UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
[X] |
Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|
|
|
For
the quarterly period ended June 30, 2014 |
|
|
[ ] |
Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
|
|
|
For
the transition period from __________ to__________ |
|
|
|
Commission
File Number: 333-168775 |
iWallet
Corporation
(Exact
name of registrant as specified in its charter)
Nevada |
27-1830013 |
(State
or other jurisdiction of incorporation or organization) |
(IRS
Employer Identification No.) |
7394
Trade Street, San Diego, California 92121 |
(Address
of principal executive offices) |
(858)
530-2958 |
(Registrant’s
telephone number) |
__________________________________________________________________ |
(Former
name, former address and former fiscal year, if changed since last report) |
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 [X] Yes [ ] No
Indicate
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).
[
] Yes [X] No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
[
] Large accelerated filer Accelerated filer |
[
] Non-accelerated filer |
[X]
Smaller reporting company |
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[
] Yes [X] No
State
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 29,321,379
as of August 19, 2014.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Unaudited
Condensed Interim Financial Statements
iWallet
Corporation
Condensed
Interim Balance Sheets
June
30, 2014 and December 31, 2013
| |
| 2014 | | |
| 2013 | |
| |
| (Unaudited) | | |
| | |
Assets | |
| | | |
| | |
Current
assets | |
| | | |
| | |
Cash | |
$ | 17,168 | | |
$ | 250,718 | |
Funds
held in attorney trust (note 8) | |
| — | | |
| 39,705 | |
Accounts
receivable | |
| 6,177 | | |
| 4,575 | |
Deposits
and deferred costs (note 9) | |
| 116,407 | | |
| 23,086 | |
Inventory
(note 4) | |
| 23,549 | | |
| 20,361 | |
Due
to/from shareholder (note 7) | |
| 114,201 | | |
| 61,833 | |
| |
| 277,502 | | |
| 400,278 | |
Intangible
assets (note 5) | |
| 103,128 | | |
| 96,715 | |
| |
$ | 380,630 | | |
$ | 496,993 | |
Liabilities | |
| | | |
| | |
Current
liabilities | |
| | | |
| | |
Bank
indebtedness - current (note 6) | |
$ | 4,907 | | |
$ | 5,539 | |
Accounts
payable (notes 7& 8) | |
| 158,561 | | |
| 126,317 | |
Accrued
liabilities (note 12) | |
| 41,087 | | |
| 3,062 | |
Due
to related party (note 7) | |
| 20,421 | | |
| 37,842 | |
Advances
from investor (note 7) | |
| 474 | | |
| 69,678 | |
Convertible
debentures (note 8) | |
| 663,000 | | |
| 354,000 | |
Tooling
commitment liability (note 9) | |
| 103,836 | | |
| 105,816 | |
| |
| 992,286 | | |
| 702,254 | |
Bank
indebtedness - long-term (note 6) | |
| 15,538 | | |
| 17,540 | |
| |
| 1,007,824 | | |
| 719,794 | |
Shareholder's
(deficiency) equity | |
| | | |
| | |
Class
A common shares, par value $0.001, 200,000,000 shares authorized; 10,000 issued (December 31, 2013 - 10,000) (note
11) | |
| 10 | | |
| 10 | |
Class
B common shares, par value $0.001, 100,000,000 shares authorized; Nil issued (December 31, 2013 - Nil) (note
11) | |
| — | | |
| — | |
Preferred
shares, par value $0.001, 10,000,000 shares authorized; Nil issued (December 31, 2013 - Nil) (note
11) | |
| — | | |
| — | |
Additional
paid-in capital | |
| 1 | | |
| 1 | |
Deficit | |
| (627,205 | ) | |
| (222,812 | ) |
| |
| (627,194 | ) | |
| (222,801 | ) |
| |
$ | 380,630 | | |
$ | 496,993 | |
The
accompanying notes are an integral part of these condensed interim financial statements.
