Securities registered or to be registered pursuant to section 12(b) of the Act:
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Securities registered or to be registered pursuant to Section 15(D) of the Act:
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transitional report, indicate by check mark if the registrant is not required to file reports
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicated by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this Filing:
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
PART I
ITEM 1 - Identity of Directors, Senior Management and Advisers
All items in this section are not required, as this 20-F filing is made as an annual report.
ITEM 2 - Offer Statistics and Expected Timetable
All items in this section are not required, as this 20-F filing is made as an annual report.
ITEM 3 - Key Information
A. Selected Financial Data
The following tables set forth the data of our fiscal years ended December 31, 2019, 2018, 2017, 2016, and 2015. We derived all figures from our financial statements as prepared by our management, approved by our Board of Directors (who act as our audit committee) and audited by our auditors. This information should be read in conjunction with our financial statements including the notes thereto, and "Item 5 - Operating and Financial Review and Prospects" included in this annual report. Our financial statements are expressed in US dollars and presented in accordance with accounting principles generally accepted in the United States.
|
|
Years ended December 31,
|
|
|
2019
$
|
2018
$
|
2017
$
|
2016
$
|
2015
$
|
|
Net income (loss) for the year
|
(86,161)
|
(328,497)
|
78,424
|
(40,226)
|
(65,470)
|
|
Weighted average number of
shares outstanding
|
14,522,727
|
14,522,727
|
14,522,727
|
14,522,727
|
14,522,727
|
|
Earnings (loss) per share,
basic and diluted
|
(0.01)
|
(0.02)
|
0.01
|
(0.00)
|
(0.00)
|
|
|
As at December 31,
|
|
|
2019
$
|
2018
$
|
2017
$
|
2016
$
|
2015
$
|
|
Total assets
|
184,354
|
492,712
|
354,343
|
113,005
|
146,671
|
|
Total Stockholders’ equity (Deficit)
|
(959,033)
|
(857,321)
|
(587,989)
|
(619,104)
|
(533,256)
|
|
Common stock
|
2,358,954
|
2,358,954
|
2,358,954
|
2,358,954
|
2,358,954
|
KBridge Energy Corp. or "KBridge" or the "Company" undertakes certain transactions in Canadian (“Cdn”) dollars and records and reports its operations in US dollars. Fluctuations in the exchange rate between the Cdn dollar and the US dollar will affect the amount of dollars reported in its financial statements and distributed in respect of cash dividends paid out or other distributions paid in Cdn dollars by us. The Company has never paid out a dividend to its shareholders.
The following table sets forth, foreign exchange rates, for the periods and dates indicated, certain information concerning the noon buying rate for CDN$. No representation is made that the CDN dollar amounts referred to herein could have been or could be converted into US dollars at any particular rate, or at all.
1
YEARS ENDED DECEMBER 31, (CDN$ PER US$1.00)
|
Period
|
|
Average(1)
|
|
2015
|
$
|
1.3840
|
|
2016
|
$
|
1.3427
|
|
2017
|
$
|
1.2986
|
|
2018
|
$
|
1.2957
|
|
2019
|
$
|
1.3269
|
(1)Note: the average for the year of the noon buying rates on the last date of each month (or a portion thereof) during the period.
FOR EACH OF THE PAST SIX MONTHS (CDN$ PER US$1.00)
|
Period
|
|
Rate
|
|
Month ended July 31, 2019
|
$
|
1.3148
|
|
Month ended August 31, 2019
|
$
|
1.3295
|
|
Month ended September 30, 2019
|
$
|
1.3243
|
|
Month ended October 31, 2019
|
$
|
1.316
|
|
Month ended November 30, 2019
|
$
|
1.3289
|
|
Month ended December 31, 2019
|
$
|
1.2988
|
Note: the noon buying rates on the last date of each month
B. Capitalization and Indebtedness
Not required as this 20-F filing is made as an annual report.
C. Reasons for the Offer and Use of Proceeds
Not required as this 20-F filing is made as an annual report.
D. Risk Factors
THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH OUR COMMON STOCK. BEFORE MAKING A DECISION CONCERNING THE PURCHASE OF OUR SECURITIES, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN THIS ANNUAL REPORT WHEN YOU EVALUATE OUR BUSINESS.
Business Risks:
Risks Associated with Our Company.
We have a limited history of operations which makes it difficult to evaluate the investment merits of our Company.
If we do not obtain additional financing, our business will fail because we will be unable to fund even the administration of our minimal operations.
In order for the Company to continue we need to obtain additional financing. As of December 31, 2019, we had cash in the amount of $65,186.
2
The future issuance of debt may contain contractual restrictions that may curtail implementation of our business plan.
We do not have any contractual restrictions limiting our ability to incur debt. Any significant indebtedness, however, could restrict our ability to fully implement our business plan. If we are unable to repay the debt, we could be forced to cease operating.
The loss of any of our key personnel may affect our ability to implement our business plan and cause our stock to decline in value.
We are dependent on Jai Woo Lee, Director of the Company, to implement our business plan and the loss of his services may have a negative effect on our ability to timely and successfully implement our business plan. We do not have an employment agreement with Jai Woo Lee and we have not obtained key man insurance over him.
Investment Risks:
Any issuance of additional shares may have the effect of diluting the interest of existing shareholders; shareholders of our common stock do not have preemptive rights.
Any additional issuances of common stock by us from our authorized but unissued shares may have the effect of diluting the percentage interest of existing shareholders. The securities issued to raise funds may have rights, preferences or privileges that are senior to those of the holders of our other securities, including our common stock. The board of directors has the power to issue such shares without shareholder approval. We fully intend to issue additional common shares in order to raise capital to fund our business operations and growth objectives.
We do not anticipate paying dividends to our common stockholders in the foreseeable future, which makes investment in our stock speculative and risky.
We have not paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. The board of directors has sole authority to declare dividends payable to our stockholders. The fact that we have not paid and do not plan to pay dividends indicates that we must use all of our funds we generate for reinvestment in our business activities. Investors also must evaluate an investment in the Company solely on the basis of anticipated capital gains.
Limited liability of our executive officers and directors may discourage shareholders from bringing a lawsuit against them.
Our Memorandum and Articles of Incorporation contain provisions that limit the liability of our directors for monetary damages and provide for indemnification of officers and directors. These provisions may discourage shareholders from bringing a lawsuit against officers and directors for breaches of fiduciary duty and may reduce the likelihood of derivative litigation against officers and directors even though such action, if successful, might otherwise have benefited the shareholders. In addition, a shareholder's investment in the Company may be adversely affected to the extent that we pay costs of settlement and damage awards against officers or directors pursuant to the indemnification provisions of the bylaw. The impact on a shareholder's investment in terms of the cost of defending a lawsuit may deter the shareholder from bringing suit against any of our officers or directors. We have been advised that the SEC takes the position that these article and bylaw provisions do not affect the liability of any director under applicable federal and state securities laws.
