natan resources ltd. interim financial statements - Canadian Stocks
natan resources ltd. interim financial statements - Canadian Stocks
natan resources ltd. interim financial statements - Canadian Stocks
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
NATAN RESOURCES LTD.<br />
INTERIM FINANCIAL STATEMENTS<br />
(UNAUDITED)<br />
FOR THE THREE MONTHS ENDED JULY 31, 2011<br />
EXPRESSED IN CANADIAN DOLLARS
NATAN RESOURCES LTD.<br />
July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS<br />
The accompanying unaudited <strong>interim</strong> <strong>financial</strong> <strong>statements</strong> of the Company have been prepared by and are<br />
the responsibility of the Company’s management.<br />
The Company’s independent auditor has not performed a review of these <strong>financial</strong> <strong>statements</strong> in accordance<br />
with standards established by the <strong>Canadian</strong> Institute of Chartered Accountants for a review of <strong>interim</strong><br />
<strong>financial</strong> <strong>statements</strong> by an entity’s auditor.<br />
Under National Instrument 51-102, Part 4, Subsection 4.3(3)(a), if an auditor has not performed a review of the <strong>interim</strong> <strong>financial</strong><br />
<strong>statements</strong>, they must be accompanied by a notice indicating that the <strong>financial</strong> <strong>statements</strong> have not been reviewed by an auditor.<br />
1
NATAN RESOURCES LTD.<br />
July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
Page<br />
Notice to Reader 1<br />
Content 2<br />
Interim Statements of Financial Position 3<br />
Interim Statements of Comprehensive Loss 4<br />
Interim Statements of Cash Flows 5<br />
Interim Statements of Changes in Shareholders’ Equity 6<br />
Notes to Interim Financial Statements 7-17<br />
2
NATAN RESOURCES LTD.<br />
Interim Statements of Financial Position<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
Assets<br />
July 31, April 30, August 18,<br />
2011 2011<br />
2010<br />
(Note 8)<br />
$ $ $<br />
Current<br />
Cash 951,224 421,572 -<br />
Prepaid expenses 4,000 4,000 -<br />
955,224 425,572 -<br />
Due from shareholders - - 1<br />
Liabilities<br />
955,224 425,572 1<br />
Current<br />
Accounts payable and accrued liabilities 15,126 12,248 -<br />
Advance due to director (Note 4) 10,000 10,000 -<br />
25,126 22,248 -<br />
Shareholders' equity<br />
Capital stock (Note 3) 951,155 409,671 1<br />
Reserves (Note 3) 81,688 81,688 -<br />
Deficit (102,745) (88,035) -<br />
930,098 403,324 1<br />
Nature and Continuance of Operations (Note 1) and Subsequent Events (Note 7)<br />
955,224 425,572 1<br />
Approved and authorized by the Board on October 31, 2011.<br />
On Behalf of the Board:<br />
“Brett Matich”<br />
Brett Matich, Director<br />
“Joel Schuster”<br />
Joel Schuster, Director<br />
The accompanying notes are an integral part of these <strong>interim</strong> <strong>financial</strong> <strong>statements</strong><br />
3
NATAN RESOURCES LTD.<br />
Interim Statements of Comprehensive Loss<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
For the<br />
three months<br />
ended July 31,<br />
2011<br />
$<br />
Expenses<br />
Bank charge and interest 52<br />
Office 281<br />
Regulatory and shareholders service 4,857<br />
Rent 9,520<br />
Loss and comprehensive loss for the period (14,710)<br />
Basic and diluted loss per share (0.00)<br />
Weighted average number of common<br />
shares outstanding 4,228,262<br />
There are no comparative figures for the period ended July 31, 2010 because the Company was incorporated on August 18,<br />
2010.<br />
The accompanying notes are an integral part of these <strong>interim</strong> <strong>financial</strong> <strong>statements</strong><br />
4
NATAN RESOURCES LTD.<br />
Interim Statements of Cash Flows<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
For the<br />
three months<br />
ended July 31,<br />
2011<br />
$<br />
Cash flows used in operating activities<br />
Loss for the period (14,710)<br />
Changes in non-cash working capital item<br />
Increase in accounts payable 2,878<br />
(11,832)<br />
Cash flows from financing activities<br />
Proceeds from share issuances 550,000<br />
Share issuance costs (8,516)<br />
541,484<br />
Net change in cash 529,652<br />
Cash, beginning of period 421,572<br />
Cash, end of period 951,224<br />
There are no comparative figures for the period ended July 31, 2010 because the Company was incorporated on August 18,<br />
2010.<br />
The accompanying notes are an integral part of these <strong>interim</strong> <strong>financial</strong> <strong>statements</strong><br />
5
NATAN RESOURCES LTD.<br />
Interim Statements of Changes in Shareholders’ Equity<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
Total<br />
Number of<br />
Shares Issued Capital Stock Reserves Deficit<br />
Shareholders'<br />
Equity<br />
$ $ $ $<br />
Balance at August 18, 2010 - - - - -<br />
Share issued on incorporation 1 1 - - 1<br />
Shares issued for cash 8,400,000 520,000 - - 520,000<br />
Share issuance costs - (110,330) 12,220 - (98,110)<br />
Share based compensation - - 69,468 - 69,468<br />
Loss for the period - - - (88,035) (88,035)<br />
Balance at April 30, 2011 8,400,001 409,671 81,688 (88,035) 403,324<br />
Shares issued for cash 5,000,000 550,000 - - 550,000<br />
Share issuance costs - (8,516) - - (8,516)<br />
Loss for the period - - - (14,710) (14,710)<br />
Balance at July 31, 2011 13,400,001 951,155 81,688 (102,745) 930,098<br />
There are no comparative figures for the period ended July 31, 2010 because the Company was incorporated on August 18, 2010.<br />
The accompanying notes are an integral part of these <strong>interim</strong> <strong>financial</strong> <strong>statements</strong><br />
6
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 1 - Nature and Continuance of Operations<br />
Natan Resources Ltd. (the “Company”) was incorporated on August 18, 2010 under the Business Corporations Act of British<br />
Columbia. On April 13, 2011, the Company successfully completed its Initial Public Offering (“IPO”) to be classified as a<br />
Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4. On April 15, 2011, the Company began<br />
trading its stock on the TSX-V under the symbol NRL.P. The principal business of the Company is the identification and<br />
evaluation of assets or a business and, once identified or evaluated, to negotiate an acquisition or participation in a business<br />
subject to receipt of shareholder approval, if required, and acceptance by regulatory authorities (the “Qualifying Transaction”).<br />
On August 31, 2011, the Company signed a non-binding letter of intent ("LOI") with the principal security holders of Wantsa,<br />
namely Caring Capital Corporation, David Strebinger, and Donald Kirkwood, which sets out the proposed terms and conditions<br />
of a transaction whereby the Company and United Media Partners Inc., doing business as Wantsa ("Wantsa") will undertake a<br />
business combination. Wantsa, a private company incorporated in British Columbia, holds intellectual property which provides<br />
solutions and a technology platform for creating and distributing offers, coupons, incentives, and deals to online and mobile<br />
consumers (Note 7).<br />
The Company’s head office, principal address and registered and records office is Suite 2000 – 1177 West Hastings Street,<br />
Vancouver, British Columbia, Canada, V6E 2K3.<br />
These unaudited <strong>interim</strong> <strong>financial</strong> <strong>statements</strong> have been prepared on the assumption that the Company will continue as a going<br />
concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge<br />
liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not<br />
expected to continue operations for the foreseeable future. As at July 31, 2011 the Company had no commercial activity and is<br />
not able to finance day to day activities through operations.<br />
The Company’s continuation as a going concern is dependent upon ability to close the Qualifying Transaction or to identify,<br />
evaluate and negotiate an acquisition of, a participation in or an interest in properties, assets or businesses within 24 months of<br />
listing on the TSX-V. Such an acquisition will be subject to regulatory approval and may be subject to shareholder approval.<br />
In order to continue as a going concern and meet its corporate objectives, the Company will require additional financing<br />
through debt or equity issuances or other available means. During the three months ended July 31, 2011, the Company raised<br />
$550,000 in gross proceeds from a private placement. However, there is no assurance that the Company will be able to obtain<br />
adequate financing in the future or that such financing will be on terms advantageous to the Company. Furthermore, there is no<br />
assurance that the Company will complete the above-mentioned transaction by April 13, 2013, at which time the TSX-V may<br />
suspend or de-list the Company’s shares from trading.<br />
The <strong>financial</strong> <strong>statements</strong> do not include any adjustments relating to the recoverability and classification of recorded asset<br />
amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.<br />
7
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 2 - Significant Accounting Policies and Basis of Preparation<br />
The following is a summary of significant accounting policies used in the preparation of these <strong>financial</strong> <strong>statements</strong>.<br />
Statement of compliance and conversion to International Financial Reporting Standards<br />
These <strong>interim</strong> <strong>financial</strong> <strong>statements</strong>, including comparatives, have been prepared in accordance with International Accounting<br />
Standards (“IAS”) 34, “Interim Financial Reporting” using accounting policies consistent with International Financial Reporting<br />
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the<br />
International Financial Reporting Interpretations Committee (“IFRIC”).<br />
This condensed <strong>interim</strong> <strong>financial</strong> report does not include all of the information required of a full annual <strong>financial</strong> report and is<br />
intended to provide users with an update in relation to events and transactions that are significant to an understanding of the<br />
changes in <strong>financial</strong> position and performance of the Company since the end of the last annual reporting period. It is therefore<br />
recommended that this <strong>financial</strong> report be read in conjunction with the annual <strong>financial</strong> <strong>statements</strong> of the Company for the<br />
period ended April 30, 2011. However, this <strong>interim</strong> <strong>financial</strong> report, being the first IFRS <strong>financial</strong> report, provides selected<br />
significant disclosures that are required in the annual <strong>financial</strong> <strong>statements</strong> under IFRS. The disclosures concerning the<br />
transition from <strong>Canadian</strong> Generally Accepted Accounting Principles (“<strong>Canadian</strong> GAAP”) to IFRS are provided in Note 8.<br />
Basis of presentation<br />
The <strong>financial</strong> <strong>statements</strong> of the Company have been prepared on an accrual basis and are based on historical costs, modified<br />
where applicable. The <strong>financial</strong> <strong>statements</strong> are presented in <strong>Canadian</strong> dollars unless otherwise noted.<br />
Use of estimates<br />
The preparation of the Company’s <strong>financial</strong> <strong>statements</strong> in conformity with IFRS requires management to make judgments,<br />
estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the<br />
<strong>financial</strong> <strong>statements</strong> and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are<br />
continuously evaluated and are based on management’s experience and other factors, including expectations of future events<br />
that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.<br />
Areas requiring a significant degree of estimation and judgment relate to the determination of fair value measurements for<br />
<strong>financial</strong> instruments and share-based compensation and other equity-based payments, and the recoverability and measurement<br />
of deferred tax assets and liabilities. Actual results may differ from those estimates and judgments.<br />
Share-based payments<br />
The Company operates an employee stock option plan. Share-based payments to employees are measured at the fair value of the<br />
instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair<br />
value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the<br />
goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The<br />
corresponding amount is recorded to the stock option reserve. The fair value of options is determined using the Black–Scholes<br />
pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed<br />
and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the<br />
equity instruments granted shall be based on the number of equity instruments that eventually vest.<br />
Reserves<br />
The stock option reserve records items recognized as share-based compensation expense until such time that the stock options are<br />
exercised, at which time the corresponding amount will be transferred to share capital. If vested options expire unexercised or are<br />
forfeited, the amount recorded is transferred to deficit.<br />
8
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 2 - Significant Accounting Policies and Basis of Preparation – (continued)<br />
Financial instruments<br />
Financial assets<br />
The Company classifies its <strong>financial</strong> assets into one of the following categories as follows:<br />
Fair value through profit or loss - This category comprises derivatives and <strong>financial</strong> assets acquired principally for the purpose<br />
of selling or repurchasing in the near term. They are carried at fair value with changes in fair value recognized in profit or loss.<br />
The Company classifies cash as fair value through profit or loss.<br />
Loans and receivables - These assets are non-derivative <strong>financial</strong> assets with fixed or determinable payments that are not quoted<br />
in an active market. They are carried at amortized cost using the effective interest method less any provision for impairment.<br />
Held-to-maturity investments - These assets are non-derivative <strong>financial</strong> assets with fixed or determinable payments and fixed<br />
maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured<br />
at amortized cost using the effective interest method less any provision for impairment.<br />
Available-for-sale - Non-derivative <strong>financial</strong> assets not included in the above categories are classified as available-for-sale.<br />
They are carried at fair value with changes in fair value recognized in other comprehensive income (loss). Where a decline in<br />
the fair value of an available-for-sale <strong>financial</strong> asset constitutes objective evidence of impairment, the amount of the loss is<br />
removed from accumulated other comprehensive income (loss) and recognized in profit or loss.<br />
All <strong>financial</strong> assets except those measured at fair value through profit or loss are subject to review for impairment at least at<br />
each reporting date. Financial assets are impaired when there is objective evidence of impairment as a result of one or more<br />
events that have occurred after initial recognition of the asset and that event has an impact on the estimated future cash flows of<br />
the <strong>financial</strong> asset or the group of <strong>financial</strong> assets.<br />
Financial liabilities<br />
The Company classifies its <strong>financial</strong> liabilities into one of two categories as follows:<br />
Fair value through profit or loss - This category comprises derivatives and <strong>financial</strong> liabilities incurred principally for the<br />
purpose of selling or repurchasing in the near term. They are carried at fair value with changes in fair value recognized in profit<br />
or loss.<br />
Other <strong>financial</strong> liabilities: This category consists of liabilities carried at amortized cost using the effective interest method, and<br />
includes accounts payable, and advance due to director.<br />
As at July 31, 2011, the Company does not have any derivative <strong>financial</strong> assets and liabilities.<br />
Income taxes<br />
Current income tax:<br />
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or<br />
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or<br />
substantively enacted, at the reporting date, in the country where the Company operates and generates taxable income.<br />
Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other<br />
comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns<br />
with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where<br />
appropriate.<br />
9
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NTE 2 - Significant Accounting Policies and Basis of Preparation – (continued)<br />
Income taxes (continued)<br />
Deferred income tax:<br />
Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax<br />
bases of assets and liabilities and their carrying amounts for <strong>financial</strong> reporting purposes. The carrying amount of deferred<br />
income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that<br />
sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.<br />
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is<br />
realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of<br />
the reporting period.<br />
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current<br />
tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same<br />
taxation authority.<br />
Loss per share<br />
Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted<br />
average number of shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic<br />
earnings (loss) per share except that the weighted average shares outstanding are increased to include additional shares for the<br />
assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that<br />
outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common<br />
stock at the average market price during the reporting periods.<br />
Accounting pronouncements not yet adopted<br />
A number of new standards, amendments to standards and interpretations applicable to the Company are not yet effective for<br />
the three months ended July 31, 2011 and have not been applied in preparing these <strong>financial</strong> <strong>statements</strong>. The Company is<br />
currently considering the possible effects of the new and revised standards which will be effective to the Company’s <strong>financial</strong><br />
<strong>statements</strong> for the year ending April 30, 2012 or later:<br />
Title of the new IFRS standard<br />
Required<br />
application date<br />
of the IFRS<br />
Amendments to IAS 12 – Income Taxes - Deferred Tax:<br />
For periods beginning on or<br />
Recovery of Underlying Assets after January 1, 2012.<br />
IFRS 9, Financial Instruments<br />
IFRS 10, Consolidated Financial Statements<br />
IFRS 11, Joint Arrangements<br />
IFRS 12, Disclosure of Interests in Other Entities<br />
For periods beginning on or<br />
after January 1, 2013.<br />
For periods beginning on or<br />
after January 1, 2013.<br />
For periods beginning on or<br />
after January 1, 2013.<br />
For periods beginning on or<br />
after January 1, 2013.<br />
10
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 3 - Capital Stock and Reserves<br />
Authorized share capital<br />
Unlimited number of common shares without par value<br />
Unlimited Class “A” preference shares with a par value of $1.00<br />
Unlimited Class “B” preference shares with a par value of $5.00<br />
Issued share capital<br />
In August 2010, the Company issued 1 common share at a price of $1.00 per share on incorporation.<br />
In September 2010, the Company issued 2,000,000 common shares at a price of $0.05 per share for total proceeds of $100,000<br />
through a private placement.<br />
In October 2010, the Company issued 4,400,000 common shares at a price of $0.05 per share for total proceeds of $220,000 through a<br />
private placement.<br />
In April 2011, the Company completed its IPO by issuing 2,000,000 common shares at $0.10 per share for a gross proceeds of<br />
$200,000. Pursuant to an Agency Agreement between the Company and Canaccord Genuity Corp. (the “Agent”), the Agent<br />
received a cash commission of $20,000, equal to 10% of the gross proceeds, an administration fee of $10,000 and expenses of<br />
$10,500. Legal fees and other transaction costs of $57,610 were incurred.<br />
In June 2011, the Company issued 5,000,000 common shares at a price of $0.11 per share for total proceeds of $550,000 through a<br />
private placement. Legal fees and other transaction costs of $8,516 were incurred.<br />
The Company entered into an Escrow Agreement with Computershare Trust Company of Canada, whereby 6,400,000 common<br />
shares were placed into escrow, and upon completion of its Qualifying Transaction, 10% of the escrowed shares will be<br />
released. The remainder of the escrowed shares will be released in six equal tranches of 15% every six months thereafter for a<br />
period of 36 months. These escrow shares may not be transferred, assigned or otherwise dealt with without the consent of the<br />
regulatory authorities. As at July 31, 2011, the Company has 6,400,000 common shares subject to escrow pursuant to the<br />
requirements of the TSX-V.<br />
Share Purchase Warrants<br />
In conjunction with the IPO, the Company issued 200,000 agent’s warrants exercisable at $0.10 per share for a period of two years.<br />
The agent’s warrants were valued at $12,220 calculated using the Black-Scholes option pricing model assuming a life expectancy of<br />
two years, a risk free rate of 1.82%, expected dividend yield of 0%, a forfeiture rate of 0%, and volatility of 120%.<br />
A summary of share purchase warrant activities are as follows:<br />
Number of<br />
warrants<br />
Weighted<br />
average<br />
exercise price<br />
$<br />
Outstanding and exercisable at August 18, 2010 - -<br />
Issued 200,000 0.10<br />
Outstanding and exercisable at April 30, 2011 and July 31, 2011 200,000 0.10<br />
11
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 3 - Capital Stock and Reserves – (continued)<br />
Share Purchase Warrants (continued)<br />
A summary of the share purchase warrants outstanding at July 31, 2011 is as follows:<br />
Exercise<br />
Price<br />
Number<br />
Outstanding Expiry Date<br />
$<br />
0.10 200,000 April 15, 2013<br />
Stock Options<br />
The Company has adopted a stock option plan (the “Option Plan”), which provides that the Board of Directors of the Company<br />
may, from time to time, grant to directors, officers, employees and technical consultants of the Company, non-transferable<br />
options to purchase common shares. The expiry date for each option shall be set by the Board of Directors at the time of issue<br />
and shall not exceed ten years. A vesting schedule may be imposed at the discretion of the Board of Directors at the time of<br />
issue. During any twelve-month period, the number of shares issuable to any one optionee shall not exceed 5% of the total<br />
number of issued and outstanding shares of the Company, and the maximum number of shares reserved for issuance shall not<br />
exceed 840,000, until completion of a Qualifying Transaction by the Company. Once a Qualifying Transaction has been<br />
completed, the number of shares that may be reserved for issuance shall not exceed 20% of the total number of issued and<br />
outstanding shares of the Company. The plan is subject to regulatory approval.<br />
In April 2011, concurrent with its IPO, the Company granted 840,000 stock options exercisable at $0.10 per share for a period of ten<br />
years, valued at $0.083 per option for a total of $69,468 calculated using the Black-Scholes option pricing model assuming a life<br />
expectancy of ten years, a risk free rate of 3.37%, expected dividend yield of 0%, a forfeiture rate of 0%, and volatility of 80%.<br />
A summary of stock options activities are as follows:<br />
Number of<br />
options<br />
Weighted<br />
average<br />
exercise price<br />
$<br />
Outstanding at August 18, 2010 - -<br />
Granted 840,000 0.083<br />
Outstanding at April 30, 2011 and July 31, 2011 840,000 0.083<br />
A summary of the stock options outstanding and exercisable at July 31, 2011 is as follows:<br />
Exercise<br />
Price<br />
Number<br />
Outstanding<br />
Number<br />
Exercisable Expiry Date<br />
$<br />
0.10 840,000 840,000 April 15, 2021<br />
12
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 6 - Financial Instruments and Risk Management – (continued)<br />
a) Currency risk<br />
The Company’s operations and financing activities are conducted in <strong>Canadian</strong> dollars and as a result, the Company is not<br />
subject to significant exposure to market risks from changes in foreign currency rates.<br />
b) Credit risk<br />
Credit risk is risk of <strong>financial</strong> loss to the Company if a counterparty to a <strong>financial</strong> statement fails to meet its contractual<br />
obligations. The Company’s cash is held in large <strong>Canadian</strong> <strong>financial</strong> institutions and is not exposed to significant credit<br />
risk.<br />
c) Interest rate risk<br />
Interest rate risk is the risk that the fair value of future cash flows of a <strong>financial</strong> instrument will fluctuate because of<br />
changes in market interest rates. The Company is exposed to limited interest rate risk as it only holds cash and does not<br />
have any interest bearing debt.<br />
d) Liquidity risk<br />
Liquidity risk is the risk that the Company will not be able to meet its obligations as they come due. The Company’s<br />
ability to continue as a going concern is dependent on management’s ability to raise the required capital through future<br />
equity or debt issuances. The Company manages its liquidity risk by forecasting cash flows from operations and<br />
anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the<br />
review, planning, and approval of significant expenditures and commitments.<br />
NOTE 7 - Subsequent Events<br />
a) In August 2011, the Company signed a non-binding letter of intent ("LOI") with the principal security holders of Wantsa,<br />
namely Caring Capital Corporation, David Strebinger, and Donald Kirkwood, which sets out the proposed terms and<br />
conditions of a transaction whereby the Company and United Media Partners Inc., doing business as Wantsa ("Wantsa")<br />
will undertake a business combination. Wantsa, a private company incorporated in British Columbia, holds intellectual<br />
property which provides solutions and a technology platform for creating and distributing offers, coupons, incentives, and<br />
deals to online and mobile consumers.<br />
The transaction ("Transaction") between Natan and Wantsa will take the form of a plan of arrangement under the Business<br />
Corporations Act (British Columbia) pursuant to which Natan will acquire, from the principal shareholders and the other<br />
shareholders of Wantsa, all of the issued and outstanding shares of Wantsa in exchange for common shares of Natan. The<br />
plan of arrangement must be approved by the shareholders of Wantsa at a special shareholder meeting to be called in<br />
connection with the Transaction and by the Supreme Court of British Columbia.<br />
Upon completion of the Transaction, Wantsa will become a wholly-owned subsidiary of Natan. The Transaction is<br />
expected to be treated as a reverse take-over within the meaning of applicable <strong>Canadian</strong> securities laws. The material terms<br />
of the LOI include:<br />
(i)<br />
Prior to completion of the Transaction, Natan will consolidate (the "Consolidation") its outstanding share<br />
capital on a five (5) old shares for one (1) new share basis. Based on Natan's current outstanding shares<br />
totalling 13,592,001, Natan would have 2,718,400 shares outstanding immediately after giving effect to the<br />
Consolidation.<br />
14
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 7 - Subsequent Events – (continued)<br />
(ii)<br />
(iii)<br />
(iv)<br />
(v)<br />
(vi)<br />
Natan will issue to the Wantsa shareholders up to an aggregate of 13,323,486 post-Consolidation common<br />
shares in exchange for all of the issued and outstanding common shares of Wantsa, subject to certain existing<br />
convertible securities in Wantsa being exercised or cancelled prior to the closing of the Transaction. Natan<br />
shares will be exchanged for Wantsa shares under the Transaction on a 1 for 1 basis.<br />
As a condition to the closing of the Transaction, Natan must complete, concurrently with the closing of the<br />
Transaction, a private placement (the "Offering") of a minimum of 3,000,000 common shares of Natan at a<br />
price of $1.75 per share (on a post-Consolidation basis) to raise proceeds of at least $5,250,000. The proceeds<br />
from the Offering will be used to launch and support a number of Wantsa's major publishing partners, expand<br />
the Wantsa technology platform with global transaction capabilities and for general working capital purposes.<br />
Upon execution of the LOI, Natan has provided to Wantsa the sum of $25,000 as a non-interest bearing<br />
advance, to be used by Wantsa to preserve assets, including retaining key employees and consultants that are<br />
critical to the development and success of the Wantsa brand. The advance is refundable to Natan in the event<br />
Natan determines to cancel the Transaction as a result of its due diligence investigations being unsatisfactory,<br />
or if the Transaction does not complete in the time and in the manner contemplated in the LOI or the Definitive<br />