Going
Concern (note 1); Commitments and Contingencies (note 12); Subsequent Events (note 16)
iWallet Corporation
Condensed Interim Statements of Operations and Comprehensive Loss
for the three and six month periods ended June 30, 2014 and 2013
(unaudited)
| |
Three months | |
Three months | |
Six months | |
Six months |
| |
ending | |
ending | |
ending | |
ending |
| |
June
30, 2014 | |
June
30, 2013 | |
June
30, 2013 | |
June
30, 2013 |
Sales | |
$ | 22,007 | | |
$ | 14,515 | | |
$ | 38,139 | | |
$ | 32,006 | |
Cost
of sales | |
| 18,317 | | |
| 5,178 | | |
| 35,253 | | |
| 19,681 | |
Gross
(loss) profit | |
| 3,690 | | |
| 9,337 | | |
| 2,886 | | |
| 12,325 | |
Expenses | |
| | | |
| | | |
| | | |
| | |
Legal and professional
fees | |
| 114,441 | | |
| 8,276 | | |
| 220,029 | | |
| 16,351 | |
Subcontractor fees
(note 7) | |
| 47,000 | | |
| — | | |
| 109,100 | | |
| — | |
Travel | |
| 1,371 | | |
| 27 | | |
| 16,986 | | |
| 3,154 | |
Office and general
expenses | |
| 9,049 | | |
| 269 | | |
| 26,404 | | |
| 2,223 | |
Interest and bank
fees | |
| 7,486 | | |
| 509 | | |
| 12,952 | | |
| 976 | |
Rent | |
| 3,250 | | |
| — | | |
| 4,500 | | |
| — | |
Research and development | |
| 10,391 | | |
| 1,387 | | |
| 11,533 | | |
| 1387 | |
Provision for loss
on tooling commitment (note 9) | |
| — | | |
| — | | |
| — | | |
| 139,213 | |
Amortization
of intangible assets | |
| 2,887 | | |
| 1,848 | | |
| 5,775 | | |
| 3,632 | |
| |
| 195,875 | | |
| 12,316 | | |
| 407,279 | | |
| 166,936 | |
Loss
before recovery of income taxes | |
| (192,185 | ) | |
| (2,979 | ) | |
| (404,393 | ) | |
| (154,611 | ) |
Recovery
of income taxes (note 10) | |
| — | | |
| (4,247 | ) | |
| — | | |
| (4,247 | ) |
Net
and comprehensive income (loss) | |
$ | (192,185 | ) | |
$ | 1,268 | | |
$ | (404,393 | ) | |
$ | (150,364 | ) |
Net
and comprehensive loss per share basic and diluted (note 13) | |
$ | (19.22 | ) | |
$ | 0.13 | | |
$ | (40.44 | ) | |
$ | (15.04 | ) |
Weighted
average number of shares outstanding basic and diluted (note 13) | |
| 10,000 | | |
| 10,000 | | |
| 10,000 | | |
| 10,000 | |
The
accompanying notes are an integral part of these condensed interim financial statements.
iWallet
Corporation
Condensed
Interim Statements of Cash Flows
for
the six month periods ended June 30, 2014 and 2013
(unaudited)
| |
| 2014 | | |
| 2013 | |
| |
| | | |
| | |
Cash
flow from operating activities | |
| | | |
| | |
Net
and comprehensive loss for the period | |
| (404,393 | ) | |
| (150,364 | ) |
Items
not affecting cash | |
| | | |
| | |
Amortization
of intangible assets | |
| 5,775 | | |
| 3,632 | |
Provision
for loss on tooling commitment (note 9) | |
| — | | |
| 139,213 | |
Recovery
of income taxes | |
| — | | |
| (4,247 | ) |
| |
| (398,618 | ) | |
| (11,766 | ) |
Non-cash
operating items resulted from changes in: | |
| | | |
| | |
Accounts
receivable | |
| (1,602 | ) | |
| 8,520 | |
Deposits
and deferred costs | |
| (95,301 | ) | |
| —
| |
Inventory | |
| (3,188 | ) | |
| 8,684 | |
Accounts
payable | |
| 32,244 | | |
| 8,254 | |
Accrued
liabilities | |
| 38,025 | | |
| 2,180 | |
| |
| (428,440 | ) | |
| 15,872 | |
Cash
flow from investing activities | |
| | | |
| | |
Expenditures
on intangible assets | |
| (12,188 | ) | |
| (5,171 | ) |
| |
| (12,188 | ) | |
| (5,171 | ) |
Cash
flow from financing activities | |
| | | |
| | |
Funds
paid to related party | |
| (17,421 | ) | |
| (1,572 | ) |
Funds
paid to shareholder | |
| (52,368 | ) | |
| (17,687 | ) |
Receipt
of funds held in attorney trust | |
| 39,705 | | |
| — | |
Repayment
of bank indebtedness | |
| (2,634 | ) | |
| (2,724 | ) |
Advances
from investor | |
| 11,796 | | |
| — | |
Proceeds
from issuance of convertible debentures | |
| 228,000 | | |
| — | |
| |
| 207,078 | | |
| (20,883 | ) |
Decrease
in cash | |
| (233,550 | ) | |
| (11,282 | ) |
Cash,
beginning of period | |
| 250,718 | | |
| 13,462 | |
Cash,
end of period | |
$ | 17,168 | | |
$ | 2,180 | |
The
accompanying notes are an integral part of these condensed interim financial statements.
iWallet
Corporation
Notes
to Condensed Interim Financial Statements
June
30, 2014 and 2013 (unaudited)
1. Nature
of Business and Going Concern
iWallet
Corporation ("the Company") is engaged in the design, development, manufacturing and sales of bio-metric locking wallets,
which operate by scanning a user’s fingerprint to open the wallet.
The
Company was incorporated on November 18, 2009 in the State of California and is located at 7968 Arjons Drive, Suite D, San Diego,
California 92126.
The
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
("U.S. GAAP"), which contemplates continuation of the Company as a going concern.