Since we are a Canadian company and most of our assets and key personnel are located outside of the United States of America, you may not be able to enforce any United States judgment for claims you may bring against us, our assets, our key personnel or the experts named in this document.
We have been organized under the laws of Canada. Many of our assets are located outside the United States.
3
In addition, a majority of the members of our board of directors and our officers and the experts named in this document are residents of countries other than the United States. As a result, it may be impossible for you to effect service of process within the United States upon us or these persons or to enforce against us or these persons any judgments in civil and commercial matters, including judgments under United States federal securities laws. In addition, a Canadian court may not permit you to bring an original action in Canada or to enforce in Canada a judgment of a U.S. court based upon civil liability provisions of U.S. federal securities laws.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements. We intend to identify forward-looking statements in this document using words such as "anticipates", "will", "believes", "plans", "expects", "future", "intends" or similar expressions. These statements are based on our beliefs as well as assumptions we made using information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Some, but not all, of the factors that may cause these differences include those discussed in the Risk Factors section. You should not place undue reliance on these forward-looking statements.
ITEM 4 - Information on the Company
A. History and Development of the Company
KBridge Energy Corp ("KBridge" or the "Company") was originally incorporated on October 23, 2002 under the laws of British Columbia, Canada with the name Penn Biotech Inc. On January 13, 2005, the Company changed its name to United Traffic System Inc. On November 30, 2007, it consolidated its outstanding common shares on a 10 old share for 1 new share basis and changed its name to Corpus Resources Corporation. On June 23, 2009, the Company changed its name to NeoMedyx Medical Corporation and on February 24, 2010, changed its name to Blue Marble Media Corp. On December 8, 2011, the Company changed its name to KBridge Energy Corp. All references to shares of common stock in this document refer to post split.
We have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets.
In 2004, the Company obtained an exclusive right to use patented biotechnology for the mass production of seed potatoes (potato microtubers) under a license agreement with the Korea Research Institute of Bioscience and Biotechnology (KRIBB). The Company developed its microtuber tissue culture at a laboratory leased from the Olds College Centre for Innovation (OCCI), Alberta, Canada and in November 2004 terminated its lease with OCCI and relocated its seed potato operations to the city of Yanji located in Jilin Province and to the city of Wuxi located in Yunnan Province, both located in The People's Republic of China (PRC). The potato business was discontinued in China during the 3rd quarter of 2005 due to a lack of funding and a down-shift in the demand for seed potatoes. The seed plant operations are no longer in existence.
On December 22, 2003, the Company agreed to acquire the license to manufacture, install and sell technology owned by Traffic-Its Co., Ltd. The license provided the Company with the exclusive right to use the technology for the duration of the patent and to commercially exploit the technology in Asia, Europe, and North America. Subsequent to December 31, 2003, the Company determined the licensor had failed to comply with the terms of the agreement and cancelled the contract. After renewed negotiations, the Company re-entered its agreement with Traffic-Its Co., Ltd. in 2004. During 2005, it was determined by management to be unfeasible to continue operations and the project was discontinued during the 3rd quarter of 2005.
During the fourth quarter of 2005, the Company officially abandoned all previous business activities.
During the years 2006 and 2007, the Company actively sought opportunities to acquire mineral exploration properties. In 2007, management of the Company reviewed a number of mineral concession opportunities in the People's Republic of China. Ultimately, these opportunities were deemed unsuitable for the Company at that time.
4
On February 27, 2009, the Company entered an agreement with Biokhan Corporation (‘Biokhan’) whereby the Company would acquire all of the outstanding shares of Biokhan effective January 2, 2009 for the issuance of 30,000,000 shares of common stock of the Company. Biokhan manufactures, sells, imports and exports medical and dental devices - in particular, dental implant materials and tools for dental implant operations. Biokhan failed to meet its financial commitments in the agreement and the acquisition was terminated November 2009. During this period the Company entered into discussions and a due diligence phase for the acquisition of Blue Cree Co Ltd., a company registered in the Republic of (South) Korea (‘Blue Cree’) and, effective January 2, 2010, the Company entered an agreement with Blue Cree whereby the Company would acquire all of the outstanding shares of Blue Cree for the issuance of 20,000,000 shares of common stock of the Company. Blue Cree is in the business of providing integrated commercial production services for television advertising, marketing, creative advertising and online promotion in South Korea and overseas production using in house skilled specialists. However, in December 2010 the acquisition of Blue Cree was abandoned due to the failure of both parties to meet their respective obligations under the agreement.
In 2011 the Company changed its name to KBridge Energy Corp. and began operations marketing resource based opportunities in North America to customers based in Korea as a broker for energy and resource related contracts where the Company brought together the energy/resource opportunity with the financing and continued developing this business.
B. Business Overview
Between 2013 and 2014, the Company brokered contracts for Korean investors to invest in the revenue sector, specifically natural gas and uranium.
During 2017 and 2018, the Company continued to seek out both suitable energy resource opportunities and investor/customers with the objective of matching the investor/customers’ funds with the resource assets. During the year ended December 31, 2019, the Company generated revenues of $27,988 (2018 - $46,840) from oil and gas business by having ownership of 50% of working interest through operations in Alberta, after purchasing oil well property on December 1, 2015. In addition, the Company generated revenues of $212,095 (2018 - $132,001) from consulting services in the resource sector.
The Company requires additional financing in order to meet its anticipated working capital and acquisition costs.
Employees
The Company intends to use the services of contractors and consultants for the administration of its projects. At present, in an effort to conserve cash and allow greater flexibility in the future, we have no paid employees.
Government Regulation
Our business complies with all relevant laws.
C. Organizational Structure
KBridge is the parent company of its operating subsidiary company, Futura Kbridge SPA Inc.
D. Property, Plant and Equipment
The Company has no leased or owned property, plant or equipment.
5
ITEM 5 - Operating and Financial Review and Prospects
The following discussion and analysis is based on and should be read in conjunction with the Company's audited financial statements including the notes thereto and other financial information appearing elsewhere herein. The audited financial statements have been prepared using US dollars and are presented in accordance with accounting principles generally accepted in the United States.
A. Operating Results
Year comparison between 2019 and 2018
The Company had net loss of $86,161 for the year ended December 31, 2019 compared to net loss of $328,497 in 2018. In 2019, the Company generated revenues of $209,498 compared to $141,933 in 2018. During 2019, the Company increased the revenues, and decreased the expenses, which led the company to have a lower net loss compared to 2018.
B. Liquidity and Capital Resources
Our sources of liquidity are expected to be cash generated from operating activities and equity financing. The Company had cash on hand as at December 31, 2019 in the amount of $65,186 (2018 - $36,629). During the year ended December 31, 2019 the Company had positive operating cash flow of $41,484 compared to negative operating cash flow of $54,020 in the previous year. In 2019, the Company earned $212,095 in consulting fees (2018 - $132,001) primarily by introducing various business opportunities for Korean companies to invest in natural resources projects and a potential uranium supply (exploration stage) to a Korean market. During the year ended December 31, 2019 the Company had $(247,531) cash flow from financing activities. In the comparable period, the Company had positive cash flow from financing activities resulting from proceeds from loan payable of $581,011.
We will require additional funding in order to develop business opportunities we determine to pursue. There can be no assurances that financing, whether debt or equity, will be available to us in the amounts required at any particular time or for any particular period or if available at all, or that it can be obtained on satisfactory terms. We have no arrangements in place with our officers, directors or affiliates to provide liquidity to us.
We anticipate that we will need to raise additional capital within the next twelve months in order to continue implementing our business plan. We will need to raise the funds through debt or equity financing or a combination of both. To the extent that additional capital is raised through the sale of equity or equity-related securities, the issuance of such securities is likely to result in dilution to our shareholders. There can be no assurance that sources of capital will be available to us on acceptable terms, or at all. If we are unable to raise additional capital, we may not be able to continue as a going concern, and might have to reorganize under bankruptcy laws, liquidate, or enter into a business combination. If adequate funds are not available within the next twelve months, we may be required to significantly curtail our operations or no longer be able to operate.
C. Research and Development, Patents and Licenses etc.
We do not currently and did not previously have research and development policies in place. Over the past two fiscal years, we have expended zero amounts on research and development. We do not have any patents or licenses.
D. Trend Information
We are not aware as of the filing of this annual report of any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our financial condition.
E. Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that would require disclosure.
6
F. Tabular Disclosure of Contractual Obligations
During the year ended December 31, 2019 the Company was not party to any contractually obligated payments.
G. Safe Harbor
This annual report contains forward-looking statements. We intend to identify forward-looking statements in this report using words such as "anticipates", "will", "believes", "plans", "expects", "future", "intends" or similar expressions. These statements are based on our beliefs as well as assumptions we made using information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Some, but not all, of the factors that may cause these differences include those discussed in the Risk Factors section. You should not place undue reliance on these forward-looking statements.
ITEM 6 - Directors, Senior Management and Employees
A. Directors and Senior Management
The following table sets forth the name, age, and position of each Director and Executive Officer of Kbridge Energy Corp.:
|
Name of Officer
|
|
Age
|
|
Office
|
|
Jai Woo Lee
|
|
69
|
|
Chief Executive Officer, Chief Financial Officer, and Chairman of the Board
Resigned as President June 15, 2009
Appointed Chairman February 24, 2010
Appointed President December 30, 2010
Resigned as President December 1, 2011
Appointed as Director on incorporation
|
|
|
|
|
|
|
|
Piers VanZiffle
|
|
72
|
|
President and Director
Appointed Director March 23, 2018
Appointed President March 23, 2018
|
The following summary outlines the professional background of the directors and executive officers of the Company.
Jai Woo Lee: Mr. Lee founded the Company to focus on the development and commercialization of new technologies, and the identification and evaluation of commercially viable products and ventures. Mr. Lee studied at Seoul National University, in Seoul, Korea. He moved from Korea to Canada in the 1970's to establish his export business of live cattle and beef, and his private company became a successful exporter of Canadian products to Korea.
Piers VanZiffle: Mr. VanZiffle is an experienced Comptroller with over 40 years’ experience in finance and accounting with both private and public companies, having been a member of the Canadian Institute of Chartered Accountants from 1977 to 1990, and has practiced accounting as a self-employed sub-contractor to many companies to date.
Arrangements
There are no arrangements or understandings between our directors or executive officers and our major shareholders, customers, suppliers or others pursuant to which any director or officer was or is to be selected as a director or officer. In addition, there are no agreements or understandings for the officers or directors to resign at the request of another person and the above-named officers and directors are not acting on behalf of nor acting at the direction of any other person.
7
B. Compensation
Executive Compensation
During the year ended December 31, 2019, the Company incurred management fees of $Nil (2018 - $8,796; 2017 - $nil) to the Director of the Company for management services rendered.
The amount of retirement and severance benefits accrued for our executive officers and directors in 2019, 2018, and 2017 was $nil. There were no pension, retirement or other similar benefits set aside for our executive officers and directors in 2019, 2018, and 2017.
Compensation of Directors
During the years 2019, 2018, and 2017, there was $nil compensation paid to directors for their services as directors.
Stock Option Plan
The Company currently does not have a stock option plan.
Under our Articles of Incorporation, we may grant options for the purchase of our shares to certain qualified officers and employees.
C. Board Practices
General
The board of directors has the ultimate responsibility for the administration of the affairs of the Company. Our Articles of Incorporation, as currently in effect, provides for a board of directors of not less than three directors and not more than ten directors. Under our Articles, all directors serve a three-year term but may be replaced at the ordinary general meeting of shareholders convened with respect to the last fiscal year. It is expected that all current directors will continue to serve the Company in the future. The directors are elected at a general meeting of shareholders by a majority vote of the shareholders present or represented by proxy, subject to minimum quorum requirements of at least one third of all issued and outstanding shares voting.
Currently and from June 2006 to date no one has served or serves on the board as an independent director.
Committees
The Company does not have an audit, compensation or remuneration committee. The entire board of directors serves these functions.
D. Employees
Employment Contracts with Employees and Officers
The Company does not have any employment agreement with any employees, directors or officers.
8
E. Share Ownership
The following table sets forth certain information regarding the beneficial ownership of the common stock of the Company as of December 31, 2019 of: (a) each of the Company's directors and officers, and (b) all directors and officers of the Company, as a group:
|
Director or Officer
|
Number of Common
Shares Owned(1)
|
Percentage of
Outstanding (%)(1)(2)
|
|
Jai Woo Lee
|
6,120,000
|
42.14%
|
|
Piers VanZiffle
|
50,000
|
0.003
|
|
Directors and Officers as a Group
|
6,170,000
|
42.143%
|
Notes:
(1)Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days of December 31, 2012, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
(2)Percentages are based on 14,522,727 shares of common stock issued and outstanding as of December 31, 2019 unless otherwise noted.
ITEM 7 - Major Shareholders and Related Party Transactions
A. Major Shareholders
Table of Major Shareholders
The following table sets forth information with respect to the beneficial ownership of our shares as of December 31, 2019 by each person known to us to own beneficially more than five percent (5%) of our shares.
|
Identity of Person or Group(1)
|
Total shares
beneficially owned
|
Percentage of total
shares issued and
outstanding(1)(2)
|
Citizenship
|
|
Jai Woo Lee
|
6,120,000
|
42.14
|
Korea
|
|
Yun Kwan Choi
|
2,000,000
|
13.77
|
Korea
|
|
Kwon Jung Soo
|
2,000,000
|
13.77
|
Korea
|
Notes:
(1)Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of December 31, 2012 are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
(2)Percentages are based on 14,522,727 common shares issued and outstanding as of December 31, 2019 unless otherwise noted.
