FORUM ENERGY METALS CORP.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six month periods ended May 31, 2020 and 2019
(Unaudited – Prepared by Management)
(Stated in Canadian Funds)
NOTICE OF NO REVIEW BY AUDITOR
The accompanying unaudited interim condensed consolidated financial statements of Forum Energy Metals
Corp. (“the Company”) have been prepared by management and have not been the subject of a review by the Company’s independent auditor.
Forum Energy Metals Corp.
(An Exploration Stage Company)
Interim Condensed Consolidated Statements of Financial Position as at
Canadian Funds
Unaudited - prepared by management
May 31, 2020 November 30, 2019
Note
- ($)
- ($)
ASSETS
Current assets
- Cash
- 4
56
275,970
15,095 66,771 44,182
402,017
131,308
- 7,901
- Marketable securities
- Receivables
- 26,032
38,038
203,279
Prepaid expenses and deposits
- Equipment
- 1,988
- 2,316
- Exploration and evaluation assets
- 7
- 2,671,010
- 2,671,010
- 3,075,014
- 2,876,605
LIABILITIES Current liabilities
Accounts payable and accrued liabilities Due to related parties
21,567 30,940 82,722
135,229
263,649 255,170
79,806
9
- 7
- Promissory notes
598,625
- Loan
- 8
- 40,000
- -
- 175,229
- 598,625
SHAREHOLDERS’ EQUITY
- Capital stock
- 9
- 45,535,243
-
45,214,204
- -
- Allotted but not issued
Contributed Surplus - Options Contributed Surplus - Warrants Accumulated deficit
99
5,465,784 2,339,652
(50,440,893)
5,325,114 2,339,652
(50,600,990)
- 2,899,786
- 2,277,980
- 3,075,014
- 2,876,605
Nature of Operations and Going Concern – Note 1 Subsequent Event – Note 12
Approved and authorized by the Board of Directors on July 27, 2020:
”Richard Mazur”
Richard Mazur Director
“Larry Okada”
Larry Okada Director
The accompanying notes are an integral part of these financial statements
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Forum Energy Metals Corp.
(An Exploration Stage Company)
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
Canadian Funds Unaudited - prepared by management
- For the three months ended
- For the six months ended
May 31, 2020
($)
May 31, 2019
($)
May 31, 2020
($)
May 31, 2019
Note
($)
General and administrative expenses
Amortization
- 464
- 163
12,000
(336,510)
25,756 (6,317)
-
16,707 28,009 (8,155)
139,230
14,890
3,139
232
15,000 22,454 29,681 32,084 95,600 28,181 65,874
4,890
-
328
19,500
(374,023)
82,650 39,625
2,373
28,459 56,288
(12,887) 140,670
21,868
4,301
- Directors fees
- 15,000
117,477
61,605 73,334 95,600 47,623 93,757
8,916
Exploration and evaluation assets expenditures Investor relations and shareholder information Management fees Media relations Office and administration Professional fees
7
Salaries and wages Share-based compensation Transfer agent and regulatory fees Travel and promotion
- 9
- 8,740
17,713
530
7,740
530
- (111,088)
- 302,266
- 9,152
Loss (income) from operations
540,759
Other items
(162,055)
-
(6,053)
- -
- (162,055)
-
(7,194)
- -
- Gain on settlement of debt
Part XII.6 tax Unrealized (gain) loss on marketable securities
1,027 3,107
2,581 5,736
- (168,108)
- 4,134
- (169,249)
- 8,317
- (279,196)
- 306,400
- (160,097)
- 549,076
Comprehensive (income) loss for the period
Loss (income) per share
- Basic and diluted
- $0.00
- $0.00
- $0.00
- $0.01
Weighted Average Number of Common Shares Outstanding - basic and diluted
- 114,089,552
- 107,488,904
- 109,352,913
- 100,122,530
The accompanying notes are an integral part of these financial statements
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Forum Energy Metals Corp.
