The accompanying notes are an integral part of these unaudited financial statements.
The accompanying notes are an integral part of these unaudited financial statements.
The accompanying notes are an integral part of these unaudited financial statements.
Notes to Financial Statements
November 30, 2013
(Unaudited)
Note 1 – Nature of Business, Presentation, and Going Concern
Organization
Dolat Ventures, Inc., the “Company” was incorporated in Nevada on April 13, 2006 with the intent to engage in the business of mineral property exploration. On March 20, 2013, the Company changed its domicile from Nevada to Wyoming.
On February 9, 2009, the Company entered into an Agreement and Plan of Acquisition (the “Acquisition Agreement”) with Dove Diamond and Mining, Inc. (“Dove”), a Nevada corporation, and the shareholders of Dove (“Dove Shareholders”) whereby the Company acquired 100% of the issued and outstanding common stock of Dove in exchange (the “Stock Exchange”) for 20,622,000 newly issued shares of its restricted common stock. The final closing was concluded and is effective February 15, 2009. For accounting purposes, as a result of the Stock Exchange, Dove became a wholly owned subsidiary of the Company. Dove ceased being a subsidiary of the Company effective March 1, 2011 when Dove’s corporate charter was permanently revoked by Nevada.
In conjunction with the acquisition of Dove, the Company experienced a change in control. On February 28, 2009 Shmuel Dovid Hauck was nominated and elected by the Board of Directors as President of Dolat Ventures, Inc. upon the resignation of Gary Tice, who previously served as President, Chief Financial Officer, Secretary, and a Director. Mr. Hauck was also appointed to the Board of Directors on February 28, 2009.
On April 13, 2010, the Company entered into a commercial based agreement with Millennium Mining LLC (“Millennium”). The Company issued thirty million (30,000,000) shares of common stock to Millennium as consideration for the formation of a commercial association between the two entities. The Company ceased its commercial association with Millennium effective March 1, 2011.
Segment Information
In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. This provision is not applicable as the Company's planned principal operations have not fully commenced.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”).
Going Concern
The ability of the Company’s to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate revenues, and continue to raise additional investment capital. No assurance can be given that the Company will be successful in these efforts.
The unaudited financial statements do not include any adjustments relating to the recoverability and classification of 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. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in the accompanying financial statements include the depreciable lives of property and equipment, valuation of share-based payments and the valuation allowance on deferred tax assets. Actual results could differ from those estimates and would impact future results of operations and cash flows.
Reclassification of Prior Year Financial Statements
The Company has reclassified, where appropriate, the prior year financial statements to conform to the current year presentation.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At November 30, 2013 and February 28, 2013, respectively, the Company had $4 and $2 in cash equivalents.
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of 10 years. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.
Mineral Property and Exploration Costs
The Company has been in the exploration stage since April 13, 2006 and has not yet realized sustainable revenues from its planned operations. It is primarily engaged in attempting to acquire, explore, and develop mining properties and attempting the wholesale distribution and sale of diamonds and precious gemstones. In accordance with Securities and Exchange Commission Industry Guide 7, mineral property acquisition costs and exploration costs are expensed to operations as incurred.
When it has been determined that a mineral property can be economically developed as a result of establishing probable and then proven reserves, the costs then incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable-proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Impairment or Disposal of Long-Lived Assets
The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset August not be recoverable. When necessary, impaired assets are written down to estimate fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 states that a fair value measurement should be determined based on the assumptions the market participants would use in pricing the asset or liability. In addition, ASC 820 specifies a hierarchy of valuation techniques based on whether the types of valuation information (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The twelve broad levels defined by ASC 820 hierarchy are as follows:
Level 1 – quoted prices for identical assets or liabilities in active markets.
Level 2 – pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.
Level 3 – valuations derived from methods in which one or more significant inputs or significant value drivers are unobservable in the markets.
These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically affect the estimated fair values.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of November 30, 2013. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts payable and accrued expenses and related party payables. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.
Revenue Recognition
The Company recognizes revenue on arrangements in accordance with ASC Topic 605,
“Revenue Recognition”
(“ASC Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. Revenue is recognized when the products are received and accepted by the customer.
Environmental Costs
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.
Stock Based Compensation
The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 is a revision to SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50 “Equity-Based Payments to Non-Employees” ("ASC 505-50"). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options issued to non-employees are recorded in expense and additional paid-in capital in shareholders' equity/(deficit) over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each period.
The Company has not adopted a stock option plan and has not granted any stock options as of November 30, 2013.
Income Taxes
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized.
The FASB has issued ASC 740 “Income Taxes” (formerly, Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” – An Interpretation of FASB Statement No. 109 (FIN 48)). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of November 30, 2013.
Basic and Diluted Loss Per Share
The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
As of November 30, 2013, there were 131,785,714 potentially dilutive shares that could be issued if the common stock conversion feature contained in the convertible notes payable were exercised.
Emerging Growth Company
We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
Effect of Recent Accounting Pronouncements
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, ''Technical Corrections and Improvements" in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, "Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)" in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities” which eliminated the definition of a development stage entity from U.S. generally accepted accounting principles and removed the additional disclosure requirements for such entities. The Company did not issue any financial statements subsequent to the implementation of ASU 2014-10. The Company adopted the early application of the provisions of ASU 2014-10.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company had an accumulated deficit of $16,341,188 at November 30, 2013. The Company had net cash used in operations of $139,064 and $28,120 for the nine months ended November 30, 2013 and November 30, 2012, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company’s to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate revenues, and continue to raise additional investment capital. No assurance can be given that the Company will be successful in these efforts.
The unaudited financial statements do not include any adjustments relating to the recoverability and classification of 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. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
NOTE 4 – CONVERTIBLE NOTES PAYABLE
On May 30, 2008, the Company entered into an unsecured promissory note with Paul M’Bayo for 80,000,000 Sierra Leones (approx. $18,500) with interest due oft 6% per annum and due May 30, 2009. The note can be converted at any time by the holder into common shares of the Company at a conversion rate of $.00/shares. Currently the Company is in default of this note.
In the year ended February 28, 2013, Mr. M’Bayo assigned $18,500 of convertible debt to an unrelated third party who in turn converted the debt into 18,500,000 common shares of the Company.
On May 20, 2009, the Company entered into an unsecured promissory note with Kevin Cheung for 28,030,000 Sierra Leones (approx. $6,500) with interest due of 6% per annum and due May 20, 2010. The note can be converted at any time by the holder into common shares of the Company at a conversion rate of $.001/share. Currently the Company is in default of this note.
On November 5, 2012, the Company entered into an unsecured promissory note with its former President Mr. David Hauck for $5,000 with prepaid interest of $1,000 and due on demand. The note can be converted at any time by the holder into common shares of the Company at a conversion rate equal to 50% of the closing market price on the date of conversion. Currently the Company is in default of this note.
On May 1, 2013, the Company entered into an unsecured $125,000 promissory note with Mayfair Sterling, Inc. with interest due of 6% per annum and maturing on May 1, 2014. The note may be converted at any time by the holder into common shares of the Company at a conversion rate of $0.001/share.
Derivative Liability
At November 30, 2013 and February 28, 2013, the Company’s derivative liability balances were $1,567,043 and $101,140, respectively. The derivative liability was calculated using the Black Scholes Model on each of the outstanding convertible notes payable.
NOTE 5 – RELATED PARTY TRANSACTIONS
As of November 30, 2013 and February 28, 2013 the Company had an accounts payable to related parties balance of $14,960 and $14,935, respectively. From time to time, associates of the Company’s management will provide services to the Company as well as provide the Company funds to cover shortfalls in capital. These advances are unsecured and non-interest bearing.
On February 9, 2009, the Company entered into an Agreement and Plan of Acquisition (the “Acquisition Agreement”) with Dove Diamond and Mining, Inc. (“Dove”), a Nevada corporation, and the shareholders of Dove (“Dove Shareholders”) whereby the Company acquired 100% of the issued and outstanding common stock of Dove in exchange (the “Stock Exchange”) for 20,622,000 newly issued shares of its restricted common stock. The final closing was concluded and is effective February 15, 2009. Dove is majority owned by the Company’s former President and majority shareholder
.
Effective March 1, 2011, Dove’s corporate charter was permanently revoked by the State of Nevada and ceased to be a subsidiary of the Company.
On April 13, 2010, the Company entered into an agreement with Millennium whereby the company issued thirty million (30,000,000) shares of the Company’s common stock in consideration for the formation of a commercial association among the two entities. The shares of stock acquired were owned by Mr. Shmuel David Hauck, the Company’s former President and majority shareholder. Effective March 1, 2011, the Company ceased its commercial association with Millennium.
On November 5, 2012, the Company entered into an unsecured promissory note with its former President Mr. David Hauck for $5,000 with prepaid interest of $1,000 and due on demand. The note can be converted at any time by the holder into common shares of the Company at a conversion rate equal to 50% of the closing market price on the date of conversion. Currently the Company is in default of this note.
NOTE 6 – STOCKHOLDERS’ EQUITY
On July 29, 2010, the Company filed an amendment to its articles of incorporation with the Nevada Secretary of State to increase its authorized number of common shares to 250,000,000 at $0.001 par value and authorized 25,000,000 shares of preferred stock with a par value of $0.001.
On July 29, 2010, the Board of Directors of the Company filed a Designation of Series A Preferred Stock creating 1,000,000 shares of Series A Preferred Stock and a Designation of Series B Preferred Stock creating 24,000,000 shares of Series B Preferred Stock. The Series A Preferred Stock may be converted at any time by the holder into common shares at a rate of 1:1. Each share of Series A Preferred Stock will vote equivalent to one share of common stock. The Series B Preferred Stock may be converted at any time by the holder into common shares at a rate of 1:1. Each share of Series B Preferred Stock will vote equivalent to one share of common stock.
As of November 30, 2013 and 2012, the Company has 4,981,350 shares of Series B Preferred Stock outstanding, respectively.
During the twelve months ended February 29, 2012 the Company issued 3,817,460 shares of its common stock for $350,000, 9,865,740 shares of common stock for consulting services and 1,150,000 shares of common stock for other services . The shares for consulting services were valued at the closing share price on the date of issuance which resulted in the Company recording a non cash expense of $1,449,861. The consulting services were provided by unrelated third party consultants and were completed in the year ended February 29, 2012. The shares issued for other services were valued at the closing share price on the date of issuance which resulted in the Company recording an expense of $159,500.
In the year ended February 28, 2013, the Company issued 18,500,000 common shares pursuant to the assignment and conversion of convertible notes payable and 2,500,000 shares to consultants for services completed by February 28, 2013. The shares issued to consultants were valued at the closing share price on the date of issuance which resulted in the Company recording an expense of $75,000.
During the nine months ended November 30, 2013, the Company issued 52,100,000 shares of common stock valued at $311,100, $126,500 was issued for services and $184,600 was stock based compensation.
NOTE 7 – INCOME TAX
Deferred income taxes have been provided to show the effect of temporary differences between the recognition of expenses for financial and income tax reporting purposes and between the tax basis of assets and liabilities, and their reported amounts in the consolidated financial statements. In assessing the realizability of deferred tax assets, the Company assesses the likelihood that deferred tax assets will be recovered through tax planning strategies or from future taxable income, and to the extent that recovery is not likely or there is insufficient operating history, a valuation allowance is established. The Company adjusts the valuation allowance in the period management determines it is more likely than not that net deferred tax assets will or will not be realized. As of November 30, 2013 and February 28, 2013, the Company has provided a valuation allowance for all net deferred tax assets due to their current realization not being more likely than not.
The provisions for income taxes differ from the amount computed by applying the statutory federal income tax rate to Income before provision for income taxes. The source and tax effects of the differences are as follows for the nine months ended November 30, 2013 and 2012:
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|
|
2013
|
|
|
2012
|
|
|
U.S. federal statutory rate
|
|
|
35
|
%
|
|
|
35
|
%
|
|
Valuation reserve
|
|
|
-35
|
%
|
|
|
-35
|
%
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|
Total
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|
|
0
|
%
|
|
|
0
|
%
|
As of November 30, 2013, the Company did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during the next 12 months. Any interest or penalties related to unrecognized tax benefits is recognized in income tax expense. Since there are no unrecognized tax benefits as a result of tax positions taken, there are no accrued penalties or interest.
Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the consolidated financial statements. Tax positions include, but are not limited to, the following:
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-
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An allocation or shift of income between taxing jurisdictions;
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|
-
|
The characterization of income or a decision to exclude reportable taxable income in a tax return; or
|
|
-
|
A decision to classify a transaction, entity or other position in a tax return as tax exempt.
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The Company reflects tax benefits only if it is more likely than not that we will be able to sustain the tax position, based on its technical merits. If a tax benefit meets this criterion, it is measured and recognized based on the largest amount of benefit that is cumulatively greater than 50% likely to be realized. The Company has no unrecognized tax benefits as of November 30, 2013.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on the Company’s balance sheets at November 30, 2013 and February 28, 2013, and has not recognized interest and/or penalties in the statement of operations for either period.
NOTE 8 – SUBSEQUENT EVENTS
On December 2, 2016, Wang DeQun, the Company’s President and director, acquired control of the Company from its prior sole officer and President through the purchase of 300,000 shares of the Company’s Class A Convertible Preferred Stock convertible into 750,000,000 shares of the Company’s common stock and having voting rights equivalent to 750,000,000 common shares.
On January 11, 2017, the Company acquired Ji Ming Yang Amperex Technology Limited, a related party Chinese corporation. The purchase price was 100,000 shares of Class D Preferred Stock convertible into 250,000,000 shares of the Company’s common stock and having voting rights equal to 250,000,000 shares of common stock.
On April 4, 2017, the Company acquired a patent from Wang DeQun in exchange for 100,000 shares of Class E Preferred Stock also convertible into 250,000,000 shares of the Company’s common stock and having voting rights equal to 250,000,000 shares of the Company’s common stock.
SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “August,” “might,” “could,” “would,” ”will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact August be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that August cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.
Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended February 28, 2013 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.
Company Overview
Dolat Ventures, Inc. (the "Company", “Dolat”, “DOLV”, “we”, “us” or “our”), through its wholly owned subsidiary, Dove Diamonds and Mining, Inc. (“Dove”) was formerly focused on the early stages of attempting to acquire diamonds, gems and precious stones from a variety of locations throughout the African continent. Effective March 1, 2011, Dove’s corporate charter was permanently revoked by Nevada and ceased being a subsidiary of the Company. The Company has had limited operations and is actively evaluating commercial extraction possibilities.
Company History
Dolat Ventures, Inc., the “Company” was incorporated in Nevada on April 13, 2006 with the intent to engage in the business of mineral property exploration. On March 20, 2013, the Company changed its domicile from Nevada to Wyoming.
On February 9, 2009, the Company entered into an Agreement and Plan of Acquisition (the “Acquisition Agreement”) with Dove Diamond and Mining, Inc. (“Dove”), a Nevada corporation, and the shareholders of Dove (“Dove Shareholders”) whereby the Company acquired 100% of the issued and outstanding common stock of Dove in exchange (the “Stock Exchange”) for 20,622,000 newly issued shares of its restricted common stock. The final closing was concluded and is effective February 15, 2009. For accounting purposes, as a result of the Stock Exchange, Dove became a wholly owned subsidiary of the Company.
In conjunction with the acquisition of Dove, the Company experienced a change in control. On February 28, 2009 Shmuel Dovid Hauck was nominated and elected by the Board of Directors as President of Dolat Ventures, Inc. upon the resignation of Gary Tice, who previously served as President, Chief Financial Officer, Secretary, and a Director. Mr. Hauck was also appointed to the Board of Directors on February 28, 2009.
On April 13, 2010, the Company entered into a Share Exchange Agreement with Millennium Mining LLC (“Millennium”), a Sierra Leone Limited Liability Company. Under the agreement, the company acquired 75% of the capital stock of Millennium in exchange for twenty eight million (28,000,000) shares of the Company’s common stock. The shares of stock acquired were owned by Mr. Shumel Dovid Hauck, the Company’s (former) President and majority shareholder. Millennium is an operating entity in the business of mining and wholesale distribution of diamonds and precious gemstones.
Plan of Operation
As of the date of this Report, we are engaged in the evaluation of the acquisition, exploration, and advancement of mining projects.
Our primary focus in the natural resource sector is diamonds. Our strategic initiatives are to undertake cost efficient and effective exploration activities to discover mineralization and potentially mineral reserves. Though we have the expertise on our board of directors to take a resource property that hosts a viable ore deposit into mining production, the costs and time frame for doing so are considerable, and the subsequent return on investment for our shareholders would be very long term indeed. We therefore anticipate optioning or selling any ore bodies that we may discover to a major mining company. Most major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies. Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine. By optioning or selling a deposit found by us to these major mining companies, it would provide an immediate return to our shareholders without the long time frame and cost of putting a mine into operation ourselves, and it would also provide future capital for the company to continue operations.
Dove Diamonds and Mining
Dove was in the early stages of attempting to acquire diamonds, gems and precious stones from a variety of locations throughout the African continent. Primarily focused on the West African country of Sierra Leone, the strategy was to search for mineral locations, suppliers and sellers of diamonds, gems and precious stones. Effective March 1, 2011, Dove’s corporate charter was permanently revoked by Nevada and ceased being a subsidiary of the company.
Results of Operations
For the Nine Months Ended November 30, 2013 and 2012
Revenues
The Company had no revenues for the periods ended November 30, 2013 and 2012.
Operating Expenses
For the nine months ended November 30, 2013, our operating expenses were $431,564 compared to $112,297 for the nine months ended November 30, 2012, representing an increase of $319,267. For 2013 we incurred higher stock based compensation of $184,600 compared to $75,000 for 2012. The company also expensed stock issued for services of $126,500 in the 2013 period which was not present in the 2012 period. Also, for the period ended November 30, 2013 professional services were $110,917 versus $15,946 in the 2012 period.
Net Loss
For the nine months ended November 30, 2013, net loss was $1,902,330 versus a net loss of $163,008 in the 2012 period. The increase in loss of $1,739,322 is primarily attributable to a derivative loss of $1,465,903 in 2013 whereas in the 2012 period the Company had a derivative loss of $50,711 and also due to the operating expenses referred to in the preceding paragraph .
Liquidity and Capital Resources
Overview
For the nine months ended November 30, 2013, we funded our limited operations through financing activities consisting primarily of a private placement of a $125,000 convertible debt note with an outside investor, and by loans from a shareholder. Our principal use of funds during the nine months ended November 30, 2013 has been for the ongoing exploration efforts in attempting to develop mining properties and for general corporate expenses.
Liquidity and Capital Resources during the nine months ended November 30, 2013 compared to the nine months ended November 30, 2012
As of November 30, 2013 the Company had cash of $4 and a deficit in working capital of $1,782,508 of which $1,567,043 is a derivative liability that will not require to be settled in cash. The Company generated a negative cash flow from operations of $139,064 for the nine months ended November 30, 2013. The negative cash flow from operating activities for the period is primarily attributable to professional fees of $110,917 and general and administrative expenses of $9,547.
No cash was used or provided in investing activities for the nine months ended November 30, 2013 or 2012. The Company raised cash of $125,000 upon the issuance of a convertible note payable during the period ended November 30, 2013.
We will require additional financing during the current fiscal year according to our planned exploration and operational activities.
Going Concern
Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the financial statements for the years ended February 28, 2013 and February 29, 2012 regarding concerns about our ability to continue as a going concern. Our unaudited financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Our unaudited financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/ or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
There is no assurance that our operations will be profitable. The Company has conducted private placements of its common stock and convertible debt, which have generated funds to satisfy the initial cash requirements of its planned exploration ventures. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results August differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results might differ from these estimates under different future conditions.
Our significant accounting policies are summarized in Note 2 of our financial statements. While all of these significant accounting policies impact the Company’s financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on the Company and require management to use a greater degree of judgment and estimates. We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting for mineral property costs, impairment of long-lived assets, income taxes and stock-based compensation. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management's Discussion and Analysis of Financial Condition.
Additional Information
We file reports and other materials with the Securities and Exchange Commission. These documents August be inspected and copied at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also get copies of documents that the Company files with the Commission through the Commission's Internet site at www.sec.gov.