Changes in Ownership Percentage
The following table shows changes over the last five years in the percentage of the issued share capital for the Group held by major shareholders, either directly or by virtue of ownership of our common shares at December 31 of each year.
9
|
Identity of Person or Group(1)
|
2019(1)(2)
|
2018(1)(2)
|
2017(1)(2)
|
2016(1)(2)
|
2015(1)(2)
|
|
Jai Woo Lee
|
42.14
|
45.10
|
46.97
|
46.97
|
46.97
|
|
Hye Kyung Lee(3)(4)
|
1.08
|
1.08
|
1.08
|
1.08
|
1.08
|
|
Sun Joo Choi
|
2.75
|
2.75
|
2.75
|
2.75
|
2.75
|
|
CDS & Co.
|
15.29
|
15.29
|
15.29
|
15.29
|
15.29
|
|
Yun Kwan Choi
|
13.77
|
13.77
|
13.77
|
13.77
|
13.77
|
|
Kwon Jung Soo
|
13.77
|
13.77
|
13.77
|
13.77
|
13.77
|
Notes:
(1)Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
(2)Percentages are based on: 14,522,727 common shares issued and outstanding as of December 31, 2019, 2018, 2017, 2016 and 2015.
(3)Includes 156,214 common shares of the Company held by Penn Capital Canada Ltd., a private company controlled by Hye Kyung Lee.
(4)Ms. Lee changed her last name in 2007 from Kim to Lee.
With the exception of the above-noted transactions, there has not been a significant change in the ownership percentage held by any major shareholders during the past five years.
Voting Rights
Our major shareholders do not have any different voting rights than other shareholders.
Corporate or Foreign Government Ownership
We are not controlled directly or indirectly by any other corporation or any other foreign government or by any other natural or legal person, severally or jointly.
Geographic Breakdown of Shareholders
The following lists the geographical distribution of shareholders at December 31, 2019:
|
Location
|
Number of
registered
shareholders
|
Number of
shares
|
|
Canada
|
39
|
242,214
|
|
United States
|
2
|
8,000
|
|
Cede & Co
|
1
|
2,221,033
|
|
Other
|
17
|
12,051,480
|
|
Total
|
59
|
14,522,727
|
Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing-house was located.
Change of Control
There are no arrangements for which, through their operation at a subsequent date, may result in a change in control of the Company.
10
B. Related Party Transactions
During the fiscal years ended December 31, 2019 and 2018 the following amounts were incurred by us under related party transactions:
As at December 31, 2019, the Company owed $904,827 (2018 - $ 1,100,959) to the Chief Executive Officer of the Company and $16,207 (2018 - $Nil) to the President, and a company controlled by the President, which is non-interest bearing, unsecured, and due on demand.
During the year ended December 31, 2019, the Company earned $211,414 (2018 - $131, 171) in consulting revenues from a company controlled by the CEO of the Company.
During the year ended December 31, 2019, the Company paid $9,044 (2018 - $8,796) in consulting fees to the President of the Company.
As at December 31, 2019 and 2018, the Company had an equity investment in a company related to the CEO. During the year ended December 31, 2019, the Company invested an additional $6,608 (2018 - $256,560) in this company.
As at December 31, 2019, the Company has loan receivable of $23,588 (2018 - $Nil) from a company controlled by the President of the Company.
During the year ended December 31, 2018, the Company wrote off a loan receivable totaling $111,652 from a company related to the President of the Company.
In the event conflicts between the Company and its related parties arise, the Company will attempt to resolve any such conflicts of interest in favor of the Company. The officers and directors of the Company are accountable to the Company and its shareholders as fiduciaries, which require that such officers and directors exercise good faith and integrity in handling the Company's affairs. A shareholder may be able to institute legal action on behalf of the Company on behalf of that shareholder and all other similarly situated shareholders to recover damages or for other relief in cases of the resolution of conflicts in any manner prejudicial to the Company.
C. Interests of Experts and Counsel
Not required, as this form 20-F filing is made as an annual report.
ITEM 8 - Financial Information
A. Statements and Other Financial Information
Financial Statements
The following consolidated financial statements of the Company have been included in Item 18, as audited by an independent auditor and accompanied by an audit report, as of December 31, 2019 and for the year then ended:
·Balance sheets;
·Statements of loss and comprehensive loss;
·Statements of stockholders' deficit;
·Statements of cash flows; and
·Notes to the financial statements.
Legal Proceedings
The Company is not involved in any litigation or legal proceedings and to its knowledge, no material legal proceedings involving is to be initiated against the Company.
11
Dividends
The Company has never paid any dividends and does not intend to pay any dividends in the near future.
B. Significant Changes
There has been no significant change in the Company's affairs since the December 31, 2019 financial statements.
ITEM 9 - The Offer and Listing
A. Offer and Listing Details
The shares of common stock of the Company are quoted by FINRA on the OTCBB under the symbol BMMCF. The following sets forth the high and low closing prices in United States funds of our common shares quoted on the OTCBB for the past five years:
|
Year Ended
|
|
High
|
|
Low
|
|
December 31, 2015
|
US$
|
0.03
|
US$
|
0.0021
|
|
December 31, 2016
|
US$
|
0.00
|
US$
|
0.0011
|
|
December 31, 2017
|
US$
|
0.29
|
US$
|
0.0011
|
|
December 31, 2018
|
US$
|
0.05
|
US$
|
0.0021
|
|
December 31, 2019
|
US$
|
0.14
|
US$
|
0.0010
|
B. Plan of Distribution
Not required, as this form 20-F filing is made as an annual report.
C. Markets
The shares of the common stock of the Company have been quoted on the OTCBB since May 27, 2003. No trades in our common shares occurred on the OTCBB market prior to November 3, 2003.
D. Selling Shareholders
Not required, as this form 20-F filing is made as an annual report.
E. Dilution
Not required, as this form 20-F filing is made as an annual report.
F. Expenses of the Issue
Not required, as this form 20-F filing is made as an annual report.
ITEM 10 - Additional Information
A. Share Capital
The Company’s authorized capital consists of unlimited common shares without par value and unlimited preferred shares without par value. As at December 31, 2019 and June 15, 2020, the Company had 14,522,727 common shares issued and outstanding.
No shares were issued during the years ended December 31, 2019, 2018 and 2017.
12
B. Bylaws and Articles of Association
Our Articles of Incorporation and Bylaws of the Company are incorporated by reference to certain exhibits to our Form F-1 registration statement filed with the Securities and Exchange Commission on May 27, 2003.
C. Material Contracts
None
D. Exchange Controls and other Limitations Affecting Security Holders
There currently are no laws, decrees, regulations or other legislation in Canada that restricts the export or import of capital or that affects the remittance of dividends, interest or other payments to non-resident holders of the Company's securities, other than withholding tax requirements.