Agreement (as defined below), unless such failure to complete is the result of a breach by Natan of any of its<br />
obligations under the LOI or such Definitive Agreement.<br />
Upon execution of the Definitive Agreement, Natan will, subject to receipt of all necessary approvals from the<br />
TSX Venture Exchange (the "Exchange"), provide to Wantsa the sum of $225,000 as a non-interest bearing<br />
secured loan, to be used by Wantsa for continued operating expenses required to support and grow the number<br />
of publishers integrated with Wantsa's technology platform as well as to retain key employees and consultants.<br />
The advance will be repayable to Natan in the same circumstances as the $25,000 advance described under item<br />
(iv) above.<br />
The LOI may be terminated by either party as a result of unsatisfactory due diligence results or if the Definitive<br />
Agreement is not entered into September 30, 2011. The date has been subsequently extended to November 4,<br />
2011.<br />
b) Subsequent to July 31, 2011, 192,000 share purchase warrants were exercised at a price of $0.10 per share for total<br />
proceeds of $19,200.<br />
15
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 8 – First Time Adoption of IFRS<br />
As stated in Note 2, these <strong>financial</strong> <strong>statements</strong> are for the period covered by the Company’s first <strong>interim</strong> <strong>financial</strong> <strong>statements</strong><br />
prepared in accordance with IFRS. The accounting policies in Note 2 have been applied in preparing the <strong>interim</strong> <strong>financial</strong><br />
<strong>statements</strong> for the period ended July 31, 2011, the <strong>financial</strong> <strong>statements</strong> for the period ended April 30, 2011 and the opening<br />
IFRS <strong>statements</strong> of <strong>financial</strong> position on August 18, 2010, the "Transition Date".<br />
In preparing the opening IFRS <strong>statements</strong> of <strong>financial</strong> position and the <strong>financial</strong> <strong>statements</strong> for the <strong>interim</strong> period ended July 31,<br />
2011, the Company has adjusted amounts reported previously in <strong>financial</strong> <strong>statements</strong> that were prepared in accordance with<br />
<strong>Canadian</strong> GAAP. An explanation of how the transition from <strong>Canadian</strong> GAAP to IFRS has affected the Company’s <strong>financial</strong><br />
position, <strong>financial</strong> performance and cash flows is set out in the following tables. The guidance for the first time adoption of<br />
IFRS is set out in IFRS 1.<br />
Additionally, in accordance with IFRS 1, an entity’s estimates under IFRS at the date of transition to IFRS must be consistent<br />
with estimates made for the same date under previous <strong>Canadian</strong> GAAP, unless there is objective evidence that those estimates<br />
were in error. The Company’s IFRS estimates as of August 18, 2010 are consistent with its <strong>Canadian</strong> GAAP estimates for the<br />
same date.<br />
.<br />
16
NATAN RESOURCES LTD.<br />
Notes to Interim Financial Statements<br />
For the three months ended July 31, 2011<br />
(Expressed in <strong>Canadian</strong> Dollars - Unaudited)<br />
NOTE 8 – First Time Adoption of IFRS - (continued)<br />
The reconciliation between <strong>Canadian</strong> GAAP and IFRS <strong>statements</strong> of <strong>financial</strong> position as at April 30, 2011 is provided below:<br />
April 30, 2011<br />
Assets<br />
Note<br />
GAAP<br />
Effect of<br />
transition to<br />
IFRS IFRS<br />
$ $ $<br />
Current<br />
Cash 421,572 - 421,572<br />
Prepaid expenses 4,000 - 4,000<br />
Liabilities<br />
425,572 - 425,572<br />
Current<br />
Accrued liabilities 12,248 - 12,248<br />
Advance due to director 10,000 - 10,000<br />
22,248 - 22,248<br />
Shareholders’ equity<br />
Capital stock 409,671 - 409,671<br />
Contributed surplus (a) 81,688 (81,688) -<br />
Reserves (a) - 81,688 81,688<br />
Deficit (88,035) - (88,035)<br />
403,324 - 403,324<br />
Total shareholders’ equity and liabilities 425,572 - 425,572<br />
There are no significant differences between IFRS and <strong>Canadian</strong> GAAP in connection with the Company’s <strong>statements</strong> of<br />
<strong>financial</strong> position as at August 18, 2010.<br />
There are no significant differences between IFRS and <strong>Canadian</strong> GAAP in connection with the Company’s <strong>statements</strong> of<br />
comprehensive loss for the period ended April 30, 2011.<br />
There are no significant differences between IFRS and <strong>Canadian</strong> GAAP in connection with the Company’s <strong>statements</strong> of cash<br />
flows for the period ended April 30, 2011.<br />
a) Reserves<br />
Under <strong>Canadian</strong> GAAP, amounts recorded in relation to the fair value of stock options granted and warrants issued<br />
were recorded to contributed surplus. Under IFRS, these amounts have been reclassified as reserves.<br />
17