As
of June 30, 2014, the Company has incurred a shareholder's deficiency of $627,205 (December 31, 2013 - $222,812) and has significant
losses and negative cash flows from operations. In addition as at June 30, 2014 the Company has a working capital deficiency of
$714,784 (December 31, 2013 - $301,976). There is no certainty that the Company will be
successful in generating sufficient cash flow from operations or achieving and maintaining profitable operations in the near future
to enable it to meet its obligations as they come due. As a result there is substantial doubt regarding the Company's ability
to continue as a going concern. The Company may require additional financing to fund its operations, which may not be available
at acceptable terms or at all. The Company plans on raising additional funds from completing financing arrangements, whether as
continued subscriptions for convertible debentures or from additional sources, in contemplation of completing a public listing
transaction as described in note 16.
The
condensed interim financial statements do not include any adjustments relating to the recoverability and classification of the
recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to
continue as a going concern. All adjustments, consisting only of normal recurring items, considered necessary for fair presentation
have been included in these condensed interim financial statements.
2. Significant
Accounting Policies
Unaudited
Condensed Interim Financial Statements
These
unaudited condensed interim financial statements have been prepared on the same basis as the annual financial statements and should
be read in conjunction with those annual financial statements for the year ended December 31, 2013. In the opinion of management,
these unaudited condensed interim financial statements reflect adjustments, necessary to present fairly the Company's financial
position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily
indicative of the results expected for a full year or for any future period.
3. Recently
Issued Accounting Standards and Recently Adopted Accounting Pronouncement
Income
Taxes (ASC Topic - 750): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carry-forward, a Similar Tax Loss,
or a Tax Credit Carry-forward Exists" ("ASU 2013-11") was issued during July 2013. The FASB issued guidance
on how to present an unrecognized tax benefit. The guidance is effective for annual periods beginning after December 15, 2013.
Adoption of the accounting pronouncement does not have a material effect on these accompanying condensed interim financial statements.
On
May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines
a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes
most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim
reporting periods within those periods) beginning after December 15, 2017. Early adoption is not permitted. The impact on the
condensed interim financial statements of adopting ASU 2014-09 will be assessed by management.
Management
does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying condensed interim financial statements.
4. Inventory
| |
| June
30, | | |
| December
31, | |
| |
| 2014 | | |
| 2013 | |
Raw
Material & Finished Goods | |
$ | 23,549 | | |
$ | 20,361 | |
During
the period ended June 30, 2014, the Company recorded a provision relating to obsolete inventory of $nil (2013 - $nil).
5. Intangible
Assets
June
30, 2014 | |
| | | |
| | | |
| Accumulated | | |
| Net
Book | |
| | | |
| Cost | | |
| Amortization | | |
| Value | |
| Patents | | |
$ | 68,118 | | |
$ | 12,726 | | |
$ | 55,392 | |
| Trademarks | | |
| 13,484 | | |
| 4,123 | | |
| 9,361 | |
| Software | | |
| 40,000 | | |
| 1,625 | | |
| 38,375 | |
| | | |
$ | 121,602 | | |
$ | 18,474 | | |
$ | 103,128 | |
|
December
31, 2013 | |
|
|
| |
| | | |
| Accumulated | | |
| Net
Book | |
|
|
| |
| Cost | | |
| Amortization | | |
| Value | |
|
Patents |
| |
$ | 65,930 | | |
$ | 9,375 | | |
$ | 56,555 | |
|
Trademarks |
| |
| 13,484 | | |
| 3,324 | | |
| 10,160 | |
|
Software
(i) |
| |
| 30,000 | | |
| — | | |
| 30,000 | |
|
|
| |
$ | 109,414 | | |
$ | 12,699 | | |
$ | 96,715 | |
| (i) | The
Company purchased software from an arm's length third party in December 2013 accordingly
although ready for use, the costs were not amortized as any amortization would have been
insignificant. |
| | Depreciation
for the six-month period ended June 30, 2014 is $5,775 (June 30, 2013 - $3,632). |
6. Bank
Indebtedness
The
bank indebtedness of the Company consists of a secured line of credit with a limit of $35,000 bearing interest at the annual prime
rate plus 1.25%, which as at June 30, 2014 and December 31, 2013 was 4.5%, and with monthly repayments determined as follows:
a) the
greater of:
| i) | two
percent (2%) of the outstanding principal balance outstanding on the last day of the
billing period, or |
b) accrued
interest since the date of the last payment.
On
termination of the line of credit, the amount will become due over a period determined by the creditor of between thirty-six and
eighty-four months, or over three to seven years, which at the time of the agreement was determined to be forty-eight months,
or four years.
The
line of credit is subject to various non-financial covenants that would constitute an event of default, notably: ownership change
or sale of the business; closure or failure to maintain the related checking account; insolvency or any bankruptcy proceedings;
or, any other defaults on other contracts with the creditor or with any other financial institution.
Security
for the line of credit is the cash in the checking account held with the bank.
| |
| June
30, | | |
| December
31, | |
| |
| 2014 | | |
| 2013 | |
Line
of credit | |
$ | 20,445 | | |
$ | 23,079 | |
Less: Current
portion - estimated based on (a)(i) above | |
| (4,907 | ) | |
| (5,539 | ) |
| |
$ | 15,538 | | |
$ | 17,540 | |
Principal
repayments estimated based on (a)(i) above as at June 30, 2014:
| 2014
(remaining six months) | | |
$ | 2,454 | |
| 2015 | | |
| 5,213 | |
| 2016 | | |
| 5,213 | |
| 2017 | | |
| 2,658 | |
| | | |
$ | 15,538 | |
7. Related
Party Balances
| |
| June
30, | | |
| December
31, | |
| |
| 2014 | | |
| 2013 | |
Current
assets | |
| | | |
| | |
Due
from shareholder | |
$ | 114,201 | | |
$ | 61,833 | |
Current
liabilities | |
| | | |
| | |
Accounts
payable – due to shareholder | |
$ | 24,000 | | |
$ | — | |
Due
to related party | |
$ | 20,421 | | |
$ | 37,842 | |
Advances
from investor | |
$ | 474 | | |
$ | 69,678 | |
The
above balances are non-interest bearing, unsecured and due on demand. The related party is related by virtue of the common control
and ownership by the Company's shareholder.
The
accounts payable – due to shareholder relates to compensation owing to the Company’s shareholder for services in his
capacity as Chief Executive Officer.
The
advances from investor were funds advanced for purposes of covering operating expenses of the Company and $81,000 of these advances
were formalized into a convertible debenture during the period (note 8). At December 31, 2013, the investor was also serving as
interim Chief Financial Officer ("CFO") and accordingly these transactions constitute related party transactions; however,
on January 1, 2014 the investor resigned as interim CFO.
8. Convertible
Debentures
In
December of 2013, the Company entered into a series of secured convertible debenture agreements (the "convertible debentures")
with various investors amounting to $354,000, of which $39,705 was held in attorney's trust to fund related closing costs. During
the three months ending March 31, 2014 the Company closed on an additional $83,000 of convertible debentures with the same terms,
bringing the total convertible debentures outstanding as at March 31, 2014 to $437,000. During the three months ending June 30,
2014 the Company closed on an additional $226,000 of convertible debentures with the same terms, inclusive of $81,000 of advances
from investor formalized into a convertible debenture during the period (note 7), bringing the total convertible debentures outstanding
as at June 30, 2014 to $663,000. The convertible debentures bear interest at 5% per annum calculated monthly and payable on maturity
and had an original maturity date of June 30, 2014. In addition during the period, the Company extended the maturity to August
15, 2014, including the formalization of the advances from investor in note 7 (see note 16). As at June 30, 2014, the amount of
accrued interest is $11,739 (December 31, 2013 - $200), which is included in accounts payable, and total interest expense for
the six months ended June 30, 2014 was $11,625 (2013 - $nil) and for the three months ended June 30, 2014 was 6,467 (2013 - $nil).
Each
convertible debenture contains a conversion option contingently exercisable upon the approval from the Securities and Exchange
Commission or the TSX Venture Exchange for listing of its common shares. The conversion price will be based on the price at which
the Company sells or issues common shares or units, less a discount of 30%. A unit would consist of one common stock and one share
purchase warrant entitling the holder to purchase one additional Class A common share at an exercise price of $0.20 and with a
term of 24 months. Similarly, the Company has the option to force conversion upon approval of a public listing at the same conversion
price.
Since
the conversion option is contingent upon a public listing no value has been allocated to the conversion option in accordance with
ASC 470 Debt. The terms of the convertible debenture do not permit the number of shares receivable upon conversion if a public
listing occurs to be calculated at the commitment date. During the period in which a public listing occurs, the conversion feature
would be measured and recognized as a debt discount and an adjustment to additional paid-in capital.
Subsequent
to the period end, all of the outstanding convertible debentures and accrued interest were converted into 3,222,120 common shares
and warrants to purchase an additional 3,222,120 shares of common stock of the Company at an exercise price of $0.20 and with
a term of 24 months.
9. Tooling
Commitment Deposit, Deferred Costs and Liability
On
May 26, 2011, the Company signed a contract with a supplier under which they are required to pay for tooling costs in addition
to their regular purchase orders (the "tooling commitment"). Under the terms of the tooling commitment the Company was
required to pay for 30% of the contracted tooling costs upon execution (the "tooling commitment deposit") and the remaining
70% over the purchase of 5,000 units over a nine month period (the "tooling commitment liability"). If 5,000 units were
not purchased within those nine months, then the remaining amount was due within thirty days.
As
of February 27, 2012, the Company had not reached the contracted level of purchases and an informal agreement to extend the period
was made; however, by December 31, 2012 the Company had not complied and as a result, the entire amount would have been considered
due.
On
August 24, 2013, the Company entered into a revised agreement with the supplier that extended the term another twelve months to
August 24, 2014.
The
tooling commitment deposit is included in deposits and deferred costs and is capitalized into inventory as units are purchased
based on the 5,000 unit commitment. The tooling commitment liability becomes due and is recognized into accounts payable as units
are purchased and the corresponding deferred costs are capitalized into inventory, all of which is based on the 5,000 unit commitment.
During
2013, it was determined that based on the actual sales levels realized in 2013, the 5,000 unit commitment, the Company would likely
not be able to meet the required orders. Accordingly, the deferred costs related to excess units was recognized as a provision
for loss on the tooling commitment in the condensed interim statement of operations and comprehensive (loss).
| |
| June
30, | | |
| December
31, | |
| |
| 2014 | | |
| 2013 | |
Tooling
commitment deposit | |
$ | 39,385 | | |
$ | 41,119 | |
Tooling
commitment deferred costs | |
| 98,967 | | |
| 100,947 | |
| |
| 138,352 | | |
| 142,066 | |
Provision
for loss on tooling commitment | |
| (138,352 | ) | |
| (139,213 | ) |
Tooling
commitment deposit and deferred costs | |
$ | — | | |
$ | 2,853 | |
Tooling
commitment liability | |
$ | 103,836 | | |
$ | 105,816 | |
10. Income
Taxes
The
Company calculates its income tax expense by estimating the annual effective tax rate and applying that rate to the year-to-date
ordinary income at the end of the period. The Company records a tax valuation allowance when it is more likely than
not that it will not be able to recover the value of its deferred tax assets. As of June 30, 2014 and 2013, the Company
calculated its estimated annualized effective tax rate at 0% and 0%, respectively. The Company had no income tax expense on its
$404,393 loss for the six months ended June 30, 2014. The Company recognized no income tax expense based on its $154,611
pre-tax loss for six months ended June 30, 2013.
The
Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would
more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold,
the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement with the relevant tax authority. The Company recognizes interest accrued on uncertain tax
positions as well as interest received from favorable tax settlements within interest expense. The Company recognizes
penalties accrued on unrecognized tax benefits within general and administrative expenses. As of June 30, 2014 and
December 31, 2013, the Company had no uncertain tax positions.
The
Company does not anticipate any significant changes to the total amounts of unrecognized tax benefits in the next twelve months.
In many cases the Company's uncertain tax positions are related to tax years that remain subject to examination by tax authorities.
The following describes the open tax years, by major tax jurisdiction, as of June 30, 2014:
Federal 2009
– present
State 2009
– present
11. Share
Capital
Authorized
200,000,000 Class
A Common shares par value $0.001
100,000,000 Class
B Common shares par value $0.001
10,000,000 Preferred
Shares par value $0.001
Issued
| |
| June
30, | | |
| December
31, | |
| |
| 2014 | | |
| 2013 | |
10,000
Class A Common shares | |
$ | 10 | | |
$ | 10 | |
12. Commitments
and Contingencies
Legal
Matters
From
time to time, the Company may be involved in a variety of claims, suits, investigations and proceedings arising from the ordinary
course of our business, collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although
claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, the
Company believes that the resolution of current pending matters will not have a material adverse effect on its business, financial
position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on the Company
because of legal costs, diversion of management resources and other factors.
Warranty
Provisions
The
Company is also exposed to warranty contingencies associated with the iWallet and has recorded a provision for these for the period
ended June 30, 2014 of $2,763 and the year ended December 31, 2013 of $3,062, however, the actual amount of loss could be materially
different.
Lease
agreements
On
June 1, 2014 the Company entered into a new lease agreement for $2,500 per month on a month to month basis.
13. Basic
and Diluted Loss Per Share
Potential
common shares related to the convertible debentures were excluded from the computation of diluted loss per share for the period
ending June 30, 2014 because the inclusion of these shares would be anti-dilutive.
For
the periods ending June 30, 2013, no dilutive instruments existed; therefore, basic and diluted loss per share were equal.
14. Segmented
Reporting
All
of the Company's long-lived assets are located in the United States.
During
the six months ended June 30, 2014, majority of sales were domestic; however total international sales accounted for 14% (six
months ended June 30, 2013 – 44%) of total sales although no individual country was in excess of ten percent of total sales.
During the three months ended June 30, 2014, majority of the sales were domestic; however total international sales accounted
for 8% of total sales. During the three months ended June 30, 2013, the Company had sales to customers in Switzerland amounting
to 14% and Canada amounting to 10%. The remaining sales consisted of primarily domestic sales; however additional international
sales accounted for 14% of total sales.
15. Risk
Management
Concentrations
of Credit Risk
The
Company’s cash balances are maintained in bank accounts in the United States. Deposits held in banks in the United States
are insured up to $250,000 per depositor for each bank by the Federal Deposit Insurance Corporation. Actual balances at times
may exceed these limits.
The
Company performs on-going credit evaluations of its customers’ financial condition and generally does not require collateral
from its customers. For the six months ended June 30, 2014, one customer accounted for 22% and another for 14% of the Company’s
revenue. There were no significant customers during the six months ended June 30, 2013. For the three months ended June 30, 2014,
one customer accounted for 30% and another for 19% of the Company's revenue. There were
no significant customers during the three months ended June 30, 2013. As of June 30, 2014 one customer accounted for 94% of the
accounts receivable balance. As of December 31, 2013 one customer accounted for 100% of the accounts receivable balance.
Economics
Dependence
For
the period ended June 30, 2014 the Company purchased 100% (2013 - 100%) of its wallet inventory from one vendor.
The
accounts payable to this vendor is reflected in the carrying amount of the tooling commitment liability see note 9.
16. Subsequent
Events
| (a) | On
July 21, 2014, the Company was combined in an all stock, tax free merger (the “Merger”)
with a wholly-owned subsidiary of Queensridge Mining Resources Inc. ("Queensridge").
Pursuant to the Merger the Company will become a wholly-owed subsidiary of Queensridge
and the Company’s former stockholders will become the majority owners of Queensridge.
Queensridge, whose shares are currently quoted on the OTC Bulletin Board, will immediately
change its name to iWallet Corporation and will continue the business of iWallet as its
only line of business. The Merger will constitute a reverse merger whereby Queensridge
was deemed to have acquired iWallet for accounting purposes only. Upon the close of the
Merger, all convertible debentures and accrued interest were converted into common shares
of the Company and resulted in the issuance of 3,222,120 shares and warrants to purchase
3,222,120 common shares at $0.20 per share, exercisable for two years. Concurrent with
the close of the Merger transaction the Company completed a Private Placement of 6,479,002
units of the Company (“Units”) for gross proceeds of $1,943,701. Each Unit
consists of one common share and one common share purchase warrant of the Company. Each
whole common share purchase warrant is exercisable at $0.60 for a period of two years.
583,110 Units were issued as compensation to the brokers who assisted with the offering. |
| (b) | The
Company began trading in the United States on the OTCQB (OTC Markets Group) exchange
under the ticker symbol IWAL on July 25, 2014. |
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements.” These forward-looking statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are
subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our
ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have
a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes
in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted
accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
Company
Overview
We
were incorporated as “Queensridge Mining Resources, Inc.” on January 29, 2010, in the State of Nevada for the purpose
of engaging in mineral exploration. On July 21, 2014, we entered into a Merger Agreement with iWallet Corporation, a private California
corporation, whereby we acquired all of the issued and outstanding common stock of iWallet Corporation through a subsidiary. Following
this merger, we merged the subsidiary with and into our corporation, and changed our name to “iWallet Corporation”
as part of that process. As a result of entering into the Merger Agreement, we are in the business of designing and developing
biometric locking wallets and related physical, personal security products.
Description
of Business
We
are a designer and developer of innovative, physical, personal security products that incorporate the latest security and communication
technologies to protect against identity, personal and financial information theft. iWallet is a registered trademark in the United
States. Our flagship product is a biometric locking wallet that protects cash, credit cards and personal information with a proprietary
fingerprint security system. The iWallet features a carbon fiber or aluminum chassis and protects credit cards from being read
by many types of RF devices in public spaces. Using a free app, iWallet owners can tether the iWallet to a supported smart device.
A proximity alarm sounds on both devices when separated by about five meters. In addition, GPS tracking capabilities are expected
to be available on future models.
We
are based in San Diego, California and our business was originally founded in 2009. The initial version of the iWallet generated
sales of over $700,000 in the first eighteen months following its launch. With improved designs and a better manufacturing partner,
we are in the process of re-launching the product on a larger scale. Established sales channels include Neiman Marcus in North
America, Harrods in England, Travelsmith.com, Highline Peak Group in Canada, Skymall, Gourji in Russia and NeedItWantItGadgets
in New Zealand. We own the trademark “iWallet” for wallets and wallets connected to smartphones in the USA and have
patents worldwide. We have been licensed by Apple Inc. as an official Accessory Developer.
Products
and Technology
At
this time, we are preparing to re-launch its flagship product and the iWallet 2.0. The suggested retail price will be $490. The
new iWallet are expected to have the following features:
| • | Sleek,
compact industrial design with carbon fiber case |
| • | Pairs
with the owner’s cellular phone via bluetooth technology |
| • | Patented,
exclusive tamper resistant locking mechanism utilizes innovative fingerprint biometric
reader for unlocking |
| • | Unique
latch control that only consumes power during latching hence providing extended battery
life |
| • | RFID
blocking capability for enhanced wireless protection |
| • | Speaker
providing audible feedback |
| • | GPS
tracking capabilities |
Over
the course of the next twelve months, we intend to bring the following additional products to market:
| • | An
inexpensive aluminum “Best Buy” version” that is expected to retail
for less than $150 and be offered in variety of colors to choose from with etching and
engraving capabilities |
| • | A
secure passport case called the iPassport |
| • | A
women’s iWallet version |
| • | A
secure mobile personal safe to store pharmaceuticals in |
| • | A
smart “padlock” with a biometric reader for gym lockers and other personal
areas that require security |
We
hold over twenty patents and patent applications filed in various countries around the world. Our products are currently manufactured
under contract by a manufacturer based in Zhuhai, China.
Market
and Competition Overview
Our
primary target demographic will be consumers who are in the market for high-end luxury wallets and similar accessories. We do
not believe that the $500 approximate retail price to the end user will be obstacle for our initial target demographic. The
carbon fiber process is labor intensive to manufacture. High net worth individuals appreciate the advantages of carbon fiber construction
and spend tens of thousands of dollars outfitting their automobiles and other accessories. However, the more affordable aluminum
version expected to retail for under $150 will be launched in 2015 once economies of scale are achieved.
A
comparison of the iWallet to the leather or canvas wallets currently offered by several major fashion designers is below:
Brand | |
Model | |
Price | |
Material | |
Bluetooth
(Anti-theft/loss) | |
Fingerprint
Reader | |
RFID
Anti-Theft | |
Owner
Access Only |
Cartier | |
Santos
de Cartier | |
$ | 380 | | |
Leather | |
| No | | |
No | |
| No | | |
No |
Salvatore
Ferragamo | |
Bifold | |
$ | 350 | | |
Leather | |
| No | | |
No | |
| No | | |
No |
Louis
Vuitton | |
Classic | |
$ | 565 | | |
Canvas | |
| No | | |
No | |
| No | | |
No |
Gucci | |
Bifold | |
$ | 550 | | |
Canvas | |
| No | | |
No | |
| No | | |
No |
iWallet | |
Slim | |
$ | 490 | | |
Carbon
Fiber | |
| Yes | | |
Yes | |
| Yes | | |
Yes |
We
believe the security, high technology, slim design, and carbon fiber construction of the iWallet can position it to compete for
a share of the luxury wallet market.
Sales,
Distribution and Growth Strategy
Our
plan for marketing and raising awareness for the iWallet includes the following strategies:
| • | Sell
and market at major trade shows that attract global buyers such as the CES. |
| • | Align
iWallet with a high profile celebrity as the face for iWallet. |
| • | Optimize
website to gain greater distributor inquiry, continued media attention and wider market
accessibility through links to other major potential purchasers. |
| • | Continue
worldwide media attention, primarily from BBC Worldwide, Fox News (Fox and Friends),
Discovery Channel. |
Our
established distribution channels for the iWallet, as originally launched, include the following:
- Neiman Marcus in North America
- In Canada for Centurion (black
card) Amex members, who will be able to redeem points in exchange for an iWallet through Highline Peak Group
- NeedItWantItGadgets in New Zealand
The
following are current prospective sales channels:
- Private branding for Montblanc,
Porsche Design, Ducatti, Gucci, and Bugatti. We are currently in partnering or licencing discussions with all of these companies.
- Dufry, a global duty free company
with 1,100 locations in 45 countries
We
plan to increase our consumer off take within newly gained distribution at major regional high-end department stores, and to expand
to private brand stores. Together with our distribution partners, we are targeting major national retail channels. We believe
a partnership with any one leading national chain would be transformative. We intend to develop our website towards wider market
accessibility through links to other major potential purchasers. We will continue to be featured in ingadget.com and gizmodo.com,
where the iWallet has been dubbed “The Fort Knox of Wallets.” We will also begin limited selling efforts in key international
markets using further regional distributors in Europe, Asia, Canada, Australia, and South America. We are also in discussions
with distribution companies in key opportunity geographies.
Results
of Operations for the Three and Six Months ended June 30, 2014 and 2013.
During the three months ended June 30, 2014,
we generated sales of 22,007. Our cost of sales was $18,317, resulting in gross profit of $3,690. Our expenses for the three months
ended June 30, 2014 were $195,875, and consisted of legal and professional fees of $114,441, subcontractor fees of $47,000, office
and general expenses of $9,049, travel expenses of $1,371, interest and bank fees of $7,486, amortization of intangible assets
of $2,887, rent of $3,250, and research and development of $10,391. Our net loss for the three months ended June 30, 2014 was $192,185.
By comparison, during the three months ended June 30, 2013, we generated sales of $14,515. Our cost of sales was $5,178, resulting
in gross profit of $9,337. Our expenses for the three months ended June 30, 2014 were $12,316, and consisted of legal and professional
fees of $8,276, office and general expenses of $269, travel expenses of $27, interest and bank fees of $509, and amortization of
intangible assets of $1,848. We also recorded a provision for recovery of income taxes of $4,247. Our net income for the three
months ended June 30, 2013 was $1,268.
During the six months ended June 30, 2014,
we generated sales of 38,139. Our cost of sales was $35,253 resulting in gross profit of $2,886. Our expenses for the six months
ended June 30, 2014 were $407,279, and consisted of legal and professional fees of $220,029, subcontractor fees of $109,100, office
and general expenses of $26,404, travel expenses of $16,986, interest and bank fees of $12,952, amortization of intangible assets
of $5,775, rent of $4,500, and research and development of $11,533. Our net loss for the six months ended June 30, 2014 was $404,393.
By comparison, during the six months ended June 30, 2013, we generated sales of $32,006. Our cost of sales was $19,681, resulting
in gross profit of $12,325. Our expenses for the six months ended June 30, 2014 were $166,936, and consisted of legal and professional
fees of $16,351, office and general expenses of $2,223, travel expenses of $3,154, interest and bank fees of $976, amortization
of intangible assets of $3,632, research and development of $1,387, and a provision for a loss on a tolling commitment of $139,213.
We also recorded a provision for recovery of income taxes of $4,247. Our net loss for the six months ended June 30, 2013 was $150,634.
Our
expenses and net loss for the three and six months ended June 30, 2014 were larger than in the same periods last year primarily
due to increased legal and professional fees related to our preparations for becoming a public company.
Over
the course of the remainder of the current fiscal year, we expect that our sales will increase significantly as we launch the
iWallet 2.0 and begin distribution of the product to various retailers and other outlets. During 2014, we also expect to make
significant additional expenditures related to the continued development and expansion of our business. Furthermore, as a public
company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. As a result
of these factors, to achieve profitability we will need to, among other matters, significantly increase our customer base and
our distribution channels. We cannot assure you that we will be able to increase our revenue in this manner and achieve profitability
on a consistent basis. As we expect to continue to invest in the development of our business, this investment could outpace growth
in our revenue, and thereby impair our ability to achieve and maintain profitability.
Liquidity
and Capital Resources
As of June 30, 2014, we had current assets
of $277,502, consisting of cash in the amount of $17,168, deposits and deferred costs of $116,407, inventory of $23,549, a loan
due from a shareholder of $114,201, and accounts receivable of $6,177. Our current liabilities as of June 30, 2014 were $992,286,
and consisted of the current portion of long term bank debt in the amount of $4,907, accounts payable of $158,561, accrued liabilities
of $41,087, amounts due to a related party of $20,421, advances from an investor of $474, convertible debentures of $663,000, and
a liability for a manufacturer tooling commitment of $103,836. Our working capital deficit as of June 30, 2014 was therefore $714,784.
In
the months prior to our reverse merger, we engaged in a bridge financing transaction raising a total $663,000 through the sale
of secured convertible promissory notes. Concurrent with the closing of the merger, these notes converted to 3,222,120 shares
of common stock and 3,222,120 warrants to purchase shares of common stock at a price of $0.20, exercisable for two years.
Our
bank indebtedness consists of a line of credit with a limit of $35,000, secured by cash on deposit in a checking account. The
line bears interest at a rate of prime plus 1.25%. As of June 30, 2014, the balance owed was $20,445.
Immediately
upon closing of our reverse merger, we closed a private offering of Units at a price of $0.30 per Unit, each Unit consisting of
one (1) share of common stock and one (1) warrant to purchase one share of common stock at a price of $0.60 per share, exercisable
for two (2) years. A total of 6,479,002 shares of common stock and 6,479,002 warrants were issued to subscribers in the offering.
The gross proceeds from the offering, prior to the deduction of agreed selling commissions and expenses, were $1,943,701. Net
of broker’s commissions and expenses, we received net proceeds of $1,745,537.
As
a result of the funds obtained through the offering, we believe that we have sufficient capital to execute our business development
plan for the current year. In order to continue our growth and development plan over the longer term, however, we will require
additional financing. Management is currently seeking additional equity financing in order to fund the long term development of
the company. There can be no assurance that we will be successful in raising additional funding, either through increased sales
and debt and/or other equity financing arrangements. If we are not able to secure significant additional funding, the long term
implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available
to us on acceptable terms or at all.
Off
Balance Sheet Arrangements
As
of June 30, 2014, there were no off balance sheet arrangements.
Going
Concern
We
have negative working capital and have incurred losses since inception. These factors create substantial doubt about our ability
to continue as a going concern. The financial statements do not include any adjustment that might be necessary if we are unable
to continue as a going concern.
Our
ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt
financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining
debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful
in these efforts.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
A
smaller reporting company is not required to include this item.
Item
4. Controls and Procedures
We
carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2014. This evaluation was carried out under the supervision and
with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that, as of June 30, 2014, our disclosure controls and procedures were not effective.
There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2014. Management
determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and
number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation
and control procedures not regularly performed due to the lack of staff and resources.
Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods
specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated
to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required
disclosure.
Limitations
on the Effectiveness of Internal Controls
Our
management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily
prevent all fraud and material error. Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The
design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time,
control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may
deteriorate.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
We
are not a party to any other pending legal proceeding. We are not aware of any other pending legal proceeding to which any of
our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material
interest adverse to us.
Item
1A. Risk Factors
A
smaller reporting company is not required to include this item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults upon Senior Securities
None.
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. Other Information
None.
Item
6. Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
iWallet
Corporation |
|
|
Date: |
August
19, 2014
|
|
|
|
/s/
Steven Cabouli |
By: |
Steven Cabouli |
Title: |
President, Chief
Executive Officer, and Chief Financial Officer |
CERTIFICATIONS
I, Steven Cabouli, certify that;
1. |
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2014 of iWallet Corporation (the “registrant”); |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 19, 2014
/s/ Steven Cabouli
By: Steven Cabouli
Title: Chief Executive Officer
CERTIFICATIONS
I, Steven Cabouli, certify that;
1. |
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2014 of iWallet Corporation (the “registrant”); |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 19, 2014
/s/ Steven Cabouli
By: Steven Cabouli
Title: Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
In connection with the quarterly Report of
iWallet Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2014 filed with the Securities and
Exchange Commission (the “Report”), I, Steven Cabouli, Chief Executive Officer and Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a)
of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material
respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations
of the Company for the periods presented. |
By: |
/s/ Steven Cabouli |
Name: |
Steven Cabouli |
Title: |
Principal Executive Officer, Principal Financial Officer and Director |
Date: |
August 19, 2014 |
This certification has been furnished solely pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
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