Issuer to compete effectively with other entities operating in this
environment may result in the loss of opportunities, which could have a material adverse effect
on the Issuer’s ability to secure attractive investment opportunities.
No assurance can be given that the values of investments that the Issuer reports from
time to time will in fact be realized
The Issuer intends that a proportion of the Investments made will be in the form of investments
in private and pre-IPO companies, for which market quotations are not readily available. The
Directors will be required to make good faith determinations as to the fair value of these
investments on a regular basis in connection with the preparation of the Issuer's financial
statements. There is no single standard for determining fair value in good faith and, in many
cases, fair value is best expressed as a range of fair values from which a single estimate may
be derived. The types of factors that can be considered when applying fair value pricing to an
investment in a particular Issuer may include the historical and projected financial data for the
Issuer, valuations given to comparable companies, the size and scope of the Issuer's
operations, the strengths and weaknesses of the Issuer, expectations relating to investors'
receptiveness to an offering of the Issuer's securities, applicable restrictions on transfer, industry
information and assumptions, general economic and market conditions, the nature and
realisable value of any collateral or credit support and other relevant factors. Fair values may
also be established using a market multiple approach that is based on a specific financial
measure (such as EBITDA, adjusted EBITDA, cash flow, net income, revenues or net asset
value) or, in some cases, a cost basis or a discounted cash flow or liquidation analysis. As
valuations, in particular valuations of investments for which market quotations are not readily
available, are inherently uncertain and may fluctuate over short periods of time and may be
based on estimates, determinations of fair value may differ materially from the values that would
have resulted if a ready market had existed. Where market quotations are available for the
Issuer's Investments, such quotations may not reflect the value that the Issuer would actually be
able to realize because of various factors, including the possible illiquidity associated with the
relevant ownership position, subsequent illiquidity in the market for a Issuer's securities, future
FORM 2A – LISTING STATEMENT
July 6, 2010
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market price volatility or the potential for a future loss in market value based on poor industry
conditions or the market's view of overall Issuer and management performance.
Investments may be illiquid
Some of the Issuer’s Investments may be subject to legal and other restrictions on resale,
transfer, pledge or other disposition or will otherwise be less liquid than publicly traded
securities. The illiquidity of these Investments may make it difficult to sell Investments if the
need arises or such sale would be in the Issuer's best interests. In addition, if the Issuer were to
be required to liquidate all or a portion of an Investment quickly, it may realise significantly less
than the value at which the Investment was previously recorded.
Making and exiting investments requires an analysis of future values and, in certain
cases, exiting investments will depend upon the success of the implementation of
corporate and management strategies
The Issuer’s ability to generate attractive returns for Shareholders will depend upon the Issuer’s
ability to make a correct assessment as to future values that can be realized in connection with
Investments. The ability to assess future values correctly, whether in connection with the
making of an Investment or the exiting from an Investment, may be particularly important in the
case of Investments over which the Issuer has little or no control on its own.
In addition, certain of the assets which may constitute Investments (such as shares in unquoted
companies) are likely to be difficult to value as there is no liquid market or pricing mechanism.
As a result, valuations are subject to substantial uncertainty. There is no assurance that the
estimates resulting from the valuation process will reflect the actual sales price even where such
sales occur shortly after the date of the valuation. Further, the Issuer may experience difficulties
realizing such Investments owing to the lack of a traded market.
The ability of the Issuer to exit certain private Issuer investments on favorable terms will be
dependent among other things upon the successful implementation of the strategic plans for
such investee companies and ability to attract strategic buyers for these businesses.
Investments in private companies and some quoted companies are subject to a number
of risks
Both private and quoted companies may (a) be highly leveraged and subject to significant debt
service obligations, stringent operating and financial covenants and risks of default under
financing and contractual arrangements which may adversely affect their financial condition; (b)
have limited operating histories and smaller market shares than larger businesses making them
more vulnerable to changes in market conditions or the activities of competitors; (c) have limited
financial resources; (d) be more dependent on a limited number of management and operational
personnel, increasing the impact of the loss of any one or more individuals; (e) have limited
public information available; (f) have less predictable operating results; and (g) require
additional capital. All of these factors may have a material adverse effect on the Issuer’s
Investments.
Market values of publicly traded securities that are held as investments may be volatile
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July 6, 2010
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The Issuer’s Investments are expected to include investments in companies the securities of
which are publicly traded or are offered to the public in connection with the process of exiting an
Investment. The Issuer expects to be exposed to a number of market risks due to the types of
Investments that it will make. The Issuer believes that its exposure to market risks will affect all
or some of its Investments and will relate to, amongst others, changes in the values of publicly
traded securities that are held for investment, movements in prevailing interest rates, changes in
foreign currency exchange rates and changes in commodities prices. The Issuer may seek to
mitigate such market risks through the use of hedging arrangements and derivative instruments,
which could subject it to additional market risks.
In particular, the market prices and values of publicly traded securities of companies in which
the Issuer has invested may be volatile and are likely to fluctuate due to a number of factors
beyond the Issuer’s control, including actual and anticipated fluctuations in the quarterly and
annual results of the companies in which investments are made and other companies in the
industries in which they operate, market perceptions concerning the availability of additional
securities for sale, general economic, social or political developments, changes in industry
conditions, shortfalls in operating results from levels forecast by securities analysts, the general
state of the securities markets and other material events, such as significant management
changes, re-financings, acquisitions and disposals.
Interest rate risks
The Issuer may incur indebtedness to fund its liquidity needs and expects to make investments
that are sensitive to changes in interest rates. As a result, the Issuer may be exposed to risks
associated with movements in prevailing interest rates. An increase in interest rates could
make it more difficult or expensive for the Issuer to obtain debt financing, could negatively
impact the values of fixed income investments and could decrease the returns that its
investments generate.
The Issuer may also be subject to additional risks associated with changes in prevailing interest
rates due to the fact that its capital will be invested in portfolio companies that have a significant
degree of indebtedness. Investments in highly leveraged companies are inherently more
sensitive to decline in revenues, increases in expenses and interest rates and adverse
economic, market and industry developments. A leveraged Issuer’s income and net assets also
tend to increase or decrease at a greater rate than would be the case if money had not been
borrowed. As a result, the risk of loss associated with an investment in a leveraged Issuer is
generally greater than for companies with comparatively less debt.
The Issuer's Investments may rank junior to investments made by others
The Issuer may make Investments in companies that have indebtedness or equity securities, or
which are permitted to incur indebtedness or to issue equity securities, that rank senior to the
Issuer's investment. By their terms, such instruments may provide that their holders are entitled
to receive payments of dividends, interest or principal on or before the dates on which payments
are to be made in respect of the Issuer's investment. Also, in the event of insolvency,
liquidation, dissolution, reorganization or bankruptcy of a Issuer in which investment is made,
holders of securities ranking senior to the Issuer's investment in that Issuer would typically be
entitled to receive payment in full before distributions could be made in respect of the Issuer's
investment. After repaying senior security holders, the Issuer in which the investment was made
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 50
may not have sufficient or any remaining assets to use for repaying amounts owed in respect of
the Issuer's investment. To the extent that any assets remain, holders of claims that rank
equally with the Issuer's investment would be entitled to share on an equal and rateable basis in
distributions that are made out of those assets.
The Issuer may engage in hedging transactions and investment structures which will
expose it to counterparty risk
Certain of the Issuer’s transactions may involve hedging transactions undertaken through third
parties such as local banks or brokers. Investment transactions may need to be structured in
ways that the Issuer will take a beneficial interest only, with legal title remaining with a third
party. In such circumstances, the Issuer would be subject to the risk of default, insolvency or
fraud of such third parties. There can be no assurance that any monies advanced to such
entities would be repaid or that the Issuer would have any recourse in the event of default.
Where the investments undertaken by the Issuer are denominated in another currency than US
dollars, the Issuer may hedge the currency risk. The use of hedging transactions to reduce
exposure to currency fluctuations may not be effective in eliminating all of the risks inherent in
any particular position, and there can be no guarantee that suitable instruments for hedging will
be available.
The Issuer may also in certain cases enter into derivative transactions to hedge the risk of
interest rate fluctuations. Such interest rate hedging agreements could also adversely affect the
Issuer's ability to pay dividends as well as expose it to counterparty risk.
