AIVN American International Ventures Inc (CE)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Nine Month Periods Ended February 28, 2018 and 2017

During the nine-month period ended February 28, 2018, the Company had revenue of $41,310, compared with $48,076 during the comparable nine-month period of 2017.  These 2018 revenues were derived from test mining activity of the Company subsidiary, AIVN de Mexico.  Cost of goods sold consisting of mining, milling and personnel costs was $220,275 during the nine-month period ended February 28, 2018 and $58,944 during the comparable 2017 period.

There was a gross loss during the 2018 nine-month period of $178,965, compared with a gross loss of $10,868 during the 2017 period.

Administrative expenses for the nine-month period ended February 28, 2018 were $253,817 compared to $409,122 in the comparable period of 2017.  Administrative expenses consist primarily of consulting fees, director awards and other services compensated with equity items.  The reduction in administrative costs for the current period was due principally to reductions in professional fees and .

The Company had an operating loss in the 2018 nine-month period of $432,782, compared with an operating loss of $419,990 for the comparable period of 2017.  The increased loss is primarily due to the explanations provided above.

Interest expense in the current nine-month period was $16,356, compared with $7,378 in the comparable period of 2017.  Interest expense accrues on outstanding debt obligations and on credit card charges, which were higher in the 2018 period.  The 2017 increase resulted from payment in the current quarter of an interest charge that had not been previously accrued.   

The Company experienced a net loss of $449,138 during the 2018 nine-month period, compared with $392,946 in the 2017 nine-month period.  

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Three-months Ended February 28, 2018 and 2017

During the three-month period ended February 28, 2018, the Company did not have revenue as the Mexican mining operations were shut down at the end of August.  In the comparable 2017 period, it also did not have revenue.  Cost of goods sold, consisting of mining, milling and personnel costs, was ($2,028) during the three-month period ended February 28, 2018, and zero in the comparable 2017 period.

There was a gross loss for the February 28, 2018 three-month period of ($2,028), and no gross profit or loss in the 2017 period.

Administrative expenses for the three-months ended February 28, 2018 were $26,408 compared to $292,933 in the comparable period of 2017. Administrative expenses consist primarily of consulting fees, director awards and other services compensated principally with equity items. Director awards usually occur once a year and in both years they occurred in the quarter ended November 30.

The Company had an operating loss in the current three-month period of $24,380, compared with an operating loss of $292,933 in the comparable period in 2017. The change is due to the factors described above.

There was no interest expense in the current three-month period, compared with $780 in the comparable period of 2017. Interest expense accrues on outstanding debt obligations and credit card charges.

Net loss during the current three-month period was $24,405, compared with a net loss of $293,701 in the comparable period of 2017.  The favorable change is due to the reduced administration cost noted above.

Since the acquisition of PGPI, our operations have focused on developing, planning and operating past producing precious metal properties and mines. Specifically, we are now a gold and silver exploration and extraction company, operating primarily in Mexico, and Nevada.  We will focus on acquiring gold and base mineral resource properties that historically produced gold and silver until 1942 when all gold production in the United States was halted due to World War II. There is no guarantee that such properties will produce gold or silver in the future or that these properties may have already been depleted, as they were previously mined.

None of our properties or claims has any proven or probable reserves.

As of February 28, 2018, the Company had working capital of $163,261, compared with a working capital of  $186,251 as of May 31, 2017.  The decrease is due to a reduction in accounts payable.

The Company has projected that its administrative overhead for the next 12 months will be approximately $265,000 which consists of accounting fees (including tax, audit and review) in the approximate amount of $155,000, legal fees in the approximate amount of $10,000, and miscellaneous expenses of $100,000. The projected legal and accounting fees relate to the Company’s reporting requirements under the Securities Exchange Act of 1934. The Company expects to incur additional legal and accounting fees in order to effect acquisitions and share exchanges or a business combination transaction. The Company has no other capital commitments. To continue its business plan, the Company will be required to raise additional funds through the private placement of its capital stock or through debt financing to meet its ongoing corporate overhead obligations. If the Company is unable to meet its corporate overhead obligations, that will have a material adverse impact on the Company and the Company may not be able to complete its plan of operations of finding a suitable business acquisition or combination candidate.

Please refer to the Company’s Form 10-K for the period ending May 31, 2017 for a discussion of other risks attendant to its proposed plan of operations of effecting a business acquisition or combination, including the occurrence of significant dilution and a change of control. Even if successful in effecting a business acquisition or combination, it is likely that numerous risks will exist with respect to the new entity and its business.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues and results of operations, liquidity or capital expenditures

Significant Accounting Policies

a.         Cash

For purposes of the Statement of Cash Flows, the Company considers all short-term debt securities purchased with a maturity of six-months or less to be cash equivalents.

b.        Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, which include cash equivalents, and accrued liabilities, approximate their fair values at February 28, 2018

c.     Loss (Income) Per Share

Basic earnings (loss) per share is computed by dividing the net income (loss) available to common shareholders for the period by the weighted average number of shares outstanding. During periods when a net loss has occurred, as was the case in the three and nine-month periods ended February 28, 2018, outstanding options and warrants are excluded from the calculation of diluted loss per share as their inclusion would be anti-dilutive.

d.     Income Taxes

The Company accounts for income taxes in accordance with current accounting guidance, which requires the use of the “liability method”.  Accordingly, deferred tax liabilities and assets are determined based on differences between the financial statement and tax bases of assets and liabilities, and consideration of net operating loss carry forwards, using enacted tax rates in effect for the year in which the differences are expected to reverse.  Current income taxes are based on the income that is currently taxable.

e.     Marketable Securities

Marketable securities, when owned, are classified as available-for-sale and are carried at fair value.  Unrealized gains and losses on these securities are recognized as direct increases or decreases in accumulated other comprehensive income.

f.     Fixed Assets

Fixed assets are recorded at cost.  Depreciation is computed by using accelerated methods, with useful lives of seven years for furniture and equipment and five years for computers and automobiles.

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g.     Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

h.     Advertising Costs

The Company expenses advertising costs when the advertisement occurs. There was no advertising expense in the nine-month period ended February 28, 2018.

i.     Segment Reporting

The Company is organized in one reporting and accountable segment.