There is no limitation, imposed either by Canadian law or by the Articles of Incorporation and other charter documents of the Company, on the right of a non-resident to hold voting shares of the Company, other than as provided by the Investment Canada Act as amended (the "Act") and as amended by the North American Free Trade Agreement Implementation Act (Canada) and the World Trade Organization (WTO) Agreement Implementation Act. The Act requires notification and, in certain cases, advance review and approval by the Government of Canada of the acquisition by a "non-Canadian" of "control of a Canadian business," all as defined in the Act. Generally, the threshold for review will be higher in monetary terms for a member of the WTO or NAFTA.
E. Taxation
United States and Canada: there are reciprocal tax treaties between Canada and the United States. Potential purchasers are urged to consult their tax advisors as to the particular consequences to them under U.S. federal, state, local and applicable foreign tax laws of the acquisition, ownership and disposition of common shares.
F. Dividends and Paying Agents
Not required, as this 20-F filing is made as an annual report.
G. Statement by Experts
Not required, as this 20-F filing is made as an annual report.
H. Documents on Display
You may review a copy of the Company's filings with the SEC, including exhibits and schedules filed with it, in the SEC's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 or the Conventional Reading Rooms' Headquarters Office at 212-551-8090 for further information on the public reference rooms. The SEC maintains a web site (www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.
I. Subsidiary Information
As at December 31, 2019, the Company has one wholly owned subsidiary company.
13
ITEM 11 - Quantitative and Qualitative Disclosures about Market Risk
Transaction Risk and Currency Risk Management
We are subject to market risk exposures due to fluctuations in exchange rates and interest rates. Changes in the foreign exchange rate between the CDN$ and the US$ may affect us due to the effect of such changes on any shareholder distributions to the shareholders using US$ as a main currency. The Company denominates its financial statements in United States dollars but conducts its daily affairs in Canadian dollars. We are not currently carrying significant amounts of short term or long-term debt. Upward fluctuations in interest rates increase the cost of additional debt and the interest cost of outstanding floating rate borrowings.
Inflation
We do not consider that inflation in Canada has had a material impact on our results of operations. Inflation in Canada in 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019 was: 1.32%, 2.35%, 2.30%, 0.83%, 1.24%, 1.47%, 1.61%, 1.50%, 1.61%, 2.30% and respectively.
ITEM 12 - Descriptions of Securities Other than Equity Securities
Not required, as this 20-F filing is made as an annual report.
14
PART III
ITEM 17 - Financial Statements
KBRIDGE ENERGY CORP.
Consolidated Financial statements
December 31, 2019
(Expressed in U.S. Dollars)
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Kbridge Energy Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of KBridge Energy Corp. (the “Company”) as of December 31, 2019, and the related consolidated statement of loss and comprehensive loss, stockholders’ deficit, and cash flows for the year then ended and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are required to be independent with respect to the Company in accordance with the relevant ethical requirements relating to our audit.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures including examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis of Matter
The accompanying financial statements have been prepared assuming that Kbridge Energy Corp. will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a working capital deficit, and has incurred significant operating losses and negative cash flows from operations since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BUCKLEY DODDS LLP
Vancouver, Canada
June 15, 2020
We have served as the Company’s auditor since 2020.
F-1
KBRIDGE ENERGY CORP.
Consolidated balance sheets
(Expressed in U.S. Dollars)
|
|
December 31,
2019
$
|
December 31,
2018
$
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
Cash
|
65,186
|
36,629
|
|
Marketable securities (Note 3)
|
30,792
|
4,701
|
|
Accounts receivable (Note 8)
|
14,516
|
27,621
|
|
Loan receivable (Note 4 and 8)
|
23,588
|
249,864
|
|
|
134,082
|
318,815
|
|
Equity Investment (Notes 8 and 11)
|
27,034
|
133,397
|
|
Oil and gas property (Note 5)
|
23,291
|
40,500
|
|
Total assets
|
184,407
|
492,712
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable and accrued liabilities (Note 6)
|
45,522
|
80,670
|
|
Loan payable (Note 7)
|
172,842
|
164,556
|
|
Due to related party (Note 8)
|
921,034
|
1,100,959
|
|
|
1,139,398
|
1,346,185
|
|
|
|
|
|
Asset retirement obligation (Note 10)
|
4,042
|
3,848
|
|
Total liabilities
|
1,143,440
|
1,350,033
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
Common stock
Authorized: unlimited common shares
without par value Issued and outstanding
common shares: 14,522,727 (2018: 14,522,727)
|
2,358,954
|
2,358,954
|
|
Additional paid-in capital
|
9,527
|
9,527
|
|
Accumulated other comprehensive loss
|
(50,653)
|
(35,102)
|
|
Deficit
|
(3,276,861)
|
(3,190,700)
|
|
Total stockholders’ deficit
|
(959,033)
|
(857,321)
|
|
Total liabilities and stockholders’ deficit
|
184,407
|
492,712
|
Nature of operations and continuance of business (Note 1)
See accompanying notes to these consolidated financial statements
F-2
KBRIDGE ENERGY CORP.
Consolidated statements of loss and comprehensive loss
(Expressed in U.S. dollars)
|
|
Year ended
December 31,
2019
|
Year ended
December 31,
2018
|
|
|
|
|
|
Oil and Gas
|
|
|
|
Revenue (Notes 9)
|
$
|
27,988
|
$
|
46,840
|
|
Direct operating costs
|
|
(10,238)
|
|
(14,777)
|
|
Depletion (Note 5)
|
|
(18,841)
|
|
(19,295)
|
|
Royalties
|
|
(1,506)
|
|
(2,836)
|
|
Gross profit
|
|
(2,597)
|
|
9,932
|
|
Consulting (Notes 8 and 9)
|
|
212,095
|
|
132,001
|
|
|
|
209,498
|
|
141,933
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
Administration fees
|
|
26,229
|
|
27,882
|
|
Advertising
|
|
29,461
|
|
48,797
|
|
Consulting fees (Note 8)
|
|
29,541
|
|
99,366
|
|
Foreign exchange (gain) loss
|
|
7,934
|
|
(29,184)
|
|
Office and miscellaneous
|
|
5,616
|
|
3,628
|
|
Professional fees
|
|
23,362
|
|
19,044
|
|
Salaries and benefits
|
|
27,418
|
|
31,345
|
|
Travel and promotion
|
|
68,085
|
|
30,226
|
|
|
|
|
|
|
|
Total operating expenses
|
|
217,646
|
|
231,104
|
|
|
|
|
|
|
|
Income (loss) before other items
|
|
(8,148)
|
|
(89,171)
|
|
|
|
|
|
|
|
Other items
|
|
|
|
|
|
Interest income (Note 4)
|
|
1,544
|
|
5,819
|
|
Assignment fee
|
|
(15,073)
|
|
-
|
|
Loss on equity investment (Note 11)
|
|
(117,318)
|
|
(129,675)
|
|
Impairment of marketable securities (Note 3)
|
|
-
|
|
(3,818)
|
|
Write off of loan receivable (Note 4)
|
|
-
|
|
(111,652)
|
|
Write off of accounts payable (Note 6)
|
|
52,834
|
|
-
|
|
|
|
|
|
|
|
Net loss for the year
|
$
|
(86,161)
|
$
|
(328,497)
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
Unrealized gain on marketable securities (Note 3)
|
|
26,091
|
|
-
|
|
Effect on translating foreign operation
|
|
(41,642)
|
|
59,165
|
|
|
|
|
|
|
|
Total comprehensive loss
|
$
|
(101,712)
|
$
|
(269,332)
|
|
|
|
|
|
|
|
Earnings (loss) per share, basic and diluted
|
$
|
(0.01)
|
$
|
(0.02)
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
14,522,727
|
|
14,522,727
|
See accompanying notes to these consolidated financial statements
F-3
KBRIDGE ENERGY CORP.
Consolidated statements of stockholders’ deficit
(Expressed in U.S. dollars)
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
Number
|
Amount
($)
|
|
Additional
paid-in
capital
$
|
|
Accumulated
other
comprehensive
loss
$
|
|
Deficit
$
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2017
|
14,522,727
|
2,358,954
|
|
9,527
|
|
(94,267)
|
|
(2,862,203)
|
|
(587,989)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign exchange
translation gain
|
-
|
-
|
|
-
|
|
59,165
|
|
-
|
|
59,165
|
|
Net loss for the year
|
-
|
-
|
|
-
|
|
-
|
|
(328,497)
|
|
(328,497)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018
|
14,522,727
|
2,358,954
|
|
9,527
|
|
(35,102)
|
|
(3,190,700)
|
|
(857,321)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
-
|
-
|
|
-
|
|
-
|
|
(86,161)
|
|
(86,161)
|
|
Unrealized gain on marketable securities
|
-
|
-
|
|
-
|
|
26,091
|
|
-
|
|
26,091
|
|
Unrealized foreign exchange
translation gain
|
-
|
-
|
|
-
|
|
(41,642)
|
|
-
|
|
(41,642)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
14,522,727
|
2,358,954
|
|
9,527
|
|
(50,653)
|
|
(3,276,861)
|
|
(959,033)
|
See accompanying notes to these consolidated financial statements
F-4
KBRIDGE ENERGY CORP.
Consolidated statements of cash flows
(Expressed in U.S. dollars)
|
|
Year ended
December 31,
2019
$
|
Year ended
December 31,
2018
$
|
|
|
|
|
|
Operating activities
|
|
|
|
Net loss for the year
|
|
(86,161)
|
|
(328,497)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
Impairment of marketable securities
|
|
-
|
|
3,818
|
|
Depletion
|
|
18,841
|
|
19,295
|
|
Accrued interest
|
|
(1,544)
|
|
(5,819)
|
|
Foreign exchange
|
|
-
|
|
24,733
|
|
Loss on equity investment
|
|
117,318
|
|
129,675
|
|
Write off of loan receivable
|
|
-
|
|
111,652
|
|
Write off of accounts payable
|
|
(52,834)
|
|
-
|
|
Assignment fee
|
|
15,073
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
13,105
|
|
(1,315)
|
|
Accounts payable and accrued liabilities
|
|
17,685
|
|
(7,562)
|
|
Net cash provided by operating activities
|
|
41,484
|
|
(54,020)
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Loan receivable given to related parties
|
|
(33,555)
|
|
(209,938)
|
|
Loan repayment received from related parties
|
|
261,647
|
|
61,625
|
|
Proceeds received from loan
|
|
-
|
|
36,652
|
|
Repayment of loans
|
|
-
|
|
(161,267)
|
|
Equity Investment
|
|
-
|
|
(256,560)
|
|
Net cash used in investing activities
|
|
228,092
|
|
(529,488)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Advances from related parties
|
|
72,581
|
|
581,011
|
|
Repayment of advances from related parties
|
|
(320,112)
|
|
-
|
|
Net cash provided by financing activities
|
|
(247,531)
|
|
581,011
|
|
|
|
|
|
|
|
Effect of foreign exchange
|
|
6,512
|
|
3,958
|
|
|
|
|
|
|
|
Increase in cash
|
|
28,557
|
|
1,461
|
|
Cash, beginning of year
|
|
36,629
|
|
35,168
|
|
Cash, end of year
|
|
65,186
|
|
36,629
|
|
|
|
|
|
|
|
Supplemental Disclosures:
|
|
|
|
|
|
Income taxes paid
|
|
-
|
|
-
|
|
Interest paid
|
|
-
|
|
-
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
Increase in equity investment
|
|
6,608
|
|
-
|
|
Unrealized gain on marketable securities
|
|
26,091
|
|
-
|
See accompanying notes to these consolidated financial statements
F-5
KBRIDGE ENERGY CORP.
Notes to the consolidated financial statements
December 31, 2019
(Expressed in U.S. dollars)
1. Nature of Operations and Continuance of Business
Kbridge Energy Corp. (the “Company”) was incorporated under the laws of British Columbia, Canada, on October 23, 2002. The Company is an oil and gas producing company with operations in Alberta Canada and it also provides consulting services to the resource sector.
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at December 31, 2019, the Company has a working capital deficit of $1,005,316 and has an accumulated deficit of $3,276,861 since inception. In addition, there is uncertainty as to the likely effects of the novel coronavirus (“COVID-19”) outbreak which may, among other things, impact the Company’s operations and ability to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing from its directors and third parties.
2. Summary of Significant Accounting Policies
(a) Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars.
(b) Principals of Consolidation
The consolidated financial statements include the accounts of the Company’s wholly owned Canadian subsidiary Futura Kbridge SPA Inc. On consolidation, all intercompany balances and transactions are eliminated.
(c) Use of Estimates
The preparation of financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the impairment of marketable securities, allowance for doubtful accounts, useful life of oil and gas properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
(d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
F-6
2. Summary of Significant Accounting Policies (continued)
(e) Accounts Receivable
Accounts receivable represents amounts owed from customers for consulting services and the sale of oil and gas. Amounts are presented net of the allowance for doubtful accounts, which represents the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable balance. The Company determines the allowance for doubtful accounts based on historical experience and current economic conditions. The Company reviews the adequacy of its allowance for doubtful account on a regularly basis. As at December 31, 2019 and 2018, the Company has no allowance for doubtful accounts.
(f) Revenue Recognition
The Company derives revenue primarily by providing consulting services and the sale of oil and gas. In accordance with Accounting Standard Codification (“ASC”) 606, “Revenue Recognition”, revenue is recognized when persuasive evidence of an arrangement exists, the services have been rendered and the goods have been delivered, the amount is fixed and determinable, and collection is reasonably assured. Customer advances are deferred and recognized as revenue when the Company has completed all of its performance obligations relating to the consulting services.
(g) Equity Method Investment
The Company accounts for its investment in associated companies in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 323, Investments - Equity Method and Joint Ventures (“ASC 323”). In accordance with ASC 323, associated companies are accounted for as equity method investments. Results of associate companies are presented on a one-line basis. Investments in, and advances to, associated companies are presented on a one-line basis in the caption “Equity Investment” in the Company’s consolidated balance sheets, net of allowance for losses, which represents the Company’s best estimate of probable losses inherent in such assets. The Company’s proportionate share of any associated companies’ net income or loss is presented on a one-line basis in the caption “Gain (loss) on equity investment” in the Company’s consolidated statement of comprehensive income (loss). Transactions between the Company and any associated companies are eliminated on a basis proportional to the Company’s ownership interest.
(h) Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company files income tax returns in Canada. The Company may be subject to a reassessment of income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. Tax authorities of Canada have not audited any of the Company’s income tax returns for the open taxation years noted above.
As of December 31, 2019 and 2018, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the years ended December 31, 2019 and 2018, there were no charges for interest or penalties.
F-7
2. Summary of Significant Accounting Policies (continued)
(i) Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” and ASC 505, “Equity Based Payments to Non-Employees”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
(j) Foreign Currency Translation
The Company changed its function currency from United States dollars to Canadian dollar on January 1, 2015. The subsidiary’s functional currency is the United States dollar. The reporting currency is the United States dollar. Management has adopted ASC 830, “Foreign Currency Matters”.
Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
On consolidation the Company translates assets and liabilities of the parent company to U.S. dollar equivalents using foreign exchange rates which prevailed at the balance sheet date, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on translation of foreign currency denominated transactions or balances are included in the other comprehensive income/loss.
(k) Comprehensive Income/Loss
ASC 220, “Comprehensive Income” establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at December 31, 2019, the Company has included the effect on translation of foreign operation in comprehensive income/loss.
(l) Financial Instruments
ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
F-8
2. Summary of Significant Accounting Policies (continued)
(l) Financial Instruments (continued)
The Company’s financial instruments consist of cash, marketable securities, accounts receivable, loan receivable, accounts payable, loan payable, and amounts due to a related party. Pursuant to ASC 820, the fair value of cash and marketable securities are determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(m) Asset Retirement Obligations
The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The estimated fair value of the asset retirement obligation is based on the current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability is capitalized as part of the cost of the related asset and amortized over its useful life. The liability accretes until the Company settles the obligation.
(n) Oil and Gas properties
The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized.
(o) Earnings (Loss) per Share
The Company computes earnings (loss) per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of loss and comprehensive loss. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
(p) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
(q) Reclassifications
Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.
F-9
3. Marketable Securities
|
|
2018
Fair value
$
|
Additions
$
|
Disposals
$
|
Impairment
$
|
Unrealized
gain
$
|
2019
Fair value
$
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
4,701
|
-
|
-
|
-
|
26,091
|
30,792
|
|
|
|
|
2017
Fair value
$
|
Additions
$
|
Disposals
$
|
Impairment
$
|
Unrealized
gain
$
|
2018
Fair value
$
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
8,519
|
308,714
|
(308,714)
|
(3,818)
|
-
|
4,701
|
During the year ended December 31, 2018, the Company purchased marketable securities with a fair value of $382,033 (CAD$495,000) for $308,714 (CAD$400,000) from an arm’s length party, resulting in a gain of $73,320 (CAD$95,000). The purchase was paid by the arm’s length party as the purpose of the transaction was to assist the arm’s length to dispose of the shares. These shares were later sold for $495,165, resulting in a again of $113,131 (CAD$146,584). The gain belongs to the arm’s length party and therefore was recorded as a payable to the CEO of the Company.
4. Loan Receivable
During the year ended December 31, 2017, the Company entered into a finance agreement with Futura Kbridge SpA (“FKS”), whereby the Company financed $220,000 with interest of 2% per annum, to acquire a solar power project (“Ariztia”). The principal amount was to be paid by December 31, 2019. As at December 31, 2019, the loan and accrued interest has been repaid.
During the year ended December 31, 2018, the Company entered into a finance agreement with FKS, whereby the Company financed $73,000 with interest of 2% per annum, to acquire a solar power project (“Guanare”). The principal amount was payable by December 31, 2019. As at December 31, 2019, the loan and accrued interest has been repaid. During the year ended December 31, 2019, the Company recorded interest income of $1,544 in relation to this loan.
During the year ended December 31, 2018, the Company advanced $136,938 (CAD$177,000) to a related party, Columbia Capital Inc., which was non-interest bearing, unsecured and due on demand. As at December 31, 2018, $11,625 (CAD$15,000) has been repaid. A loan payable balance that was due at December 31, 2017 totaling $14,109 was used to offset the loan receivable. As at December 31, 2018, the Company wrote off the loan receivable totaling $111,652 due to uncertainty in collection.
During the year ended December 31, 2019, the Company advanced $33,555 (CAD$43,936) to a related party, Columbia Capital Inc., which is non-interest bearing, unsecured and due on demand. As at December 31, 2019, $10,240 (CAD$13,300) has been repaid.
|
|
2019
$
|
2018
$
|
|
Opening balance
|
249,864
|
220,380
|
|
Transferred from loan payable
|
-
|
(14,109)
|
|
Addition
|
33,555
|
209,938
|
|
Repayment
|
(261,647)
|
(61,625)
|
|
Interest
|
1,544
|
5,819
|
|
Write off
|
-
|
(111,652)
|
|
Foreign exchange
|
272
|
1,113
|
|
|
23,588
|
249,864
|
F-10
5. Oil and Gas Property
During the year ended December 31, 2015, the Company purchased a 50% interest in an oil and gas well in Alberta, Canada for $90,318 (CAD$125,000). At December 31, 2019, the Company has no determined reserve in the well. Management estimated the useful life of the well was five years. During the year ended December 31, 2019, the Company recorded depletion of $18,841 (CAD$25,000) (2018 - $19,295 (CAD$25,000)).
|
|
2019
$
|
2018
$
|
|
Opening balance
|
40,500
|
63,970
|
|
Depletion
|
(18,841)
|
(19,295)
|
|
Foreign exchange
|
1,632
|
(4,175)
|
|
|
23,291
|
40,500
|
6. Accounts Payable and Accrued Liabilities
|
|
2019
$
|
2018
$
|
|
Trade payables
|
24,804
|
57,604
|
|
GST payable
|
1,479
|
1,079
|
|
Accrued liabilities
|
19,239
|
21,987
|
|
|
45,522
|
80,670
|
During the year ended December 31, 2019, the Company wrote off $52,834 (CAD$70,103) of accounts payable due to the Company’s assessment of the extinguishment of the contractual obligation.
7. Loan Payable
During the year ended December 31, 2018, the Company received a loan of $329,864 (CAD$450,000), with $36,652 (CAD$50,000) in cash and $308,714 (CAD$400,000) in marketable securities (Note 3). The Company repaid $161,267 (CAD$220,000) to the shareholders of the arm’s length party who paid for the purchase of marketable securities (Note 3). The remaining balance of the loan was repaid by the CEO of the Company.
As at December 31, 2019, the Company owed $172,842 (CAD$224,487) (2018 - $164,556 (CAD$224,487)) to an unrelated party, which is non-interest bearing, unsecured, and due on demand.
8. Related Party Transactions
(a)As at December 31, 2019, the Company owed $904,827 (2018 - $1,100,959) to the Chief Executive Officer (“CEO”) of the Company, and $16,207 (2018 - $Nil) to the President, and a company controlled by the President, which is non-interest bearing, unsecured, and due on demand.
(b)During the year ended December 31, 2019, the Company earned $211,414 (2018 - $131,171) in consulting revenues from companies that are controlled by the CEO of the Company.
(c)During the year ended December 31, 2019, the Company invested $9,044 (2018 - $8,796) in consulting fees to the President of the Company.
(d)As at December 31, 2019 and 2018, the Company had an equity investment in a company related to the CEO. During the year ended December 31, 2019, the Company invested an additional $6,608 (2018 - $256,560 (CAD$350,000)) in this company. During the year ended December 31, 2019, the value of the investment was reduced to $27,034 (2018 - $133,397) (Note 11).
(e)As at December 31, 2018, the Company wrote off a loan receivable totaling $111,652 from a Company related to the President of the Company (Note 4).
F-11
9. Concentrations
During the year ended December 31, 2019, the Company’s generated 100% of its revenues from three customers (2018 - 100% with three customers). As at December 31, 2019, the Company had 100% of its accounts receivable with three customers (2018 - 100% with three customers).
10. Asset Retirement Obligation
Laws and regulations concerning environmental protection affect the Company’s oil and gas operations. Under current regulations, the Company is required to meet performance standards to minimize environmental impact from its activities and to perform site restoration and other closure activities. The Company’s provision for future site closure and reclamation costs is based on known requirements. The Company’s determination of the environmental rehabilitation provision arising from the property at December 31, 2019 was $4,042 (CAD $5,250) (2018 - $3,848 (CAD$5,250)). This estimate was based upon an undiscounted future costs of $3,724 (CAD$5,000), an annual inflation rate of 2% and risk free rate of 1.7%. The closure and reclamation expenditures are expected to be incurred in 2021.
|
|
2019
$
|
2018
$
|
|
Opening balance
|
3,848
|
4,185
|
|
Foreign exchange
|
194
|
(337)
|
|
Ending balance
|
4,042
|
3,848
|
11. Equity Investment
During the year ended December 31, 2018, the Company purchased 56,000 common shares in Kbridge Resources Development (“KRD), a company related to the CEO, representing 28.57% ownership of KRD, for $256,560 (CAD$350,000).
On March 20, 2019, the CEO of the Company sold 38,000 common shares in KRD to the Company for $6,608 (CAD$8,800). The Company’s ownership in KRD increased to 47.96%.
The continuity of the Company’s investment in KRD is as follows:
|
|
2019
$
|
2018
$
|
|
Opening balance
|
133,397
|
-
|
|
Purchase of equity investment
|
6,608
|
256,560
|
|
Share of loss of equity investee
|
(117,318)
|
(129,675)
|
|
Foreign exchange
|
4,347
|
6,512
|
|
Ending balance
|
27,034
|
133,397
|
|
As at
|
2019
$
|
2018
$
|
|
|
|
|
|
Current assets
|
140,685
|
192,806
|
|
Non-current assets
|
1,609,849
|
1,050,328
|
|
Current liabilities
|
(1,456,912)
|
(682,782)
|
|
Non-current liabilities
|
(691,934)
|
(717,473)
|
|
Net assets
|
(398,312)
|
(157,121)
|
|
Year ended
|
2019
$
|
2018
$
|
|
Revenue
|
51,480
|
271,120
|
|
Expenses
|
(295,984)
|
(724,742)
|
|
Loss for the year
|
(244,504)
|
(453,622)
|
F-12
12. Income Taxes
The Company has non-capital losses carried forward of $1,275,000 available to offset taxable income in future years which expires beginning in fiscal 2026, and expiring in 2039.
The Company is subject to Canadian federal and provincial income taxes at a combined rate of 27% (2018 – 27%). The reconciliation of the provision for income taxes at the combined Canadian federal and provincial statutory rate compared to the Company’s income tax expense as reported is as follows:
|
|
2019
$
|
2018
$
|
|
Loss before income tax
|
(86,161)
|
(328,497)
|
|
Statutory tax rate
|
27%
|
27%
|
|
Expected tax expense (recovery)
|
(23,000)
|
(88,690)
|
|
|
|
|
|
Permanent differences and other
|
(50,391)
|
27,420
|
|
Effect of foreign exchange
|
(15,000)
|
93,130
|
|
Effect of change in tax rate
|
-
|
(12,620)
|
|
Change in valuation allowance
|
88,391
|
(19,240)
|
|
Provision for income taxes
|
-
|
-
|
|
|
2019
$
|
2018
$
|
|
Deferred income tax assets (liability)
|
|
|
|
Non-capital losses carried forward
|
344,000
|
255,710
|
|
Marketable securities
|
14,000
|
19,681
|
|
Resource pool
|
21,000
|
15,257
|
|
Asset retirement obligation
|
(1,000)
|
(1,039)
|
|
Total gross deferred income tax assets
|
378,000
|
289,609
|
|
Valuation allowance
|
(378,000)
|
(289,609)
|
|
Net deferred income tax asset
|
-
|
-
|
11. Subsequent Event
In March 2020, the World Health Organization characterized the COVID-19 virus as a global pandemic. There is significant uncertainty as to the likely effects of this outbreak which may, among other things, impact the Company’s supplies and may negatively impact the capital markets, where the Company has raised equity in the past. At the current time, the Company is unable to quantify the potential impact this pandemic may have on the Company’s future financial statements.
F-13
ITEM 18 - Exhibits
The following exhibits are included herein, except for the exhibits marked with an asterisk, which are incorporated herein by reference.
|
Exhibit No.
|
|
Exhibit Title
|
|
|
|
|
|
1.1*
|
|
Notice of Articles
|
|
1.2*
|
|
Transition Notice
|
|
1.3*
|
|
Articles
|
|
1.4*
|
|
Articles of Amendment
|
|
12.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
12.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
13.1
|
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
* previously filed
19