The due diligence process which the Issuer intends to undertake may not reveal all
material facts or circumstances
The Issuer intends to ensure that such legal, financial and commercial due diligence as it
consider to be reasonable and appropriate (based on the facts and circumstances relating to the
relevant Investment) is conducted prior to making an Investment, particularly in relation to
unquoted Investments. In undertaking due diligence, the Issuer and the Investment Manager
will need to utilise their own resources and may be required to rely upon third parties to conduct
certain aspects of the due diligence process. In circumstances where the Issuer is not the lead
co-investor, it may need to rely upon the due diligence carried out by the lead investor. Any due
diligence process involves subjective analysis and there can be no assurance that due diligence
will reveal all material issues related to a potential Investment which might be necessary or
helpful in evaluating a potential Investment.
Unsuccessful transactions may result in the Issuer incurring substantial costs
There is a risk that the Issuer may incur substantial legal, financial and advisory expenses
arising from unsuccessful transactions which may include, among other things, public offer and
transaction documentation, legal, accounting and environmental due diligence.
The Issuer will be subject to exchange rate fluctuations
Whilst the Issuer’s functional currency will be US dollars, the Issuer’s assets may be invested in
securities denominated in other currencies and any income or capital received by the Issuer
FORM 2A – LISTING STATEMENT
July 6, 2010
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may be denominated in the local currency of the Investment or otherwise in a currency other
than US dollars. Accordingly, changes in currency exchange rates (to the extent unhedged)
may affect the value of the Issuer’s Investments and the unrealised appreciation or depreciation
of Investments. Furthermore, the Issuer may incur costs in connection with conversions
between various currencies.
GENERAL RISKS
Investment risks
An investment in Shares of the Issuer is only suitable for financially sophisticated investors who
are capable of evaluating the merits and risks of such an investment, or other investors who
have been professionally advised with regard to the investment, and who have sufficient
resources to be able to bear any losses that may arise therefrom (which may be equal to the
whole amount invested). Such an investment should be seen as complementary to existing
investments in a wide spread of other financial assets and should not form a major part of an
investment portfolio. Investors should not consider investing in the Shares unless they already
have a diversified investment portfolio.
Prospective investors should be aware that the value of an investment in the Issuer may go
down as well as up and investors may therefore not recover their original investment. In
addition, the price at which investors may dispose of their Shares may be influenced by a
number of factors, some of which may pertain to the Issuer, and others of which are extraneous.
These factors could include the performance of the Issuer’s investments, large purchases or
sales of Shares, liquidity (or absence of liquidity) in the Shares, currency fluctuations, legislative
or regulatory or taxation changes, general economic and political conditions and interest and
inflation rate variations. The value of the Shares may therefore fluctuate and not reflect their
underlying asset value.
Liquidity and possible price volatility of the Shares
Stock markets have from time to time experienced severe price and volume fluctuations, a
recurrence of which could adversely affect the market price of Shares, regardless of the
performance of the Issuer.
Dividends
There can be no assurance as to the future payment of dividends, if any. The declaration,
payment and amount of any future dividends of the Issuer is subject to the discretion of the
Directors, and will depend upon, among others, the Issuer’s earnings, financial position, cash
requirements and availability of profits, as well as the provisions of relevant laws or generally
accepted accounting principles.
Difficulties and implications of raising additional capital
Whilst the Directors are satisfied that the working capital available to the Issuer will be sufficient
for its present requirements, it is possible that the Issuer will wish or need to raise extra capital
in the future. If additional funds are raised through the issuance of new equity in the Issuer,
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 52
other than on a pro-rata basis to existing Shareholders, the percentage ownership of the
Shareholders may be reduced, Shareholders may experience subsequent dilution and/or such
securities may have preferred rights, options and pre-emption rights senior to the Shares. There
can be no guarantee that any future capital raisings will be successful.
18.
Promoters
The Issuer has no promoters.
19.
Legal Proceedings
The Issuer is not a party to or subject to any outstanding judgements, lawsuits or proceedings
and to the knowledge of the Issuer there are no pending lawsuits or proceedings.
20.
Interest of Management and Others in Material Transactions
Management and others have no interest in material transactions of the Issuer.
21.
Auditors, Transfer Agents and Registrars
The auditors of the Issuer are:
Manning Elliott LLP, Chartered Accountants,
11th Floor, 1050 West Pender Street
Vancouver, BC
V6E 3S7, Canada
The transfer agent of the Issuer is
Computershare Trust Company of Canada
3rd Floor, 510 Burrard Street
Vancouver, BC, V6C 3B9
22.
Material Contracts
The following are the contracts, which are material to the Issuer:
1.
2.
Stock option plan; and
Listing agreement with the CSE.
Copies of any material contracts of the Issuer may be inspected at the registered office of the
Issuer at 500, 900 West Hastings Street, Vancouver, British Columbia, during normal business
hours.
23.
Interest of Experts
To the knowledge of the Issuer, there are no direct or indirect interests in the property of the
Issuer or of a related person of the Issuer received or to be received by a person or company
whose profession or business gives authority to a statement made by the person or company
FORM 2A – LISTING STATEMENT
July 6, 2010
Page 53
and who is named as having prepared or certified a part of the Listing Statement or prepared or
certified a report or valuation described or included in the Listing Statement.
24.
Other Material Facts
To the knowledge of the Issuer, there is no other material fact about the Issuer and its securities
that are not disclosed under the preceding items and are necessary in order for the Listing
Statement to contain full, true and plain disclosure of all material facts relating to the Issuer and
its securities.
25.
Financial Statements
Enclosed is are copies of the annual audited financial statements of the Issuer, Silk Road
Ventures Ltd. (formerly OLE Remediation Ltd.) for the period from incorporation until February
28, 2014 and the unaudited financial statements for the three months ended May 31, 2014.
The first certificate below must be signed by the CEO, CFO, any person or company who is a
promoter of the Issuer and two directors of the Issuer. In the case of an Issuer re-qualifying
following a fundamental change, the second certificate must also be signed by the CEO, CFO,
any person or company who is a promoter of the target and two directors of the target.
THIS SPACE INTENTIONALLY LEFT BLANK
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CERTIFICATE OF THE ISSUER
Pursuant to a resolution duly passed by its Board of Directors, Silk Road Ventures Ltd.., hereby
applies for the listing of the above mentioned securities on the CSE. The foregoing contains
full, true and plain disclosure of all material information relating to Silk Road Ventures Ltd. It
contains no untrue statement of a material fact and does not omit to state a material fact that is
required to be stated or that is necessary to prevent a statement that is made from being false
or misleading in light of the circumstances in which it was made.
Dated at
Vancouver, BC
this 6 day of October
,
2014
.
“Alisher Ali”
“Donald Gordon”
Alisher Ali
Donald Gordon
Director, Chief Executive Officer
Director, Chief Financial Officer
“Sylvia Saw McKaige”
Sylvia Saw McKaige
Director
FORM 2A – LISTING STATEMENT
July 6, 2010
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Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Unaudited Condensed Interim Financial Statements For The Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars) Page Management Responsibility for Unaudited Interim Statements 2 Unaudited Condensed Interim Statements of Financial Position 3 Unaudited Condensed Interim Statements of Comprehensive Loss 4 Unaudited Condensed Interim Statements of Changes in Equity 5 Unaudited Condensed Interim Statements of Cash Flows 6 Notes to the Unaudited Condensed Interim Financial Statements 7 -­‐ 21 SILK ROAD VENTURES LTD.