(An Exploration Stage Company)
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity
Canadian Funds Unaudited - prepared by management
Accumulated
Contributed Surplus -
Contributed Surplus -
Other
Capital Stock Number
(#)
96,408,904
Comprehensive Accumulated
Defict
($)
Amount
($)
Options
($)
Warrants
($)
Loss
($)
Total
($)
November 30, 2018
44,614,030
554,000
(9,908) (3,347)
-
- 5,067,714
- 2,333,843
- (9,921) (49,278,431)
- 2,727,235
554,000
(9,908)
-
- Shares issued for cash
- 11,080,000
- -
- -
- -
---
----
- Shares issue costs - cash
- -
--
--
-
3,347
-
Share issue costs - finders' warrants
- Share-based compensation
- 8,740
- 8,740
Reclassification on the adoption of
- IFRS 9
- -
-
--
--
--
9,921
-
- (9,921)
- -
- Loss for the period
- (549,076)
- (549,076)
May 31, 2019
- 107,488,904
- 45,154,775
75,000 (6,859) (2,462) (6,250)
-
- 5,076,454
- 2,337,190
- -
------
- (49,837,428)
- 2,730,991
75,000 (6,859)
-
- Shares issued for cash
- 1,250,000
- -
- -
- -
Shares issue costs - cash Share issue costs - finders' warrants Flow-through premium
-----
- -
- -
- -
- -
- 2,462
- -
-
248,660
-
---
- -
- (6,250)
248,660 (763,562)
Share-based compensation Loss for the period
-
- -
- (763,562)
November 30, 2019
- 108,738,904
- 45,214,204
- 5,325,114
- 2,339,652
- -
---
- (50,600,990)
- 2,277,980
321,039 140,670 160,097
- Shares issued for cash
- 5,350,648
- 321,039
- -
140,670
-
---
-
- -
- Share-based compensation
Income (loss) for the period
--
-
- -
- 160,097
- May 31, 2020
- 114,089,552
- 45,535,243
- 5,465,784
- 2,339,652
- -
- (50,440,893)
- 2,899,786
The accompanying notes are an integral part of these financial statements
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Forum Energy Metals Corp.
(An Exploration Stage Company)
Interim Condensed Consolidated Statements of Cash Flows
Canadian Funds Unaudited - prepared by management
For the six months ended May 31, 2020
($)
May 31, 2019
($)
Cash resources provided by (used in) Operating activities
- Income (loss) for the period
- 160,097
- (549,076)
Items not affecting cash: Amortization Share-based compensation Unrealized (gain) loss on marketable securities Foreign exchange on promissory notes Changes in non-cash working capital Receivables
328
140,670
(7,193)
2,916
464
8,740 5,736
-
(40,739)
(224,230)
-
(6,144)
(242,082)
10,664 75,656 16,541
2,145
Due to related parties Advance from joint venture and option partner Prepaid expenses and deposits
- Accounts payable and accrued liabilities
- (29,772)
- (216,377)
- (458,902)
Cash provided by (used in) operating activities
Investing activities
Acquisition of exploration and evaluation assets Promissory notes
-
-
(25,000)
3,440
- -
- (21,560)
Cash used in investing activities
Financing activities
321,039
-
40,000
554,000
(9,908)
-
Proceeds from private placements Share issuance costs Loan
- 361,039
- 544,092
Cash provided by financing activities
144,662 131,308
63,630
134,834
Net increase (decrease) in cash
Cash - Beginning of year
- Cash - End of period
- 275,970
- 198,464
The accompanying notes are an integral part of these financial statements
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Forum Energy Metals Corp.
(An Exploration Stage Company)
Notes to the Interim Condensed Consolidated Financial Statements
For the six month period ended May 31, 2020
Canadian Funds Unaudited – prepared by management
1. Nature of Operations and Going Concern
Forum Energy Metals Corp. (“Forum “or “the Company”) is engaged in the business of evaluating, and if deemed appropriate, acquiring interests in, exploring and developing, natural resource properties. The head office is located at Suite 615, 800 West Pender Street, Vancouver, British Columbia, V6C 2V6 and the registered and records office of the Company is located at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia V6E 4N7. On February 25, 2018, the Company received approval from the TSX Venture Exchange (the “Exchange”) to change the name of the Company from Forum Uranium Corp. to Forum Energy Metals Corp. On February 28, 2018, the shares of Forum Energy Metals Corp. began trading on the Exchange under the new
symbol FMC, without change to the Company’s capital structure.
