Professional Documents
Culture Documents
Auditors' Report
To the Shareholders of
Cadillac Ventures Inc.
We have audited the consolidated balance sheets of Cadillac Ventures Inc. (A Development Stage
Company) as at May 31, 2007 and 2006 and the related statements of operations and deficit and cash
flows for each of the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the
financial position of the Company as at May 31, 2007 and 2006 and the results of its operations and its
cash flows for each of the years then ended in accordance with Canadian generally accepted
accounting principles.
Assets
Current assets
Cash (Note 5) $ 1,305,811 $ 123,717
Due from a related company (Note 8) 11,439 -
Accounts receivable 87,824 7,461
Prepaid - 458
Quebec refundable tax credits and
mining duty refunds 2,436 2,436
1,407,510 134,072
$ 2,024,066 $ 411,914
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 93,050 $ 91,977
Shareholders' Deficit
1,931,016 319,937
$ 2,024,066 $ 411,914
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Cadillac Ventures Inc.
(A Development Stage Company)
Consolidated Statements of Operations and Deficit
Cumulative
from date of
inception
of the
development
Year ended May 31, stage (April
2007 2006 28, 2006)
Expenses
Accounting and corporate services $ 30,938 $ 29,445 $ 34,585
Consulting fees (Note 8) 106,100 - 106,100
Legal and audit 136,925 17,986 148,224
Management fees 3,500 6,892 3,500
Office and general 18,722 3,918 18,726
Shareholder relations 60,987 39,983 62,269
Stock-option compensation (Note 6(b)) 353,500 - 353,500
Basic and diluted (loss) per share (Note 6(d)) $ (0.02) $ (0.01)
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Cadillac Ventures Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Cumulative
from date of
inception
of the
development
Year ended May 31, stage (April
2007 2006 28, 2006)
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
Incorporation
Cadillac Ventures Inc. (formerly Blue Power Energy Corporation) was incorporated under the
laws of the Province of Ontario by articles of incorporation dated April 1, 1996. Pursuant to
articles of amendment dated April 20, 2006, the name of the Company was changed to "Cadillac
Ventures Inc." ("the Company").
Nature of operations
The Company is a development stage enterprise in the business of mineral exploration and the
continued operations of the Company and the recoverability of amounts shown for mineral
properties is dependent upon the existence of a deposit and upon future profitable production, or
alternatively, upon the Company's ability to recover its costs through a disposition of its interest.
The amounts shown for mineral properties represent costs to date, less amounts written off, and
do not necessarily represent the future value. Changes in future conditions could require a
material change in the amount recorded for mineral properties.
These statements do not include any adjustments which would be necessary if the going
concern assumption was not used.
The preparation of these financial statements in conformity with Canadian generally accepted
accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
(a) Consolidation
These consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, Chilly-Bin Inc. ("Chilly-Bin") since its acquisition on April 28, 2006
(See Note 3).
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
(h) Goodwill
Goodwill is the excess of the consideration paid over the net amounts assigned to assets
acquired and liabilities assumed. Goodwill is not amortized. It is tested for impairment
annually, or more frequently, if events or changes in circumstances indicate that it is
impaired.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
3. Acquisition of Subsidiary
On April 28, 2006 the Company acquired 100% of Chilly-Bin by issuing a total of 5,000,000
common shares to the shareholders of Chilly-Bin in exchange for all of the outstanding common
shares of Chilly-Bin.
As a result of the share exchange, the Company acquired control of Chilly-Bin, a private Ontario
corporation, which holds as its main asset the New Alger Property located in Cadillac Township,
Quebec. Accordingly, the acquisition of Chilly-Bin is accounted for by the purchase method. The
cost of an acquisition should be based on the fair value of the consideration given, except where
the fair value of the consideration given is not clearly evident. In such cases, the fair value of the
net assets acquired is used.
As the shares issued on acquisition represent approximately 38% of the Company's issued and
outstanding common shares and the Company's shares were thinly traded, it was impossible to
estimate the actual market value of the 5,000,000 common shares. Therefore, the value of the
shares issued on acquisition was based on the fair value of the net assets acquired. The fair
value of Chilly-Bin's net assets was estimated by management to be $250,000. The Company
incurred additional costs totalling $30,357 related to the acquisition during the year ended May
31, 2006. The total purchase price was allocated as follows:
$ 280,357
Consideration given
Shares issued $ 250,000
Additional costs 30,357
$ 280,357
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
4. Mineral properties
Cumulative
from date of
inception
of the
development
Year ended May 31, stage (April
2007 2006 28, 2006)
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
(1) The New Alger Property, a gold property, consists of a single mining concession in the Township
of Cadillac in the Province of Quebec. On January 31, 2005 Chilly-Bin acquired 100% of the
property from Alfer Inc. ("Alfer") in exchange for 5,000,000 Chilly-Bin shares and $19,589. Alfer
also retained a 1% net smelter returns production royalty from the sale of all minerals produced
from the New Alger Property.
(2) On April 4, 2007, the Company was assigned an option agreement on the Burnt Hill tungsten and
molybdenum project located in New Brunswick. This property is wholly owned by Noront
Resources Inc. (“Noront”). The Company is assuming the obligations under the option agreement
for the right to earn an initial 51% interest. These obligations include the payment of $100,000 in
cash to Noront, the issuance of 2,500,000 shares in the capital of the Company to Noront, and a
work commitment of $1,500,000, all of these obligations must be met prior to October 27, 2009.
Flow-through common shares require the Company to pay an amount equivalent to the proceeds
of the issue on prescribed resource expenditures. If the Company does not incur the committed
resource expenditures, it will be required to indemnify the holders of the shares for any tax and
other costs payable by them as a result of the Company not making the required resource
expenditures. As at May 31, 2007 the Company's remaining commitment with respect to unspent
resource expenditures under flow-through common share agreements is $795,250 (2006 -
$165,500).
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
6. Share capital
(a) Authorized
Unlimited number of non-participating, redeemable,
voting Class B preference shares
Unlimited number of Class C preference shares issuable in series
Unlimited number of common shares
(i) On November 1, 2005 the Company settled substantially all of its outstanding
liabilities amounting to $171,119 through the issuance of an aggregate of
28,519,855 common shares to the following arm's length creditors: Elen
Enterprises Inc, Nominex Ltd, Kalwea Financial Corp., Allan Ringler Services Inc,
George Duguay Services Inc, Jim Voisin and Peter Miller.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
(ii) On December 30, 2005 the Company completed a private placement financing
under which it issued 8,475,000 flow-through units of the Company at a price of
$0.02 per unit for aggregate gross proceeds of $169,500. Each unit is comprised of
one common share in the capital of the Company and one-third common share
purchase warrant. Each warrant entitles the holder thereof to purchase one
common share of the Company at a price of $0.03 per warrant until December 30,
2006.
The fair value of the warrants was estimated using the Black-Scholes pricing option
model. The assumptions used for the valuation of the respective warrants were:
Dividend yield 0%, expected volatility 152%, risk-free interest rate of 3.76% and an
expected life of one year. Value assigned to the 2,825,000 warrants was $25,425.
(iii) The amount from the flow-through shares in (ii) above has been renounced and has
created a future income tax liability of $61,223 which has been allocated as a cost
of issuing the flow-through shares.
(iv) On April 20, 2006 the outstanding common shares were consolidated on the basis
of one new common share for each five issued and outstanding old common
shares.
(vi) On June 14, 2006 the Company completed a private placement financing under
which it issued 1,562,500 units of the Company at a price of $0.08 per unit for
aggregate gross proceeds of $125,000. Each unit consists of one common share
and one common share purchase warrant exercisable for 2 years at $0.10.
The fair value of the warrants was estimated using the Black Scholes pricing option
model. The assumptions used for the valuation of the respective warrants were:
Dividend yield 0%, expected volatility 147%, risk free interest rate of 4.22% and an
expected life of two years. Value assigned to 1,562,500 warrants was $84,375.
(vii) On October 4, 2006 the Company completed a private placement financing under
which it issued 2,400,000 flow-through shares of the Company at a price of $0.06
per share for aggregate gross proceeds of $144,000.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
(viii) On December 5, 2006 and December 8, 2006 the Company completed two private
placements which it issued 2,523,331 units at a price of $0.15 per share for
aggregate gross proceeds of totalling $378,500. Each unit is comprised of one
common share of the Company and one common share purchase warrant which
entitles the holder thereof to purchase one common share of the Company at a
price of $0.20 for a period of 24 months from the date of closing.
The fair value of the warrants was estimated using the Black Scholes pricing option
model. The assumptions used for the valuation of the respective warrants were:
Dividend yield 0%, expected volatility 173%, risk free interest rate of 3.82% and an
expected life of 2 years. Value assigned to 2,523,331 warrants was $285,116.
(ix) On December 29, 2006 the Company completed a private placement which it
issued 1,860,714 flow-through units of the Company at a price of $0.35 per unit for
gross proceeds of $651,250. Each unit is comprised of one flow-through common
share and one purchase warrant which entitles the holder thereof to purchase one
common share of the Company at a price of $0.45 for a period of two years from
the date of closing.
The fair value of the warrants was estimated using the Black Scholes pricing option
model. The assumptions used for the valuation of the respective warrants were:
Dividend yield 0%, expected volatility 173%, risk free interest rate of 4.02% and an
expected life of 2 years. Value assigned to 1,860,714 warrants was $494,950.
(x) On May 30, 2007 the Company completed two private placements which it issued
1,025,999 common shares at a price of $0.60 per share for aggregate gross
proceeds of totalling $615,600.
(xi) The Company received proceeds of $84,700 resulting from the exercise of 564,665
common share purchase warrants with an expiry date of December 30, 2006. The
remaining 333 warrants expired. These warrants were initially issued in the private
placement described in Note 6(a)(ii). As a result of Note 6 (a)(iv) the warrants were
consolidated 5 for 1 and the exercise price was increased on the same basis
resulting in an exercise price of $0.15.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
The following table sets out the changes in the stock options for each of the years ended
May 31, 2007 and 2006:
2007 2006
Weighted Weighted
average average
No. of exercise No. of exercise
options price options price
As of May 31, 2007, the following stock options were outstanding and exercisable:
Options outstanding Options exercisable
Weighted
average Weighted Weighted
remaining average average
Number contractual exercise Number exercise
Expiry Date of Options life price of Options price
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
During the year, 2,200,000 (2006 - Nil) stock options were granted to directors and consultants of the
Company. These options vested immediately and were expensed in the statement of operations and
deficit and credited to contributed surplus. For the year ended May 31, 2007, the following options were
expensed.
Number of options Amount
Option grant date expensed expensed
2,200,000 $ 353,500
(i) The amount expensed was calculated using the Black-Scholes option pricing model
with the following assumptions: dividend yield of 0%; expected volatility of 180%;
risk-free interest rate of 3.75% and an expected average life of 5 years. The
options were valued at $280,500.
(ii) The amount expensed was calculated using the Black-Scholes option pricing model
with the following assumptions: dividend yield of 0%; expected volatility of 167%;
risk-free interest rate of 4.15% and an expected average life of 5 years. The
options were valued at $73,000.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
(c) Warrants
The following is continuity of warrants for the years ended May 31, 2007 and 2006:
Number
of $
Warrants Value
The following table summarizes the warrants outstanding at May 31, 2007 and 2006:
5,946,545 564,998
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
2007 2006
Numerator:
(Loss) for the year $ (423,428) $ (37,001)
Denominator:
Weighted average number of common
shares 18,886,635 5,573,445
(i) The stock options and share purchase warrants were not included in the
computation of diluted loss per share as their inclusion would be anti-dilutive.
7. Income taxes
Future income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts for tax
purposes.
The Company has one future income tax liability which arose as a result of issuing flow-through
shares to investors. Since the expenditures generated by the flow-through shares are renounced
to the investors this lowers the tax bases of the resource properties and results in a future
income tax liability.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
2007 2006
In accordance with CICA Handbook EIC 146, the benefit of non-capital losses carried forward
has been used to reduce the futures income tax liability.
The Company provided a valuation allowance equal to the future tax asset because it is not more
likely than not that the future tax asset will be realized. The Company's income tax recovery for
each of the years ended May 31, 2007 and 2006 is as follows:
2007 2006
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
The Company's actual income tax expense for each of the years ended is made up as follows:
2007 2006
As at May 31, 2007 the Company has non-capital losses available for carry forward of
approximately $1,454,000 and Canadian exploration and development expenditures of
approximately $326,000 available to be applied against taxable income in future years. No
benefit from these amounts has been recorded in these financial statements.
2008 $ 91,000
2009 603,000
2010 141,000
2014 90,000
2015 68,000
2026 98,000
2027 363,000
$ 1,454,000
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
The Company was previously paying $2,000 per month to Harper Capital Inc. ("Harper") (a
company owned by the spouse of the former promoter of the Company) for managing and
supervising the Company's activities. Since August 2005, the Company has no longer required
Harper's services. During the year ended May 31, 2007 the Company was charged the sum of
$Nil (2006 - $6,000) as management fees for service provided by Harper.
As at May 31, 2007, pursuant to the financing disclosed in Note 6(a)(vi), the following related
parties of the Company participated in the private placement by purchasing offered units:
Nominex Ltd. (of which Neil Novak, a director of the Company, is the President) - 62,500 units;
Nicole Brewster, the former Secretary and a former director of the Company - 62,500 units; Jim
Voisin, the President and a director of the Company - 62,500 units; and Norm Brewster, an
insider of the Company - 250,000 units.
During the year, the Company has paid Billiken Management Services Inc. ("Billiken"), a private
company, in which partial ownership is held by a spouse of one of the directors of the Company,
to manage the New Alger Property. This company charges a fee of 10% of expenses incurred on
behalf of the Company. The fee totaled $3,089 (2006 - $Nil). As at May 31, 2007, there was a
balance of $11,439 due to the Company from Billiken.
During the year, consulting fees paid/payable to directors, officers and insiders of the Company
were expensed or capitalized to mining properties for an aggregate of $160,600. The amounts
are as follows: Jim Voisin, the CFO and a director of the Company - $43,000; Nicole Brewster,
the former Secretary and a former director of the Company - $27,600; and Norm Brewster,
director - $90,000.
Amounts due to related parties are unsecured, non-interest bearing and have no fixed terms of
repayment.
9. Financial Instruments
The Company's financial instruments include due from related company, accounts receivable
and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion
that the Company is not exposed to significant interest rate, currency or credit risks arising from
these financial instruments. The fair value of the financial instruments approximates their market
value due to the short term nature of these instruments.
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Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006
The Company's operations comprise a single reporting operating segment engaged in resource
exploration. As the operations comprise a single reporting segment, amounts disclosed in the
financial statements for loss for the year and loss per share also represent segment amounts.
On June 11, 2007 the Company and Noront have agreed to amend the option agreement on the
Burnt Hill Project. Under the terms of this amendment Noront will immediately commence a
$1,500,000 exploration program on the Burnt Hill project. The Company will issue to Noront, on
or prior to December 31, 2007, $1,500,000 worth of common shares of the Company to be
valued at no more than $1.00 per share, or at the same price as a proposed financing
contemplated by the Company to be completed in the second or third quarters of 2007. The
Company will remain the operator of the program during this time.
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