NOTICE OF NO AUDITOR REVIEW OF CONDENSED FINANCIAL STATEMENTS Under National Instrument 51-­‐102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed financial statements; the statements must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of financial statements by an entity’s auditor. Management has prepared the information and representations in this interim report. The condensed financial statements have been prepared in accordance with International Financial Reporting Standards and, where appropriate, reflect management’s best estimates and judgment. The financial information presented throughout this report is consistent with the data presented in the condensed financial statements. The company maintains adequate systems of internal accounting and administrative controls, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information is produced. “Don Gordon”
Director and Chief Financial Officer
July 30, 2014 Page | 2 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Unaudited Condensed Interim Statements of Financial Position (Expressed in Canadian dollars)
May 31, 2014 February 28, 2014
(Audited)
$ $ ASSETS
Current Assets
Cash (Note 10)
1,221,531
214,347
Prepaid Expenses
10,000
-­‐
Due from Related Parties (Note 10)
7,500
-­‐
Marketable Securities (Note 5 & 10)
4,423,439
2,306,846
TOTAL ASSETS
5,662,470
2,521,193
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
10,479
10,255
Accounts Payable and Accrued Liabilities
Due to Related Parties (Note 10)
328
328
-­‐
10,806
10,583
Shareholder's Equity (Deficiency)
Capital Stock (Note 6)
222,500
222,500
Shares Subscribed (Note 6 & 13)
5,000,000
2,300,000
Deficit
429,165
(11,890)
5,651,665
2,510,610
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY
5,662,470
2,521,193
Nature and Continuance of Operations (Note 1) Subsequent Events (Note 13) Approved and authorized for issue by the Board of Directors on July 30, 2014 “Don Gordon” “Alisher Ali” Don Gordon, Director Alisher Ali, Director The accompanying notes are an integral part of these unaudited condensed interim Financial Statements Page | 3 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Unaudited Condensed Interim Statement of Comprehensive Income (Loss) (Expressed in Canadian dollars) For the Three Months Ended May 31, 2014
For the Three Months Ended May 31, 2013
$ $
2,506
13,425
7,850
4,705
4,650
171
(33,306)
365
3,750
2,275
996
-­‐
-­‐
(7,386)
1,262
473,098
474,361
-­‐
-­‐
Net Income (Loss) and Comprehensive Income (Loss) for the Period
441,055
(7,386)
Basic and Diluted Income (Loss) Per Common Share
(0.037)
0.001
Weighted Average Number of Common Shares Outstanding 11,929,026
6,038,667
Expenses
Administration and Other Expenses
Management Fees (Note 10)
Professional Fees Regulatory and Transfer Agency Fees
Rent (Note 10)
Provision for Taxes Receivable (Note 4)
Other Item
Interest Income
Unrealized Gain on Marketable Securities
The accompanying notes are an integral part of these unaudited condensed interim Financial Statements Page | 4 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Unaudited Condensed Interim Statement of Changes in Equity (Expressed in Canadian dollars) Number of Outstanding Shares Capital Shares Stock Subscribed
$ $ Deficit
$ Total
$ Shares i ssued for cash on i ncorporation
Shares i ssued for plan of arrangement October 22, 2013
Cancellation of i ncorporation shares
Net l oss for the year
1 1 -­‐ -­‐
1
Balance, February 28, 2013
929,026 2,500 -­‐ (26,165) (23,665)
Net l oss for the period
-­‐ -­‐ -­‐ (7,386) (7,386)
Balance, May 31, 2013
929,026 2,500 -­‐ (32,319) (29,819)
Shares i ssued for cash
Shares i ssued to settle balance due to related party (Note 6 & 10)
Shares subscribed
Net i ncome for the year
10,000,000 200,000 -­‐ -­‐ 200,000
Balance, February 28, 2014
11,929,026 225,000 2,300,000 (11,890) 2,510,610
Shares subscribed
Net i ncome for the period
-­‐ -­‐ 2,700,000 -­‐ 2,700,000
-­‐ -­‐ -­‐ 441,055 441,055
Balance, May 31, 2014
11,929,026 225,000 5,000,000 429,165 5,651,665
929,026 2,500 -­‐ -­‐ 2,500
(1) (1) -­‐ -­‐ (1)
-­‐ -­‐ -­‐ (26,165) (26,165)
1,000,000 20,000 -­‐ -­‐ 20,000
-­‐ -­‐ 2,300,000 -­‐ 2,300,000
-­‐ -­‐ -­‐ 14,275 14,275
The accompanying notes are an integral part of these unaudited condensed interim Financial Statements Page | 5 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Unaudited Condensed Interim Statements of Cash Flows (Expressed in Canadian dollars) For the Three Months Ended May 31, 2014
For the Three Months Ended May 31, 2013
$
$
Cash provided by (used in): Operating activities
441,055
(7,386)
171
(473,098)
(31,872)
-­‐
(7,386)
Changes i n non-­‐cash working capital i tems: Tax recoverable
Prepaid e xpenses
Accounts payable and accrued l iabilities
Due from/to related parties
Net cash used in operating activities
(171)
(10,000)
224
(7,500)
(49,320)
-­‐
-­‐
495
2,925
(3,966)
Investing activity
Purchase of marketable securities
Net cash used in investing activity
(1,643,495)
(1,643,495)
(718)
(718)
Net cash provided by financing activity
2,700,000
2,700,000
-­‐
-­‐
Increase (decrease) in cash 1,007,185
(4,684)
Cash, beginning of the period
214,347
6,757
Cash, end of the period
1,221,531
2,073
Net i ncome (loss)
Item not i nvolving cash
Provision for taxes receivable
Gain on sale of marketable securities
Financing activity
Shares subscribed
The accompanying notes are an integral part of these unaudited condensed interim Financial Statements Page | 6 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
1. NATURE AND CONTINUANCE OF OPERATIONS Silk Road Ventures Ltd. (formerly Ole Remediation Ltd.) (the “Company”) was incorporated on May 15, 2012 in British Columbia. Pursuant to a Plan of Arrangement (the “Arrangement Agreement”) between the Company and 0922519 B.C. Ltd. (“BC0922519”) dated May 22, 2012. BC0922519 assigned the License Agreement (see also Note 7) and $2,500 to the Company. As consideration for the assets, the Company issued 6,038,667 common shares (pre-­‐consolidation) to the shareholders of BC0922519 on October 1, 2012. The name of the company was changed to Silk Road Ventures Ltd. effective August 22nd, 2013. The Company is reviewing investment opportunities for financial services business in frontier markets. The address of the Company’s corporate office and principal place of business is 500-­‐900 Hastings Street West, Vancouver, British Columbia. These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. The Company’s continuing operations, as intended, and its financial success are dependent upon the extent to which it can continue to raise the capital to implement its investment plan (see also Note 13). These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company liquidate. Page | 7 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
2. BASIS OF PRESENTATION These financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), and as such do not include all of the information required for full annual financial statements. These financial statements are presented in Canadian dollars, which is the Company’s functional and reporting currency. These financial statements are prepared on a historical cost basis except for financial instruments classified as fair value through profit or loss (“FVTPL”), which are stated at their fair value. 3. SIGNIFICANT ACCOUNTING POLICIES a) Significant accounting judgments and estimates
The preparation of these financial statements requires management to make judgements and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgements and estimates. The financial statements include judgements and estimates which, by their nature, are uncertain. The impacts of such judgements and estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods. Significant assumptions about the future and other sources of judgements and estimates that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: Going concern The evaluation of the Company’s ability to continue as a going concern is subject to judgement. Marketable securities The determination of the categories of the Company’s marketable securities within financial assets is subject to judgement. The estimation of the fair value of the Company’s marketable securities is subject to estimation. Page | 8 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued) b) Cash and cash equivalents Cash and cash equivalents are comprised of cash in banks, and all short-­‐term investments that are highly liquid in nature, cashable, and have an original maturity date of three months or less. As at May 31, 2014, there is $1,221,531 included as cash and cash equivalents. c) Marketable securities Investments in shares of publically listed companies, investments in trust units and bonds traded on an active market are designated as fair value through profit and loss. These securities are recorded at fair value based upon the closing bid prices at the statement of financial position date with fair value changes recorded in income. Purchases and sales of these securities are recorded on the settlement date. Transaction costs are expensed in the period incurred. The Company does not have any investments in subsidiaries, other controlled entities, associates under significant influence or joint ventures. d) Share-­‐based payments Pursuant to the Company’s option plan (“Option Plan”), the Company may grant stock options to directors, officers and employees for the purchase of the capital stock of the Company. Included in the Option Plan are provisions that provide that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares of the Company. At the discretion of the Board of Directors of the Company, options granted under the Option Plan can have a maximum exercise term of 5 years from the date of grant. Vesting terms will be determined at the time of grant by the Board of Directors. The fair value of the options is measured at grant date, using the Black-­‐Scholes option pricing model, and is recognized over the period that the employees earn the options. The fair value is recognized as an expense with a corresponding increase in equity. The amount recognized as expense is adjusted to reflect the number of share options expected to vest. e) Deferred income taxes Deferred income tax assets and liabilities are recognized for deferred income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs. To the extent that the Company does not consider it more likely than not that a deferred income tax asset will be recovered, the deferred income tax assets is reduced. Page | 9 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued) e) Deferred income taxes (continued) Deferred income tax assets and liabilities are offset only if a legally enforceable right exists to offset current tax assets against liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. f) Provisions Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-­‐tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. g) Earnings (loss) per share Basic earnings (loss) per share is computed by dividing the net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted average share outstanding are increased to include additional shares for the assumed exercise of stock options and warrants if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and tat the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods. A special resolution was passed on June 27th, 2013 to consolidate the capital stock on the basis of six and one half (6 ½) old common shares into one (1) new common share. All share and per share information included in the financial statements and accompanying notes have been adjusted to reflect this share split for all periods presented. h) Foreign Currency transactions Transactions in foreign currencies are converted to the Company’s functional currency at exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities of the Company which are denominated in foreign currencies are translated to the Company’s functional currency at the exchange rate prevailing at the year-­‐end. Non-­‐monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date. Revenues and expenses are translated at exchange rates prevailing on the date of transactions. All exchange gains and losses are included in determination of earnings. Page | 10 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued) i) Financial instruments All financial instruments are recorded initially at fair value. In subsequent periods, all financial instruments are measured based on the classification adopted for the financial instruments: held to maturity, loans and receivables, fair value through profit or loss (“FVTPL”), available-­‐for-­‐
sale, FVTPL liabilities or other liabilities. FVTPL assets and liabilities are subsequently measured at fair value with the change in the fair value recognized in net income (loss) during the period. Held to maturity assets, loans and receivable, and other liabilities are subsequently measured at amortized cost using the effective interest rate method. Available for sale assets are subsequently measured at fair value with the change in fair value recorded in other comprehensive income (loss), except for equity instruments without a quoted market price in active markets and whose fair value cannot be reliably measured, which are measured at cost. The Company has classified its financial instruments as follows: Financial Instrument Cash Marketable securities Accounts payable Due to related parties Classification FVTPL FVTPL Other liabilities Other liabilities The Company’s financial instruments measured at fair value on the statement of financial position consist of cash and marketable securities which are measured at level 1 of the fair hierarchy. The three levels of the fair value hierarchy are as follows: Level 1: Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2: Values based on quoted prices in markets that are not active or models inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3: Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Page | 11 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued) j) Impairment i) Non-­‐financial assets The carrying amounts of the Company’s non-­‐financial assets, other than deferred income tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets’ recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of assets (the “cash-­‐generating unit”). An impairment loss is recognized if the carrying amount of a cash-­‐generating unit exceeds its estimated recoverable amount. The recoverable amount of an asset or a cash-­‐generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cost flows are discounted to their present value using a pre-­‐tax discount rate that reflects current market assessment of the time value of money and the risks specific to the assets. Impairment losses are recognized in net income (loss). Impairment losses recognized in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss has been recognized. ii) Financial assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in net income (loss) and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through net income (loss). Page | 12 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued) k) Comprehensive income (loss) Comprehensive income (loss) is the change in the Company’s net assets that results from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that are not included in net profit. Other comprehensive income consists of changes to unrealized gain and losses on available for sale financial assets, changes to unrealized gains and losses on the effective portion of cash flow hedges and changes to foreign currency translation adjustments of self-­‐sustaining foreign operations during the period. Comprehensive income measures net earnings for the period plus other comprehensive income. Amounts reported as other comprehensive income are accumulated in a separate component of shareholders’ equity as Accumulated Other Comprehensive Income. The Company has not had other comprehensive income since inception and accordingly, a statement of comprehensive income has not been presented. l) Segment reporting A reportable segment, as defined by 'IFRS 8 Operating Segments', is a distinguishable business or geographical component of the Company, which are subject to risks and rewards that are different from those of other segments. The Company considers its primary reporting format to be business segments. The Company considers that it has only one reportable segment. m) Revenue recognition Distributions received from investment trust units are recorded as interest, dividend and other investment income, or returned capital. Interest and other investment income are accounted for as earned and dividend income is recognized on the ex-­‐dividend date. Page | 13 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued) n) Newly adopted accounting standards The mandatory adoption of the following new and revised accounting standards and interpretations on March 1, 2013 had no significant impact on the Company’s financial statements for the current period or prior period presented. The following standards were adopted for the period ended May 31, 2014 and the year ended February 28, 2014 • IFRS 10 – Consolidated Financial Statements • IFRS 11 – Joint Arrangements • IFRS 12 – Disclosure of Interest in Other Entities • IFRS 13 – Fair Value Measurement • IAS 27 – Separate Financial Statements • IAS 28 – Investments in Associates and Joint Ventures • IAS 1 – Presentation of Financial Statements o) Future changes in accounting policies A number of new standards, and amendments to standards and interpretations, are not yet effective for the period ended May 31, 2014, and have not been applied in preparing these financial statements. The following standards and interpretations have been issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committees effective for annual periods beginning on or after March 1, 2014: IAS 32 – Financial Instruments: Presentation In December 2011, the IASB issued an amendment to clarify the meaning of the offsetting criterion and the principle behind net settlement, including identifying when some gross settlement systems may be considered equivalent to net settlement. Earlier application is permitted when applied with corresponding amendments to IFRS 7. IAS 36 – Impairment of Assets In May 2013, the IASB issued an amendment to address the disclosure of information about the recoverable amount of impaired assets or a cash-­‐generating until (“CGU”) for periods in which an impairment loss has been recognized or reversed. The amendments also address disclosure requirements applicable when and asset’s or a CGU’s recoverable amount is based on fair value less costs of disposal. Page | 14 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued) o) Future changes in accounting policies (continued) IFRIC 21 – Levies IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 27 – Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain. The following standard will be effective for annual periods beginning on or after March 1, 2016: IAS 16 – Property, Plant and Equipment and IAS 38 – Intangible Assets In May 2014, the IASB issued amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. The amendments clarify that the use of revenue-­‐based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The amendments also clarifies that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The following standard will be effective for annual periods beginning on or after March 1, 2017: IFRS 15 – Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and specifies how and when an entity will recognise revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five-­‐step model to be applied to all contracts with customers. The IASB has tentatively decided that the following standard will be effective for annual periods on or after March 1, 2018: IFRS 9 – Financial Instruments IFRS 9 includes requirements for recognition and measurement, derecognition and hedge accounting. IFRS 9 was originally issued on November 2009, reissued in October 2010, and then amended in November 2013. The IASB is adding to the standard as it completes the various phases of its comprehensive project on financial instruments, and so it will eventually form a complete replacement for IAS 39 Financial Instruments: Recognition and Measurement. The extent of the impact of adoption of these standards and interpretations on the financial statements of the Company has not been determined. Page | 15 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
4. TAXES RECOVERABLE The Company recorded a provision for certain taxes recoverable that were determined as not likely to be collected. May 31, 2014
February 28, 2014
$ $ Taxes recoverable
171
4,863
(171) (4,863)
Allowance
Total
-­‐
-­‐
5. MARKETABLE SECURITIES Accumulated Cost
Unrealized Gain
Market Value
$ $ $ May 31, 2014
Marketable securities
3,841,017
582,423
4,423,439
February 28, 2014
Marketable securities
2,197,520
109,326
2,306,846
6. CAPITAL STOCK a. Authorized: Unlimited Common shares without par value b. Issued and Outstanding: On May 15, 2012, and October 1, 2012, the Company issued and redeemed 1 common share at $1 respectively. On October 1, 2012, the Company issued 6,038,667 (pre-­‐consolidation) common shares to BC0922519. A special resolution was passed on June 27th, 2013 to consolidate the capital stock on the basis of six and one half (6 ½) old common shares into one (1) new common share. All share and per share information included in the financial statements and accompanying notes have been adjusted to reflect this share split for all periods presented. Page | 16 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
6. CAPITAL STOCK (continued) b. Issued and Outstanding: (continued) On October 24, 2013, the Company issued an aggregate of 11,000,000 common shares at a price of $0.02 per share for gross proceeds of $220,000 of which $20,000 was composed of amounts previously advanced to the Company by a related party. On December 27, 2013, the Company received subscription proceeds of $2,300,000 toward private placements of 50,000,000 common shares at $0.10 per share that were completed subsequent to year end (Note 13). Stock Options: The Company has adopted an incentive stock option plan (the "Option Plan") which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the applicable stock exchange’s requirements, grant to directors, officers, employees and consultants to the Company, non-­‐transferable options to purchase common shares. Pursuant to the Option Plan, the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares of the Company. Options granted under the Option Plan can have a maximum exercise term of 5 years from the date of grant. Vesting terms will be determined at the time of grant by the Board of Directors. As at and during the period ended May 31, 2014, no options were granted or outstanding. 7. AGENCY AND LICENSE AGREEMENT Pursuant to a Licensing Agreement dated April 19, 2012 with Ole Global Clean Ltd. of Nevada, USA (“OGC”), BC0922519 or its assignee had agreed to market OCG’s proprietary soil remediation technology and services in Canada for use on brownfield properties to clean up the soil and develop the properties into commercially viable real estate. The Licensing Agreement was assigned to the Company by BC0922519 on May 22, 2012 as described in Note 1. The value of the assigned agreement is not determinable and accordingly no asset is recorded in respect of the assignment and no adjustment is made for the termination. The Licensing Agreement was terminated during the year ended February 28, 2014 and the Company has no further obligations under the Licensing Agreement. Page | 17 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
8. CAPITAL DISCLOSURES The Company’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders. The Company considers the items included in shareholders’ equity and cash as capital. The Company manages the capital structure and makes adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets. The Company’s primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to pursue these plans, the Company intends to raise additional funds through equity or debt financing. The Company is not subject to any capital requirements imposed by a regulator. 9. FINANCIAL INSTRUMENTS The Company’s financial instruments consist of cash, marketable securities, accounts payable and due from (to) related parties; the fair values of which are considered to approximate their carrying amounts due to their short-­‐term maturities or the Company’s ability to liquidate the instruments in an active market at quoted prices in the case of the marketable securities. The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below: Market risk is the risk of loss that may arise from changes in market factors such as interest rates, investment fluctuations, and commodity and equity prices. Market conditions will cause fluctuations in the fair values of financial assets classified as fair value through profit or loss and cause fluctuations in the fair value of future cash flows of other financial liabilities. The Company is exposed to market risk in trading its marketable securities, and unfavourable market conditions could result in dispositions of marketable securities at less than favourable prices. The Company’s marketable securities are accounted for at estimated fair values and are sensitive to changes in market prices, such that changes in market prices result in a proportionate change in the carrying value of the Company’s marketable securities. Management closely monitors commodity prices, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. The result of sensitivity analysis shows an increase or decrease of 5% in the market price, with all other variables held constant, could have decreased or increased the Company’s net income (loss) by approximately $190,000 (2013 -­‐$nil). The Company’s investments in marketable securities are denominated in foreign currencies as follows: $3,523,327 denominated in United States dollars (“US$”) and $331,299 denominated in United Kingdom pound sterling (“GBP”). The result of sensitivity analysis shows an increase or decrease of 5% in exchange rates, with all other variables held constant, could have increased or decreased the net loss and comprehensive loss by approximately $190,000 (2013 -­‐ $Nil). Page | 18 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
9. FINANCIAL INSTRUMENTS (continued) Financial instruments that potentially expose the Company to credit risk are cash and cash equivalents. To minimize the credit risk on cash the Company deposits its securities with financial institutions. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at May 31, 2014, the Company had cash balance of $1,221,531 and current liabilities of $10,806. All of the Company’s financial liabilities have contractual maturities of less than 30 days, and are subject to normal trade terms. Management is considering different alternatives to secure adequate debt or equity financing to meet the Company’s short term and long term cash requirement. Interest risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in market risk. The Company’s sensitivity to interest rates is currently immaterial. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company holds marketable securities that are denominated in a currency other than Canadian dollar. A change in foreign currency exchange rates can have an impact on net income (loss) and comprehensive income (loss). 10. RELATED PARTY TRANSACTIONS Management fees of $13,425 (2013 -­‐ $3,750) were charged by a company controlled by Chief Financial Officer (CFO). The management fees also represent key management compensation incurred during the year. As at May 31, 2014 and February 28, 2014, the Company had $328 due to a company controlled by a director. During the period ended May 31, 2014, rental expense of $4,650 (2013 -­‐ $Nil) was also charged by a company controlled by the CFO. During the period ended May 31, 2014, $7,500 was issued as a non-­‐interest loan to the CFO and will be fully repaid in the subsequent period (Note 13). During the period ended May 31, 2014, the Company deposited $1,500,000 in cash with Eurasia Capital LLC (“Eurasia”), which is an investment brokerage operating in Mongolia. The CEO of the Company who is also a director and acts as board chair of the Company is the board chair of Eurasia. As at May 31, 2014, the Company had marketable securities with a fair value of $4,423,439 (2013 -­‐ $nil) (see Note 5) and cash of $7,963 (2013 -­‐ $nil), comprising substantially all of the Company’s assets, that are held in the brokerage account operated by Eurasia. Page | 19 Silk Road Ventures Ltd. (Formerly Ole Remediation Ltd.) Notes to the Unaudited Condensed Interim Financial Statements For the Three Months Ended May 31, 2014 and 2013 (Expressed in Canadian dollars)
11. SEGMENTED INFORMATION During the period ended May 31, 2014, the Company had one reportable operating segment, being the OGC License Agreement located in one geographical segment, Canada. 12. INCOME TAXES The provision for (recovery of) income taxes differs from the amount that would have resulted in applying Canadian federal and provincial statutory tax rates as follows: 2014 2013 Statutory tax rate 25.92% 25.00% Expected income tax expense (recovery) 3,700 (6,541) Effect of changes in effective tax rates 393 -­‐ Other temporary differences (24,052) -­‐ Deferred tax assets not recognized 19,959 6,541 Income tax expense -­‐ -­‐ Significant components of the Company’s deferred income tax assets are shown below: 2014 2013 Non-­‐capital loss carry forward 31,516 6,541 Marketable securities (24,047) -­‐ 7,469 6,541 Deferred tax assets not recognized (7,469) (6,541) Net deferred income tax assets -­‐ -­‐ The Company has non-­‐capital losses for income tax purposes of $116,400 (2013 – $26,200) which can be applied to reduce future taxes. The non-­‐capital losses expire between 2033 to 2034. 13. SUBSEQUENT EVENT The Company completed a private placement and issued 50,000,000 common shares at $0.10 per share for gross proceeds of $5,000,000 on July 3, 2014 of which $2,300,000 was received on December 27, 2013 (see also Note 6) and $2,700,000 was received during March 2014. The 50,000,000 shares were authorized for issuance by the board of directors on July 3, 2014. The company experienced internet related breach of security which has resulted certain confidential bank financial information being stolen. As a result of this incident, the Company has sustained meaningful but not material financial loss. The Company is currently investigating the incident. Page | 20 The Company transferred $7,500 to the CFO during May 2014, without board approval and this will be fully repaid in the subsequent period. The Company postponed its plans to proceed with its listing application until some time after its next Annual General and Special Meeting. Page | 21 Ole Remediation Ltd.
Financial Statements
For the period from incorporation on May 15, 2012 to February 28, 2013
(Expressed in Canadian dollars)
Page
Independent Auditors' Report
2
Statement of Financial Position
3
Statement of Comprehensive Loss
4
Statement of Changes in Equity
5
Statement of Cash Flows
6
Notes to the Financial Statements
7-18
MAN N I N G
CHART F. RTD
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INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Ole Remediation Ltd.
We have audited the accompanying financial statements of Ole Remediation Ltd. which comprise the
statement of financial position as at February 28, 2013, and the statements of comprehensive loss, changes
in equity and cash flows for the period from incorporation on May 15, 2012 to February 28, 2013 and the
related notes comprising a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Canadian generally accepted auditing standards. Those standards require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on our judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained based on our audit is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Ole
Remediation Ltd. as at February 28, 2013, and its financial performance and cash flows for the period from
incorporation on May 15, 2012 to February 28, 2013 in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1 in the financial statements which indicates the
existence of a material uncertainty that may cast significant doubt on the ability of Ole Remediation Ltd. to
continue as a going concern.
iY\CLr^irsA i&tirtL LLP
CHARTERED ACCOUNTANTS
Vancouver, British Columbia
June 3, 2013
Ole Remediation Ltd.
Statement of Financial Position
As at February 28,2013
(Expressed in Canadian dollars)
Note
ASSETS
Current Assets
Gash
P •jcy
HST recoverable
Prepaid expenses
2045
3 625
12,427
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities
Due to related parties
6,592
g
29 500
36,092
SHAREHOLDERS' EQUITY
Capital stock
5
Deficit
I Z ^
2 500
(26,165)
(23,665)
12,427
Nature of Operations and Going Concern
Corporate Restructuring and Commitment
1
4
Approved and authorized for issue by the Board of Directors on June 3, 2013
Don Gordon, Director
The accompanying notes are an integral part of these financial statements
Ole Remediation Ltd.
Statement of Comprehensive Loss
For the period from incorporation on May 15, 2012 to February 28, 2013
(Expressed in Canadian dollars)
Note
Expenses
Management fees
Professional fees
9
Regulatory and transfer agency fees
Net loss and comprehensive loss
Basic and diluted loss per common share
Weighted average numberof common shares outstanding
The accompanying notes are an integral part of these financial statements
12,500
8,666
4,999
(26,165)
(0.01)
3,144,271
Ole Remediation Ltd.
Statement of Changes in Equity
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
Number of
Total
Outstanding
Share
Shares
Capital
Deficit
Equity
$
$
$
Share issued for cash on incorporation
Shareholders'
11
11
1
6,038,667
2,500
2,500
-
2,500
(1)
(1)
(1)
(1)
-
(1)
(26,165)
(26,165)
(26,165)
(23,665)
Shares issued on plan of arrangement
October 22,2012
Cancellation of incorporation share
Net loss
_
-
Balance, February 28, 2013
6,038,667
2,500
The accompanying notes are an integral part of these financial statements
Ole Remediation Ltd.
Statement of Cash Flows
For the period from incorporation on May 15, 2012 to February 28, 2013
(Expressed in Canadian dollars)
Cash (used in) /provided by:
Operating activities
Net loss
(26,165)
Change in non-cash working capital components
HST recoverable
Prepaid expense
Accrued liabilities
Net cash used in operating activities
(2,045)
(3,625)
6,592
(25,243)
Financing activities
Due to related party
Share issuance
Net cash provided by financing activities
Increase in cash
Cash , beginning
Cash, ending
29,500
2,500
32,000
6,757
.
6,757
Cash paid for interest expense
Cash paid for income taxes
The accompanying notes are an integral part of these financial statements
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Ole Remediation Ltd. (the "Company") was incorporated on May 15, 2012 pursuant to a Plan of
Arrangement (the "Arrangement Agreement") between the Company and 0922519 B.C. Ltd.
("BC0922519") dated May 22, 2012. Under the Arrangement Agreement, BC0922519 assigned the
License Agreement dated April 19, 2012 with OLE Global Clean Ltd. ("OGC") and $2,500 to the
Company. As consideration for this asset, the Company issued 6,038,667 common shares to the
BC0922519 shareholders on October 1, 2012. BC0922519 received shareholder approval to the
arrangement at a special meeting of shareholders held on July 6, 2012 (see also Note 4). The
principal business of the Company is the development of the OGC License Agreement by marketing,
selling and distributing the soil remediation technology and services of OLE Global Clean Ltd. in
Canada. Currently the Company is also reviewing investment opportunities for financial services
business in frontier markets in collaboration with an investment group based in Mongolia. The
address of the Company's corporate office and principal place of business is 2000 - 1500 West
Georgia Street, Vancouver, British Columbia, Canada.
These financial statements have been prepared on the basis of accounting principles applicable to a
going concern which assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business rather than through a process of forced liquidation. The
Company's continuing operations, as intended, and its financial success may be dependent upon the
extent to which it can successfully raise the capital to implement the investment plan. These financial
statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should the Company be unable
to continue in existence.
The success of the Company is dependent upon certain factors that may be beyond management's
control, such as political, currency, and liquidity risk. If the Company is unable to fund its investments
or otherwise fails to invest in an active business, its business, financial condition or results of
operations could be materially and adversely affected.
For the period from incorporation on May 15, 2012 to February 28, 2013, the Company incurred a
loss of $26,165 and a working capital deficiency of $23,665. These factors raise significant doubt
about the Company's ability to continue as a going concern. The Company's ability to continue its
operations as intended is dependent on its ability to obtain necessary financing and raise capital
sufficient to cover its marketing and other costs.
These financial statements do not include any adjustments relating to the recoverability and
classification of recorded assets and liabilities that might be necessary should the Company be
unable to continue in existence.
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
2.
BASIS OF PRESENTATION
In 2010, the Canadian Institute of Chartered Accountants ("CICA") Handbook was revised to
incorporate International Financial Reporting Standards ("IFRS"), and requires publicly accountable
enterprises to apply such standards effective for years beginning on or after January 1, 2011.
Accordingly, these financial statements are prepared in accordance and in compliance with
International Financial Reporting Standards as issued by the International Accounting Standards
Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee
("IFRIC").
These financial statements are presented in Canadian dollars, which is the Company's functional and
reporting currency. These financial statements are prepared on a historical cost basis except for
financial instruments classified as fair value through profit or loss ("FVTPL"), which are stated at their
fair value. In addition, these financial statements have been prepared using the accrual basis of
accounting, except for cash flow information.
3.
SIGNIFICANT ACCOUNTING POLICIES
Significant accounting judgments and estimates
The preparation of these financial statements requires management to make judgements and
estimates that affect the reported amounts of assets and liabilities at the date of the financial
statements and reported amounts of expenses during the reporting period. Actual outcomes could
differ from these judgements and estimates. The financial statements include judgements and
estimates which, by their nature, are uncertain. The impacts of such judgements and estimates are
pervasive throughout the financial statements, and may require accounting adjustments based on
future occurrences. Revisions to accounting estimates are recognized in the period in which the
estimate is revised and the revision affects both current and future periods.
Significant assumptions about the future and other sources of judgements and estimates that
management has made at the statement of financial position date, that could result in a material
adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from
assumptions made, relate to, but are not limited to, the following:
i)
Impairment
At the end of each reporting period, the Company's assets are reviewed to determine whether
there is any indication that those assets may be impaired. If such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment, if
any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair
value is determined as the amount that would be obtained from the sale of the asset in an arm's
length transaction between knowledgeable and willing parties. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks amount of the
asset is reduced to its recoverable amount and the impairment loss is recognized in the profit of
loss for the period. For an asset that doses not generate largely independent cash inflows, the
recoverable amount is determined forthe cash generating unit to which the asset belongs.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but to an amount
that does not exceed the carrying amount that would have been determined had no impairment
loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognized immediately in profit or loss.
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Significant accounting judgments andestimates (continued)
ii) Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments,
where active market quotes are not available. Details of the assumptions used are given in the
notes regarding financial assets and liabilities.
In applying the valuation techniques management makes maximum use of market inputs
wherever possible, and uses estimates and assumptions that are, as far as possible, consistent
with observable data that market participants would use in pricing the instrument. Where
applicable data is not observable, management uses its best estimate about the assumptions that
market participants would make. Such estimates include liquidity risk, credit risk and volatility may
vary from the actual prices that would be achieved in an arm's length transaction at the reporting
date.
Cash and cash eouivalents
Cash and cash equivalents are comprised of cash in banks, and all short-term investments that are
highly liquid in nature, cashable, and have an original maturity date of three months or less. As at
February 28, 2013, there is $6,757 included as cash and cash equivalents.
Deferred finance costs
Professional, consulting and regulatory fees as well as other costs directly attributable to financing
transactions are reported as deferred financing costs until the transactions are completed, if the
completion of the transaction is considered to be more likely than not. Share issuance costs are
charged to share capital when the related shares are issued. Costs relating to financing transactions
that are not completed, or for which successful completion is considered unlikely, are charged to
operations.
Shared-based payments
Pursuant to the Company's option plan ("Option Plan"), the Company may grant stock options to
directors, officers and employees for the purchase of the capital stock of the Company. Included in
the Option Plan are provisions that provide that the number of common shares reserved for issuance
will not exceed 10% of the issued and outstanding common shares of the Company. At the discretion
of the Board of Directors of the Company, options granted under the Option Plan can have a
maximum exercise term of 5 years from the date of grant. Vesting terms will be determined at the
time of grant by the Board of Directors.
The fair value of the options is measured at grantdate, using the Black-Scholes option pricing model,
and is recognized over the period that the employees earn the options. The fair value is recognized
as an expense with a corresponding increase in equity. The amount recognized as expense is
adjusted to reflect the number of share options expected to vest.
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15, 2012 to February 28, 2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
Deferred income tax assets and liabilities are recognized for deferred income tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured
using the enacted or substantively enacted tax rates expected to apply when the asset is realized or
the liability settled. The effect on deferred income tax assets and liabilities of a change in tax rates is
recognized in income in the period that substantive enactment occurs. To the extent that the
Company does not consider it more likely than not that a deferred income tax asset will be recovered,
the deferred income tax assets is reduced. Deferred income tax assets and liabilities are offset only if
a legally enforceable right exists to offset current tax assets against liabilities and the deferred tax
assets and liabilities relate to income taxes levied by the sametaxation authority on the same taxable
entity.
Provisions
Provisions are recorded when a present legal or constructive obligation exists as a result of past
events where it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate, the risks specific to
the liability. As at February 28, 2013, no provision has been recorded in the Company.
Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net earnings (loss) available to common
shareholders by the weighted average number of shares outstanding during the reporting period.
Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that
the weighted average share outstanding are increased to include additional shares for the assumed
exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by
assuming that outstanding stock options and warrants were exercised and that the proceeds from
such exercises were used to acquire common stock at the average market price during the reporting
periods.
Financial instruments
All financial instruments are recorded initially at fair value. In subsequent periods, all financial
instruments are measured based on the classification adopted for the financial instruments: held to
maturity, loans and receivables, fair value through profit or loss ("FVTPL"), available-for-sale, FVTPL
liabilities or other liabilities.
FVTPL assets and liabilities are subsequently measured at fair value with the change in the fair value
recognized in net income (loss) during the period.
Held to maturity assets, loans and receivable, and other liabilities are subsequently measured at
amortized cost using the effective interest rate method.
Available for sale assets are subsequently measured at fair value with the change in fair value
recorded in other comprehensive income (loss), except for equity instruments without a quoted
market price in active markets and whose fair value cannot be reliably measured, which are
measured at cost.
10
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments (continued)
The Company has classified its financial instruments as follows:
Financial Instrument
Cash
Accounts payable
Due to related parties
Classification
FVTPL
Other liabilities
Other liabilities
The Company's financial instruments measured at fair value on the statement of financial position on
a recurring basis consist of cash which is measured at level 1 of the fair hierarchy. The three levels
of the fair value hierarchy are as follows:
Level 1: Values based on unadjusted quoted prices in active markets that are accessible at the
measurement date for identical assets or liabilities.
Level 2: Values based on quoted prices in markets that are not active or models inputs that are
observable either directly or indirectly for substantially thefull term ofthe asset or liability.
Level 3: Values based on prices or valuation techniques that require inputs that are both
unobservable and significant to the overall fair value measurement.
Impairment
i) Non-financial assets
The carrying amounts of the Company's non-financial assets, other than deferred income tax assets,
are reviewed at each reporting date to determine whether there is any indication of impairment. If any
such indication exists, then the assets' recoverable amount is estimated.
For the purpose of impairment testing, assets are grouped together into the smallestgroup of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or group of assets (the "cash-generating unit").
An impairment loss is recognized if the carrying amount of a cash-generating unit exceeds its
estimated recoverable amount. The recoverable amount of an asset or a cash-generating unit is the
greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated
future cost flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessment of the time value of money and the risks specific to the assets.
Impairment losses are recognized in net income (loss).
Impairment losses recognized in prior years are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation, if no impairment loss has been recognized.
11
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment (continued)
ii) Financial assets
Afinancial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired. A financial asset is impaired if
objective evidence indicates that a loss event has occurred after the initial recognition of the asset,
and that the loss event had a negative effect on the estimated future cash flows of that asset that can
be estimated reliably.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate. Losses are recognized in net income (loss)
and reflected in an allowance account against receivables. When a subsequent event causes the
amount of impairment loss to decrease, the decrease in impairment loss is reversed through net
income (loss).
Comprehensive income (loss)
Comprehensive income (loss) is the change in the Company's net assets that results from
transactions, events and circumstances from sources other than the Company's shareholders and
includes items that are not included in net profit. Other comprehensive income consists of changes to
unrealized gain and losses on available for sale financial assets, changes to unrealized gains and
losses on the effective portion of cash flow hedges and changes to foreign currency translation
adjustments of self-sustaining foreign operations during the period. Comprehensive income
measures net earnings for the period plus other comprehensive income. Amounts reported as other
comprehensive income are accumulated in a separate component of shareholders' equity as
Accumulated Other Comprehensive Income. The Company has not had other comprehensive
income since inception.
Segment reporting
A reportable segment, as defined by 'IFRS 8 Operating Segments', is a distinguishable business or
geographical component of the Company, which are subject to risks and rewards that are different
from those of other segments. The Company considers its primary reporting format to be business
segments. The Company considers that it has only one reportable segment, being the Canadian
Agency and Licensing business.
12
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15, 2012 to February 28, 2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Future chances in accounting policies
Anumber of new standards, and amendments to standards and interpretations, are not yet effective
for the period ended February 28, 2013, and have not been applied in preparing these financial
statements. The following standards and interpretations have been issued by the International
Accounting Standards Board and the International Financial Reporting Interpretations Committees
effective for annual periods beginning on orafter January 1, 2013:
IFRS 1 - First time adoption of IFRS
In March 2012, the IASB issued an amendment to this standard, which a new exception was included
in respect of government loans. Measurement of below-market rate government loans is allowed to
be applied prospectively at date of transition. In addition, if the entity had obtained the information to
measure the loan at its fair value at the inception of the loan, it could re-measure the loan on
transition. This exception is to be applied on a loan-by loan basis. This amendment is not expected
to affect the Company.
IFRS 7 - Financial Instruments: Disclosures
In December 2011, the IASB issued an amendment to this standard, which requires entities to
provide additional information about offsetting of financial assets and financial liabilities that will
enable users of financial statements to evaluate the effect or potential effect of netting arrangements,
including rights of set-off associated with an entity's recognized financial assets and recognized
financial liabilities, on the entity's financial position. This amendment is not expected to affect the
Company.
IFRS 10 - Consolidated Financial Statements
IFRS 10 establishes the principles for the presentation and preparation of consolidated financial
statements when an entity controls one or more other entities. IFRS 10 changed the definition of
control such that the same criteria are applied to all entities to determine control.
IFRS 10
supersedes all of the guidance in IAS 27, Consolidated and Separate Financial Statements and SIC
12, Consolidation - Special Purpose Entities.
IFRS 11 - Joint Arrangements
IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint
operation. Joint ventures will be accounted for using the equity method of accounting whereas for a
joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of
the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or
equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint Ventures,
and SIC 13, Jointly Controlled Entities - Non-monetary.
IFRS 12 - Disclosure of Interests in Other Entities Contributions.
IFRS 12 establishes disclosure requirements for interests in other entities, such as joint
arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard
carries forward existing disclosures and also introduces significant additional disclosure requirements
that address the nature of, and risks associated with, an entity's interests in other entities.
13
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Future chances in accounting policies (continued)
IFRS 13 - Fair Value Measurement
IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for
use across all IFRS standards. The new standard clarifies that fair value is the price that would be
received to sell an asset, or paid to transfer a liability in an orderly transaction between market
participants, at the measurement date. It also establishes disclosures about fair value measurement.
Under existing IFRS, guidance on measuring and disclosing fair value that is dispersed among the
specific standards requiring fair value measurements and in many cases does not reflect a clear
measurement basis or consistent disclosures.
IAS 1 - Presentation of Financial Statements
In June 2011, the IASB issued an amendment to IAS 1, which requires entities to separately present
items in other comprehensive income based on whether or not they may be recycled to profit or loss
in future periods.
IAS 19- Employee Future Benefits
In June 2011, the IASB issued an amendment to IAS 19, which changes the recognition,
measurement and presentation of defined benefit pension expense and provides for additional
disclosures for all employee benefits.
IAS27 - Separate Financial Statements
As a result of the issue of the new consolidation suite of standards, IAS 27 Separate Financial
Statements has been reissued, as the consolidation guidance will now be included in IFRS 10. IAS 27
will now only prescribe the accounting and disclosure requirements for investments in subsidiaries,
joint ventures and associates when an entity prepares separate financial statements.
IAS 28 - Investments in Associates and Joint Ventures
As a consequence of the issue of IFRS 10, IFRS 11 and IFRS 12, IAS 28 has been amended and will
provided the accounting guidance for investments in associates and to set out the requirements for
the application of the equity method when accounting for investments in associates and joint
ventures. The amended IAS 28 will be applied by all entities that are investors with joint control of, or
significant influence over, an investee.
IFRIC 20 - Production Stripping Costs
In October 2011, the IASB issued IFRIC 20 Stripping Costs, which requires the capitalization and
depreciation of stripping costs in the production phase if an entity can demonstrate that it is probable
future economic benefits will be realized, the costs can be reliably measured and the entity can
demonstrate that it is probable future economic benefits will be realized, the costs can be reliably
measured and the entity can identify the component of the ore body for which access has been
improved.
The following standard will be effective for annual periods beginning on orafter January 1, 2014:
IAS 32 - Financial Instruments: Presentation
In December 2011, the IASB issued an amendment to clarify the meaning of the offsetting criterion
and the principle behind net settlement, including identifying when some gross settlement systems
may be considered equivalent to net settlement. Earlier application is permitted when applied with
corresponding amendment to IFRS 7.
14
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28,2013
(Expressed in Canadian dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Future chances in accounting policies (continued)
The following standard will be effective for annual periods beginning on or after January 1, 2015:
IFRS 9 - Financial Instruments
In November 2009, as part of the IASB project to replace HAS 39 Financial Instruments: Recognition
and Measurement, the IASB issued the first phase of IFRS 9 Financial Instruments, that introduces
new requirements for the classification and measurement of financial assets. The standard was
revised in October 2010 to include requirements regarding classification and measurement of
financial liabilities.
The extent of the impact of adoption of these standards and interpretations on the financial
statements of the Company has not been determined.
4. CORPORATE RESTRUCTURING AND COMMITMENT
The Company and BC0922519 entered into the Arrangement Agreement on May 22, 2012 to conduct
a corporate restructuring by way of a statutory plan of arrangement to transfer BC0922519's interest
in the OGC License Agreement and $2,500 cash to the Company (the "Transfer") which was
completed on August 3, 2012. As consideration for the Transfer, the Company issued 6,038,667
common shares to shareholders of BC0922519 ("Distributed Shares'). The Arrangement Agreement
was approved by the Supreme Court of British Columbia on August 3, 2012 and by BC0922519's
shareholders on July 6, 2012.
As a result, the Transfer was executed and the Company issued the Distributed Shares to
shareholders of BC0922519 as of record date of October 1, 2012 and the Company was spun out
fromBC0922519.
5.
CAPITAL STOCK
a. Authorized:
b.
unlimited Common shares without par value
Issued and Outstanding:
Number of
Shares
Shares issued at inception on May 15,2012
Common shares issued for cash under the Arrangement
1
1
Agreement (Note 4)
6,038,667
2,500
Shares repurchased
Balance, February 28, 2013
m
6,038,667
r\\
2,500
On May 15, 2012 and October 1, 2012, the Company issued and redeemed 1 common share at $1
respectively.
15
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15, 2012 to February 28, 2013
(Expressed in Canadian dollars)
5. CAPITAL STOCK (continued)
On October 1, 2012, the Company issued 6,038,667 common shares to BC0922519 and BC0922519
re-distributed these shares to its shareholders by Arrangement Agreement as of record date of
October 1,2012 (Note 4).
Stock Options:
The Company has adopted an incentive stock option plan (the "Option Plan") which provides that the
Board of Directors of the Company may from time to time, in its discretion, and in accordance with the
applicable stock exchange's requirements, grant to directors, officers, employees and consultants to
the Company, non-transferable options to purchase common shares. Pursuant to the Option Plan,
the number of common shares reserved for issuance will not exceed 10% of the issued and
outstanding common shares of the Company. Options granted under the Option Plan can have a
maximum exercise term of 5 years from the date of grant. Vesting terms will be determined at the
time of grant by the Board of Directors. As at February 28, 2013, no options were granted or
outstanding.
6.
AGENCY AND LICENSE AGREEMENT
Pursuant to a Licensing Agreement dated April 19, 2012 with OGC, BC0922519 or its assignee had
agreed to market OCG's proprietary soil remediation technology and services in Canada for use on
brownfield properties to clean up the soil and develop the properties into commercially viable real
estate. The Licensing Agreement is effective April 19, 2012 to June 15, 2015. In return, BC0922519
was entitled to a sales fee of 15% of all gross sales generated in Canada, subject to meeting annual
pre-determined performance criteria as follows:
Performance Date
June 15,2013
June 15,2014
June 15, 2015
Gross Sales Volume
$500,000
$700,000
$1,000,000
This Licensing Agreement was assigned to the Company by BC0922519 as described in Note 1. The
value of the assigned agreement is not determinable and accordingly no asset is recorded in respect
of the assignment.
7.
CAPITAL DISCLOSURES
The Company's objectives when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders. The
Company considers the items included in shareholders' equity and due to related parties as capital.
The Company manages the capital structure and makes adjustments to it in response to changes in
economic conditions and the risk characteristics of the underlying assets. The Company's primary
objective with respect to its capital management is to ensure that it has sufficient cash resources to
fund the operation of the Company. To secure the additional capital necessary to pursue these
plans, the Company intends to raise additional funds through the equity or debt financing. The
Company is not subject to any capital requirements imposed by a regulator.
16
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
8.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts payable and due to related parties;
the fair values of which are considered to approximate their carrying value due to their short-term
maturities or ability of prompt liquidation.
The Company's risk exposures and the impact on the Company's financial instruments are
summarized below:
Strategic and operational risks are risks that arise if the Company fails to carry out sales under its
Agency and License Agreement and the economic viability of achieving a level of sufficient sales
and/or to raise sufficient equity and/or debt financing in financing the market development. These
strategic opportunities or threats arise from a range of factors which might include changing economic
and political circumstances and regulatory approvals and competitor actions. The risk is mitigated by
consideration of other potential development opportunities and challenges which management may
undertake.
Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by
failing to discharge an obligation. The Company is subject to normal industry credit risks. Therefore,
the Company believes that there is minimal exposure to credit risk.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities. The Company's approach to managing liquidity risk is to ensure that it will have
sufficient liquidity to meet liabilities when due. As at February 28, 2013, the Company had cash
balance of $6,757 and current liabilities of $36,092. All of the Company's financial liabilities have
contractual maturities of less than 30 days, and are subject to normal trade terms. Management is
considering different alternatives to secure adequate debt or equity financing to meet the Company
short term and long term cash requirement.
Interest risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in
market risk. The Company's sensitivity to interest rates is currently immaterial.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Company holds no financial instruments that are
denominated in a currency other than Canadian dollar. Accrued liabilities are denominated in
Canadian currency. Therefore, the Company's exposure to currency risk is minimal.
9. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
During the period from incorporation on May 15, 2012 to February 28, 2013, the Company incurred
management fees of$12,500 to a company controlled by the President. The Company has identified
its President and Chief Financial Officer as its key management personnel. No post-employment
benefits, other long-terms benefits and termination benefits were made during the period ended
February 28, 2013.
As at February 28, 2013, the Company also had $20,000 due to a director and $9,500 due to a
company controlled by the President.
17
Ole Remediation Ltd.
Notes to the Financial Statements
For the period from incorporation on May 15,2012 to February 28, 2013
(Expressed in Canadian dollars)
10. SEGMENTED INFORMATION
During the period ended February 28. 2013, the Company had one reportable operating segment,
being theOGC License Agreement located in one geographical segment, Canada.
11. INCOME TAXES
As at February 28, 2013, the Company had loss carried forward of $26,165 which is available for
deduction against future Canadian taxable income. The non-capital loss will expire in 2033. A
deferred income tax asset of $6,541 was not recognized due to the uncertainty of utilization of this
amount.
18