The Company presently has no proven or probable reserves and on the basis of information to date, it has not yet determined whether its properties contain economically recoverable ore reserves. The Company has not generated any revenues from its operations to date and consequently is considered to be in the exploration stage. The amounts shown as exploration and evaluation assets represent deferred acquisition costs incurred to date, less amounts written off, and do not necessarily represent present or future values. The recoverability of the carrying amounts for exploration and evaluation assets is dependent upon the Company raising capital,
the sale or entering into a joint venture of the Company’s exploration and evaluation assets, and/or the
attainment of profitable operations. These financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its commitments, continue operations and realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future. The Company continues to have operating losses, has limited financial resources, no source of operating cash flow, and no assurances that sufficient funding, including adequate financing, will be available to conduct further
exploration and development of its mineral properties. The Company’s ability to continue as a going concern is
dependent upon its ability to obtain the financing necessary to fund its mineral properties through the issuance of capital stock or joint ventures, and to realize future profitable production or proceeds from the disposition
of its mineral interests. These material uncertainties may cast significant doubt about the Company’s ability to
continue as a going concern. At May 31, 2020, the Company has working capital of $266,788, recognized income for the period of $160,097 and has an accumulated deficit of $50,440,893 (Note 12).
Since March 2020, several governmental measures have been implemented in Canada and the rest of the world in response to the coronavirus (COVID-19) pandemic. While the impact of COVID-19 and these measures are expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on the
Company’s business operations cannot be reasonably estimated at this time. The Company anticipates this
could have an adverse impact on its business, results of operations, financial position and cash flows in 2020. The Company continues to operate its business, and in response to Canadian Federal and Provincial, and US Federal and State emergency measures, has requested its employees and consultants work remotely wherever possible. These government measures, which could include government mandated closures of the Company
or its contractors, could impact the Company’s ability to conduct its exploration programs in a timely manner,
and the Company is evaluating the best way to move its exploration activities forward when the emergency measures are lifted.
Management plans to continue to secure the necessary financing through a combination of equity financing and entering into joint venture arrangements. However, there is no assurance that the Company will be successful in these actions. These financial statements do not give effect to adjustments to the carrying values and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
2. Basis of Preparation
Statement of Compliance
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Forum Energy Metals Corp.
(An Exploration Stage Company)
Notes to the Interim Condensed Consolidated Financial Statements
For the six month period ended May 31, 2020
Canadian Funds Unaudited – prepared by management
These interim condensed financial statements, including comparatives, have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting and interpretations of the IFRS Interpretations Committee (“IFRIC”). They have been prepared on a
historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The significant accounting policies, as disclosed, have been applied consistently to all periods presented in these financial statements.
These interim condensed financial statements do not include all of the information required for full annual financial statements and therefore should be read in conjunction with the Company’s most recent annual financial statements as at and for the year ended November 30, 2019. The effects of the adoption of new and amended IFRS pronouncements have been disclosed in Note 3 of these condensed interim financial statements.
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries, Forum Energy Metals U.S. LLC (“Forum US”) a company incorporated in the state of Wyoming, and Lumina Cobalt US Holdings I Corp. (“LCH”). Lumina Cobalt (U.S.) Corp. (“LCUS”), a company incorporated in
the state of Delaware, is a wholly-owned subsidiary of LCH. All significant inter-company transactions, balances, and unrealized foreign exchange translation gains or losses have been eliminated.
Foreign currency translation
The presentation currency of the Company and the functional currency of the Company is the Canadian dollar. Transactions in currencies other than the functional currency are recorded at rates approximating those in effect at the time of the transactions. Monetary items are translated at the exchange rate in effect at the balance sheet date and non-monetary items are translated at historical exchange rates. Translation gains and losses are reflected in the statement of loss and comprehensive loss for the period. Unless otherwise indicated, all dollar amounts in these financial statements are in Canadian dollars.
Critical accounting estimates and judgments
The preparation of these financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the period. Actual results could differ from these estimates.
Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: