UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 October 31, 2014
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________To
______________________
Commission file number: 000-53942
URBAN BARNS FOODS INC.
(Exact name of registrant as specified in its charter)
Nevada |
N/A |
(State or other jurisdiction of incorporation
or |
(I.R.S. Employer Identification
No.) |
organization) |
|
|
|
Office 205 290 Lakeshore Road |
|
Pointe-Claire, Quebec, Canada H9S 4L3
|
514-907-4989 |
(Address of principal executive offices) (Zip
Code) |
(Registrants telephone number,
including area code) |
Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was require
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] |
Accelerated filer [ ] |
Non-accelerated filer [ ] |
Smaller reporting company [X]
|
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]
No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of December 20, 2014 the registrants outstanding common
stock consisted of 281,182,847 shares.
Table of Contents
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited interim financial statements of Urban Barns Foods
Inc. (the Company, Urban Barns, we, our, us) follow. All currency
references in this report are to U.S. dollars unless otherwise noted.
URBAN BARNS FOODS INC.
Consolidated Financial
Statements
For the period ended October 31, 2014
(Expressed in U.S.
dollars)
(unaudited)
Financial Statement Index
3
URBAN BARNS FOODS INC.
Consolidated Balance Sheets
(expressed in U.S. dollars)
|
|
October 31, |
|
|
July 31, |
|
|
|
2014 |
|
|
2014 |
|
|
|
$ |
|
|
$ |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash |
|
108,081 |
|
|
75,969 |
|
Accounts
receivable |
|
11,097 |
|
|
1,318 |
|
Amounts receivable |
|
82,229 |
|
|
57,976 |
|
Inventory |
|
19,648 |
|
|
13,444 |
|
Prepaid expenses and deposits |
|
44,411 |
|
|
52,469 |
|
Total current assets |
|
265,466 |
|
|
201,176 |
|
Property and equipment (Note 3) |
|
584,957 |
|
|
523,286 |
|
Intangible assets (Note 4) |
|
108,851 |
|
|
105,281 |
|
Total assets |
|
959,274 |
|
|
829,743 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and accrued
liabilities (Note 6) |
|
191,655 |
|
|
170,555 |
|
Due to related parties
(Note 6) |
|
61,744 |
|
|
73,745 |
|
Note payable (Note 5) |
|
197,835 |
|
|
|
|
Total liabilities |
|
451,234 |
|
|
244,300 |
|
Nature of operations and continuance of
business (Note 1) |
|
|
|
|
|
|
Commitments (Note 10) |
|
|
|
|
|
|
Subsequent events (Note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock Authorized: 100,000,000 preferred shares,
par value $0.001 Issued and outstanding: nil
shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, Class
A Authorized: 500,000,000 common shares, par
value $0.001 Issued and outstanding:
281,182,847 and 270,746,982 shares, respectively |
|
281,183 |
|
|
270,747 |
|
|
|
|
|
|
|
|
Common stock, Class
B Authorized: 25,000,000 common shares, value
of $0.001 Issued and outstanding: nil shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
5,158,424 |
|
|
4,370,807 |
|
|
|
|
|
|
|
|
Common stock issuable (Note 7)
|
|
|
|
|
117,553 |
|
|
|
|
|
|
|
|
Deferred compensation (Note 6)
|
|
(28,950 |
) |
|
(37,352 |
) |
|
|
|
|
|
|
|
Accumulated deficit |
|
(4,902,617 |
) |
|
(4,136,312 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
508,040 |
|
|
585,443 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
959,274 |
|
|
829,743 |
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-1
URBAN BARNS FOODS INC.
Consolidated Statements of
Operations
(expressed in U.S. dollars)
(unaudited)
|
|
Three Months |
|
|
Three Months |
|
|
|
Ended |
|
|
Ended |
|
|
|
October 31, |
|
|
October 31, |
|
|
|
2014 |
|
|
2013 |
|
|
|
$ |
|
|
$ |
|
Revenue |
|
17,252 |
|
|
|
|
Cost
of sales |
|
5,908 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
11,344 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
Depreciation |
|
27,310 |
|
|
14,582 |
|
Foreign exchange loss (gain) |
|
2,827 |
|
|
(1,799 |
) |
General and
administrative (Note 6) |
|
467,455 |
|
|
261,415 |
|
Professional fees (Note 6) |
|
64,910 |
|
|
37,189 |
|
Research and development |
|
215,147 |
|
|
4,218 |
|
Total operating expenses |
|
777,649 |
|
|
315,605 |
|
Loss from operations |
|
(766,305 |
) |
|
(315,605 |
)
|
Other income (expense) |
|
|
|
|
|
|
Amortization of
deferred financing costs |
|
|
|
|
(1,170 |
)
|
Gain (loss) on change in fair
value of derivative liabilities |
|
|
|
|
(4,235 |
) |
Interest expense |
|
|
|
|
(17,789 |
)
|
Total other income (expense) |
|
|
|
|
(23,194 |
) |
Net loss |
|
(766,305 |
) |
|
(338,799 |
)
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
278,242,125 |
|
|
160,890,668 |
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-2
URBAN BARNS FOODS INC.
Consolidated Statements of
Cash Flows
(expressed in U.S. dollars)
(unaudited)
|
|
For the Three |
|
|
For the Three |
|
|
|
Months Ended |
|
|
Months Ended |
|
|
|
October 31, |
|
|
October 31, |
|
|
|
2014 |
|
|
2013 |
|
|
|
$ |
|
|
$ |
|
Operating Activities |
|
|
|
|
|
|
Net loss for the period |
|
(766,305 |
) |
|
(338,799 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: operating activities: |
|
|
|
|
|
|
Amortization of deferred
financing costs |
|
|
|
|
1,170 |
|
Depreciation |
|
27,310 |
|
|
14,582 |
|
Deferred compensation |
|
8,402 |
|
|
162,602 |
|
Loss on change
in fair value of derivative liabilities |
|
|
|
|
4,235 |
|
Stock-based compensation |
|
280,000 |
|
|
|
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
(9,779 |
) |
|
15 |
|
Amounts
receivable |
|
(24,253 |
)
|
|
(729 |
)
|
Inventory |
|
(6,204 |
) |
|
|
|
Prepaid expenses
and deposits |
|
8,058 |
|
|
1,440 |
|
Accounts payable and accrued
liabilities |
|
21,100 |
|
|
44,742 |
|
Due to related parties |
|
(12,001 |
) |
|
60,207 |
|
Net
cash used in operating activities |
|
(473,672 |
) |
|
(50,535 |
) |
Investing Activities |
|
|
|
|
|
|
Purchase of intangible assets
|
|
(3,570 |
) |
|
|
|
Purchase of property and equipment |
|
(88,981 |
) |
|
|
|
Net
cash used in investing activities |
|
(92,551 |
) |
|
|
|
Financing Activities |
|
|
|
|
|
|
Proceeds from issuance of
convertible debentures |
|
|
|
|
32,500 |
|
Proceeds from
issuance of common shares |
|
400,500 |
|
|
1,000,000 |
|
Proceeds from note payable |
|
197,835 |
|
|
|
|
Proceeds from
related parties |
|
|
|
|
48,424 |
|
Net cash provided by financing activities |
|
598,335 |
|
|
1,080,924 |
|
Increase in cash |
|
32,112 |
|
|
1,030,389 |
|
Cash, beginning of year |
|
75,969 |
|
|
29,617 |
|
Cash, end of year |
|
108,081 |
|
|
1,060,006 |
|
Supplemental disclosures: |
|
|
|
|
|
|
Interest paid
|
|
|
|
|
|
|
Income tax paid |
|
|
|
|
|
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-3
URBAN BARNS FOODS INC.
Consolidated Statements of Stockholders Equity
(Expressed in U.S.
dollars)
(unaudited)
|
|
Common
Stock |
|
|
Additional |
|
|
Common |
|
|
|
|
|
|
|
|
|
|
|
|
Class A |
|
|
Class B |
|
|
Paid-In |
|
|
Stock |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Issuable |
|
|
Compensation |
|
|
Deficit |
|
|
Total |
|
|
|
# |
|
|
$ |
|
|
# |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Balance, July 31, 2014 |
|
270,746,982 |
|
|
270,747 |
|
|
|
|
|
|
|
|
4,370,807 |
|
|
117,553 |
|
|
(37,352 |
)
|
|
(4,136,312 |
)
|
|
585,443 |
|
Shares issued for cash |
|
10,435,865 |
|
|
10,436 |
|
|
|
|
|
|
|
|
507,617 |
|
|
(117,553 |
) |
|
|
|
|
|
|
|
400,500 |
|
Fair value of stock options
granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000 |
|
|
|
|
|
|
|
|
|
|
|
280,000 |
|
Deferred compensation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,402 |
|
|
|
|
|
8,402 |
|
Net loss for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(766,305 |
) |
|
(766,305 |
)
|
Balance, October 31, 2014 |
|
281,182,847 |
|
|
281,183 |
|
|
|
|
|
|
|
|
5,158,424 |
|
|
|
|
|
(28,950 |
) |
|
(4,902,617 |
) |
|
508,040 |
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-4
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
1.
|
Nature of Operations and Continuance of Business
|
|
|
|
|
|
Urban Barns Foods Inc. (the “Company”) was incorporated under the laws of the State of Nevada on
May 21, 2007 as HL Ventures Inc. The Company is an urban produce production company that aims to
be the supplier of choice for fresh and high-quality organic and conventional fruits and vegetables for
urban consumers.
|
|
|
|
|
|
These consolidated financial statements have been prepared on the going concern basis, which
assumes that the Company will be able to realize its assets and discharge its liabilities in the normal
course of business. As at October 31, 2014, the Company has not generated significant revenues, has
a working capital deficit of $185,768, and has an accumulated deficit of $4,902,617. The continued
operations of the Company are dependent on its ability to generate future cash flows from operations
or obtain additional financing. Management is obtaining working capital through debt or equity
financing until such time that the Company’s operations generate positive operating cash flow. These
factors raise substantial doubt about the Company’s ability to continue as a going concern. These
consolidated financial statements do not include any adjustments to the recorded assets or liabilities
that might be necessary should the Company be unable to continue as a going concern.
|
|
|
|
2.
|
Significant Accounting Policies
|
|
|
|
|
(a)
|
Basis of Presentation and Principles of Consolidation
|
|
|
|
|
|
The consolidated financial statements and the related notes of the Company are prepared in
accordance with generally accepted accounting principles in the United States and are expressed in
United States dollars. The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Urban Barns Foods (Canada) Inc., and Non-Industrial Manufacture Inc.
All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is
July 31.
|
|
|
|
|
(b)
|
Use of Estimates
|
|
|
|
|
|
The preparation of these consolidated financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure 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. The Company regularly evaluates estimates and
assumptions related to the collectability of accounts and amounts receivable, valuation of inventory,
useful life and recoverability of long-lived assets, valuation of convertible debentures, assumptions
used to determine the fair value of stock-based compensation, and deferred income tax valuation
allowances. The Company bases its estimates and assumptions on current facts, historical experience
and various other factors that it believes to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and liabilities and the accrual
of costs and expenses that are not readily apparent from other sources. The actual results experienced
by the Company may differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results, future results of operations
will be affected.
|
|
|
|
|
(c)
|
Interim Financial Statements
|
|
|
|
|
|
These interim unaudited consolidated financial statements have been prepared on the same basis as
the annual consolidated financial statements and in the opinion of management, reflect all adjustments,
which include only normal recurring 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.
|
|
|
|
|
(d)
|
Cash and Cash Equivalents
|
|
|
|
|
|
The Company considers all highly liquid instruments with a maturity of three months or less at the time
of issuance to be cash equivalents.
|
(The accompanying notes are an integral part of these consolidated financial
statements)
F-5
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. |
Significant Accounting Policies (continued)
|
| | |
|
(e) |
Accounts Receivable
|
| |
|
| |
Accounts receivable represents invoiced amounts to customers for the sale of agricultural products. Amounts are presented net of the allowance for doubtful accounts, which represents the Company’s best estimate of the amount
of probable credit losses in the existing accounts receivable balance. The Company determines allowance for doubtful accounts based upon historical experience and current economic conditions. The Company reviews the adequacy of its allowance for
doubtful accounts on a regular basis. As of October 31 and July 31, 2014, the Company had no allowances for doubtful accounts.
|
| |
|
|
(f) |
Inventory
|
| |
|
| |
Inventory is comprised of seeds for growing agricultural products and packaging materials, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for
estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future and market conditions.
|
| | |
| (g) |
Property and Equipment
|
| |
|
| |
Property and equipment consists of production equipment and is stated at cost and amortized straight- line over five years.
|
| |
|
| (h) |
Intangible Assets
|
| |
|
| |
Intangible assets consist of patent development costs. Intangible assets acquired are initially recognized and measured at cost and amortized over its expected useful life once the patents are in use. Impairment tests are
conducted annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value, and an impairment loss is recognized
in income for the excess, if any. The amortization methods and estimated useful lives of intangible assets are reviewed annually.
|
| |
|
| (i) |
Long-Lived Assets
|
| |
|
| |
In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may
not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs
significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of
the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which
is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying
amount is not recoverable and exceeds fair value.
|
| |
|
| (j) |
Revenue Recognition
|
| |
|
| |
The Company derives revenue from the sale of agricultural products. In accordance with ASC 605, Revenue Recognition, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the amount
is fixed and determinable, and collectability is reasonably assured.
|
| |
|
| (k) |
Comprehensive Loss
|
| |
|
| |
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at October 31 and July 31, 2014, the Company had no items that
affected comprehensive loss.
|
(The accompanying notes are an integral part of these consolidated financial
statements)
F-6
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. |
Significant Accounting Policies (continued)
|
| | |
|
(l) |
Foreign Currency Translation
|
| | |
| |
The Company’s functional and reporting currency is the U.S. dollar. Monetary assets and liabilities of integrated operations and other monetary assets and liabilities denominated in foreign currencies are translated to U.S.
dollars at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated
on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.
|
| | |
|
(m) |
Income Taxes
|
| | |
| |
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more
likely than not to be realized.
|
| | |
| |
As of October 31 and July 31, 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.
|
| | |
| |
The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes
by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard
three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its wholly-owned subsidiaries’ income tax returns for
the years ended July 31, 2014 and 2013.
|
| | |
| |
The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the year ended July 31, 2014, there were no charges for interest or penalties.
|
| | |
|
(n) |
Loss Per Share
|
| | |
| |
The Company computes net 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 income
statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential
common shares 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 at October 31, 2014, the Company had 29,537,027 (July 31, 2014 – 12,237,027)
potentially dilutive shares outstanding.
|
| | |
|
(o) |
Financial Instruments and Fair Value Measures
|
| | |
| |
ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair
value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value.
|
(The accompanying notes are an integral part of these consolidated financial
statements)
F-7
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. |
Significant Accounting Policies (continued)
|
| | |
|
(o) |
Financial Instruments and Fair Value Measures (continued)
|
| | |
| |
Level 1
|
| |
|
| |
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
| |
|
| |
Level 2
|
| |
|
| |
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices
for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by,
observable market data.
|
| |
|
| |
Level 3
|
| |
|
| |
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
| | |
| |
The Company’s financial instruments consist principally of cash, accounts receivable, amounts receivable, accounts payable and accrued liabilities, and amounts due to related parties. Pursuant to ASC 820, the fair value of
cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and
respective maturity dates or durations, with the exception of derivative liabilities which is a “Level 2” input.
|
| | |
|
(p) |
Stock-based Compensation
|
| | |
| |
The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees
and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
|
| | |
|
(q) |
Reclassification
|
| | |
| |
Certain financial statement captions have been reclassified from the prior year to conform to the current year presentation.
|
| | |
|
(r) |
Recent Accounting Pronouncements
|
| | |
| |
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage
Entities” (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities
subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is
permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer
present or disclose any information required by Topic 915. The Company has adopted this standard and will not report inception to date financial information.
|
(The accompanying notes are an integral part of these consolidated financial
statements)
F-8
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. |
Significant Accounting Policies
(continued) |
|
|
|
|
(r) |
Recent Accounting Pronouncements (continued) |
|
|
|
|
|
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any
material impact on the consolidated 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. |
|
|
|
3. |
Property and Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
October 31, |
|
|
July 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2014 |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
Net Carrying |
|
|
Net Carrying |
|
|
|
|
Cost |
|
|
Depreciation |
|
|
Impairment |
|
|
Value |
|
|
Value |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Production equipment |
|
796,974 |
|
|
150,519 |
|
|
61,498 |
|
|
584,957 |
|
|
523,287 |
|
|
|
|
|
|
|
|
|
|
October 31, |
|
|
July 31, |
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2014 |
|
|
|
|
|
|
|
Accumulated |
|
|
Net Carrying |
|
|
Net Carrying |
|
|
|
|
Cost |
|
|
Depreciation |
|
|
Value |
|
|
Value |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Patent development costs |
|
108,851 |
|
|
|
|
|
108,581 |
|
|
105,281 |
|
5. |
Note Payable |
|
|
|
|
On October 29, 2014, the Company issued a promissory note
for $197,835 (CND$223,000) which is unsecured, bears interest at a rate of
12.68% per annum and due the earlier of i) the Company raising
CND$1,000,000 or more through issuance of equity or debt or ii) October
29, 2015. |
|
|
|
6. |
Related Party Transactions |
|
|
|
|
(a) |
As at October 31, 2014, the Company owed $59,522 (July
31, 2014 - $61,813) to directors and officers of the Company. The amounts
owing are unsecured, non-interest bearing, and due on demand. |
|
|
|
|
(b) |
As at October 31, 2014, the Company owed $1,327 (July 31, 2014 - $8,259) to
the Vice President of the Company. The amount owing is unsecured,
non-interest bearing, and due on demand. |
|
|
|
|
(c) |
As at October 31, 2014, the Company owed $3,549 (July
2014 - $3,673) to a company controlled by the former President. The amount
owing is unsecured, non-interest bearing, and due on demand. |
|
|
|
|
(d) |
As at October 31, 2014, the Company had deferred
compensation of $28,950 (July 31, 2014 - $37,352) incurred to directors
and officers of the Company. |
|
|
|
|
(e) |
During the period ended October 31, 2014, the Company
incurred professional fees of $nil (2013 - $6,300) to the spouse of the
former President of the Company. |
|
|
|
|
(f) |
During the period ended October 31, 2014, the Company
incurred consulting fees of $49,902 (2013 - $57,603) to directors and
officers of the Company. |
|
|
|
|
(g) |
During the period ended October 31, 2014, the Company
incurred consulting fees of $2,034 (CND$2,250) (2013 - $nil) to the
daughter of the President of the Company. |
(The accompanying notes are an integral part of these
consolidated financial statements)
F-9
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
6. |
Related Party Transactions (continued) |
|
|
|
|
(h) |
During the period ended October 31, 2014, the Company
incurred labour costs of $19,001 (CND$21,000) (2013 - $nil) and cost of
living expenses of $4,072 (CND$4,500) (2013 - $nil) to the daughter of the
Vice President of the Company. |
|
|
|
|
(i) |
During the period ended October 31, 2014, the Company
incurred finders fees of $nil (2013 - $150,000) to a director of the
Company. |
|
|
|
|
(j) |
During the period ended October 31, 2014, the Company
granted 5,925,000 (2013 nil) stock options with a fair value of $237,000
(2013 - $nil) to directors and officers of the Company. |
|
|
|
|
(k) |
During the period ended October 31, 2014, the Company
granted 200,000 (2013 nil) stock options with a fair value of $8,000
(2013 - $nil) to the spouse of the President of the Company. |
|
|
|
|
(l) |
During the period ended October 31, 2014, the Company
granted 150,000 (2013 nil) stock options with a fair value of $6,000
(2013 - $nil) to the daughter of the Vice President of the
Company. |
|
|
|
7. |
Common Stock |
|
|
|
|
(a) |
On August 21, 2014, the Company completed a private
placement of 10,010,000 units at $0.05 per unit for gross proceeds of
$500,500, of which $100,000 had been received as at July 31, 2014 and
recorded as common stock issuable. Each unit consists of one share of
Class A common stock and one share purchase warrant exercisable into one
additional share of Class A common stock at a price of $0.075 per share
until August 20, 2017. |
|
|
|
|
(b) |
On October 31, 2014, the Company issued 425,865 shares of
Class A common stock pursuant to the conversion of $5,062 of a convertible
debenture and $3,601 of accrued interest during the year end July 31,
2014. As at July 31, 2014, this amount was recorded as common stock
issuable. |
|
|
|
8. |
Share Purchase Warrants |
|
|
|
|
The following table summarizes the continuity of share
purchase warrants: |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
|
Number of |
|
|
Exercise Price |
|
|
|
|
Warrants |
|
|
$ |
|
|
Balance, July 31, 2014 |
|
2,027,027 |
|
|
0.070 |
|
|
Granted |
|
10,010,000 |
|
|
0.075 |
|
|
Balance, October 31, 2014 (unaudited) |
|
12,037,027 |
|
|
0.074 |
|
As at October 31, 2014, the following
share purchase warrants were outstanding:
|
Number of |
|
|
Exercise |
|
|
|
|
|
warrants |
|
|
price |
|
|
Expiry date |
|
|
outstanding |
|
|
$ |
|
|
|
|
|
2,027,027 |
|
|
0.070 |
|
|
October 31, 2016 |
|
|
10,010,000 |
|
|
0.075 |
|
|
August 20, 2017 |
|
|
12,037,027 |
|
|
|
|
|
|
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-10
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
9. |
Stock Options |
|
|
|
The Company has adopted a stock option plan pursuant to
which options may be granted to directors, officers, employees and
consultants of the Company to a maximum of 10% of the Companys issued and
outstanding Class A stock at the time of the grant exercisable for the
period of up to ten years. The exercise price and the vesting terms of
each option is determined by the Board of Directors, or a committee
appointed by the Board of Directors. |
|
|
|
The following table summarizes the continuity of the
Companys stock options: |
|
|
|
|
|
|
Weighted |
|
|
Aggregate |
|
|
|
|
|
|
|
Average |
|
|
Intrinsic |
|
|
|
|
Number |
|
|
Exercise Price |
|
|
Value |
|
|
|
|
of Options |
|
|
$ |
|
|
$ |
|
|
Outstanding, July 31, 2013
|
|
15,800,000 |
|
|
0.10 |
|
|
|
|
|
Granted |
|
5,300,000 |
|
|
0.10 |
|
|
|
|
|
Expired |
|
(600,000 |
) |
|
0.10 |
|
|
|
|
|
Forfeited |
|
(10,000,000 |
) |
|
0.10 |
|
|
|
|
|
Outstanding, July 31, 2014
|
|
10,500,000 |
|
|
0.10 |
|
|
|
|
|
Granted |
|
7,000,000 |
|
|
0.10 |
|
|
|
|
|
Outstanding, October 31, 2014 (unaudited) |
|
17,500,000 |
|
|
0.10 |
|
|
|
|
Additional information regarding stock
options as of October 31, 2014, is as follows:
|
|
|
Outstanding and exercisable |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
Range of |
|
|
|
|
Remaining |
|
|
Average |
|
|
Exercise Prices |
|
Number of |
|
|
Contractual Life
|
|
|
Exercise Price |
|
|
$
|
|
Options |
|
|
(years) |
|
|
$ |
|
|
0.10 |
|
17,500,000 |
|
|
9.0 |
|
|
0.10 |
|
The fair values for stock options
granted have been estimated using the Black-Scholes option pricing model
assuming no expected dividends and the following weighted average
assumptions:
|
|
|
2014 |
|
|
2013 |
|
|
Risk-free interest rate |
|
2.46% |
|
|
|
|
|
Expected life (in years) |
|
10.0 |
|
|
|
|
|
Expected volatility |
|
443% |
|
|
|
|
The fair value of stock options vested
during the period ended October 31, 2014 was $280,000 (2013 $nil) which was
recorded as stock-based compensation and charged to operations. The weighted
average fair value of stock options granted during the year ended October 31,
2014 was $0.04 (2013 $nil) per option.
(The accompanying notes are an integral part of these
consolidated financial statements)
F-11
URBAN BARNS FOODS INC.
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
10. |
Commitments and Contingencies |
|
|
|
|
(a) |
On November 1, 2012, the Company entered into three
consulting agreements with directors and officers of the Company. Each
agreement pays each director and officer a consulting fee of $5,000 per
month until November 1, 2017. On August 19, 2014, the Company agreed to
amend the annual consulting fees due to the President of the Company to
$125,000. |
|
|
|
|
(b) |
On December 1, 2012, the Company entered into a research
agreement with McGill University (McGill), where McGill will perform
testing, research and development towards improvements and efficiency
gains on the Companys patent-pending growing machines. Under the terms of
the agreement, the Company will pay $500,000, where $25,000 is due upon
the signing of the agreement (paid), $75,000 is due when the Company
either completes financing or four growing machines, and $100,000 annually
on January 1, 2014, 2015, 2016, and 2017. Pursuant to the amendment dated
October 30, 2013, payments of $100,000 annually are due on October 1,
2014, 2015, 2016, and 2017. The agreement expires on January 1,
2018. |
|
|
|
|
(c) |
On March 19, 2014, the Company leased a warehouse located
in Quebec. The term of the lease commences on March 20, 2014, and expires
on May 31, 2019. The monthly lease rate is subject to an annual increase
of 2%. The minimum lease payments over the remaining term of the lease are
as follows: |
Year |
|
CND$ |
|
2015 |
|
169,013 |
|
2016 |
|
250,002 |
|
2017 |
|
255,002 |
|
2018 |
|
260,102 |
|
2019 |
|
265,304 |
|
|
|
1,199,422 |
|
|
(d) |
On July 17, 2014, the Company entered into a lease
agreement for a delivery van at a rate of CND$630 per month until July 17,
2019. The minimum lease payments over the remaining term of the lease are
as follows: |
Year |
|
CND$ |
|
2015 |
|
5,670 |
|
2016 |
|
7,560 |
|
2017 |
|
7,560 |
|
2018 |
|
7,560 |
|
2019 |
|
7,560 |
|
|
|
35,910 |
|
11. |
Subsequent Events |
|
|
|
On November 28, 2014, the Board of Directors approved a
financing of up to $6,000,000 through the offering and sale of up to
150,000,000 Class A common stock at a price of $0.04 per
share. |
(The accompanying notes are an integral part of these
consolidated financial statements)
F-12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
This report on Form 10-Q contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.
These forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following: competition,
promotional costs and the risk of declining revenues. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of a number of factors. These forward-looking statements are made as of
the date of this filing, and we assume no obligation to update such
forward-looking statements. The following discusses our financial condition and
results of operations based upon our consolidated financial statements which
have been prepared in conformity with accounting principles generally accepted
in the United States. It should be read in conjunction with our financial
statements and the notes thereto included elsewhere herein.
Results of Operations
Three Months Ended October 31, 2014 and 2013.
During the three months ended October 31, 2014, we generated
$17,252 in revenue at a cost of sales of $5,908, for a gross margin of $11,344.
During the three months ended October 31, 2013, we did not generate any revenue.
We incurred operating expenses of $777,649 during the three
months ended October 31, 2014, compared with $315,605 during the three months
ended October 31, 2013. The increase in our operating expenses of $462,044 was
due to increases in research and development, general and administrative
expenses and staffing costs as we opened our first growing facility this year,
and an increase in the depreciation incurred during the period related to our
R&D growing machines.
We incurred a net loss of $766,305 during the three months
ended October 31, 2014, compared with a net loss of $338,799 during the three
months ended October 31, 2013. In addition to revenues and expenditures from
operations, we incurred $1,170 for amortization of deferred financing costs,
$4,235 for loss on change in fair value of derivative liabilities and $17,789 of
interest expenses during the three months ended October 31, 2013 which were not
incurred during the three months ended October 31, 2014.
Liquidity and Capital Resources
The following table provides selected financial data about our
company for the quarter ended October 31, 2014:
|
|
October 31, |
|
|
July 31, |
|
|
|
2014 |
|
|
2014 |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
Cash |
|
108,081 |
|
|
75,969 |
|
Current Assets |
|
265,466 |
|
|
201,176 |
|
Total Assets |
|
959,274 |
|
|
829,743 |
|
Current Liabilities |
|
451,234 |
|
|
244,300 |
|
Shareholders Equity |
|
508,040 |
|
|
244,300 |
|
As of October 31, 2014, we had cash of $108,081, total current
assets of $265,466, total current liabilities of $451,234 and a working capital
deficit of $185,768, compared to cash of $75,969, total current assets of
$201,176, total current liabilities of $244,300, and a working capital deficit
of $43,124 as of July 31, 2014. The increase in our working capital deficit is
due to the increase in our liabilities from a $197,835 promissory note used for
our increased operating costs of our recently opened first growing facility as
we work to increase our sales.
4
During the three months ended October 31, 2014, we used
received net cash of $598,335 from financing activities, compared to net cash
received of $1,080,924 from financing activities during the three months ended
October 31, 2013. The decrease is primarily due to $599,500 less in proceeds
received from the issuance of our common shares, $32,500 from the issuance of
convertible debentures and $48,424 from proceeds from related parties offset by
$197,835 of proceeds from a note payable.
During the three months ended October 31, 2014, we used net
cash of $473,672 on operating activities compared to $50,535 during the three
months ended October 31, 2013. The increase in net cash used was due to our
increased research and development expenses and general and administrative
expenses as we opened our first growing facility.
During the three months ended October 31, 2014, we used net
cash of $92,551 on investing activities compared to $nil during the three month
period ended October 31, 2013. The increase in cash used was due to our
increased purchase of equipment as we opened our first growing facility as well
as payments for patents on our intellectual property.
From February 10, 2010 (inception) to October 31, 2014, our
accumulated deficit was $4,902,617. We are dependent on the funds raised through
our equity or debt financing, investing activities, and revenue generated
through the sales of our products to fund our operations.
We anticipate that we will meet our ongoing cash requirements
by retaining income as well as through equity or debt financing. We have met and
continue to meet with various individuals and institutions to obtain the
financing required to produce and distribute our products and anticipate this
will continue until we accrue sufficient capital reserves to finance all of our
productions independently via internally generated cash flow.
Plan of Operations
Our 2015 operating plan is focused on revenue generation,
product line development and machine design refinement. We recently completed
our demonstration growing facility in the Montreal area and have begun
commercial scale operations and sales. We will continue research and development
activities in Montreal with McGill University.
The Montreal growing facility consists of 13 machines and,
although small, has considerable production capacity. This new facility is fully
operational and has been shipping product to multiple 4 and 5-star restaurants
and hotels, as well as some important wholesale distributors. Typically, the
vast majority of restaurant and hotel establishments go through an introductory
phase of testing and product sampling before the company starts to receive
orders. This period can take anywhere from one day to three months or more
before an order is placed.
In addition to the commercial barn operation we have been
collaborating with McGills Macdonald campus to research the optimization of the
variables of controlled environment agriculture (CEA) and apply those
improvements within our growing facility. McGill has set up one machine on the
Macdonald campus and Urban Barns has taken over the 3 machines previously
allocated for McGills testing in our growing facility. McGill will conduct
research in conjunction with their recent NSERC Collaborative Research &
Development grant with industry support from us.
We estimate that our expenses over the next 6 months will be
approximately $1,940,000 as summarized in the table below. These estimates may
change significantly depending on the nature of our future business activities
and our ability to raise capital from investors or other sources.
Description
|
Potential
Completion Date |
Estimated
Expenses ($) |
Cost of sales |
6 months |
137,000 |
Sales &
marketing expenses |
6 months |
225,000 |
General and administrative expenses
|
6 months |
628,000 |
Additional Growing
Machines & Building Improvements |
6 months |
650,000 |
Total |
|
1,940,000
|
Our general and administrative expenses for the next 6 months
will consist of professional fees, office maintenance, communication expenses
(cellular, internet, fax and telephone), bank charges, courier and postage
costs, office supply costs
and fees related to our website. Our professional fees will include legal, accounting and auditing fees related to our regulatory filings throughout the year.
5
Based on our planned expenditures, we require additional funds of $1,940,000 to proceed with our business plan over the next 6 months. If we are not able to obtain additional financing on a timely basis, we will be unable to conduct our
operations as planned, and we will not be able to meet our obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by
charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Off-Balance Sheet Arrangements
As of October 31, 2014 we had one off balance sheet transactions that will have or is reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources. In collaboration with McGill University researcher Dr. Mark Lefsrud of the Faculty of Agricultural and Environmental Sciences, we will further develop an indoor plant growth system aimed at
expanding locally grown food. With industrial support from us, McGill University was recently awarded an NSERC Collaborative Research & Development (CRD) grant in the amount of $240,000 in order to continue the development of this important
project. The grant will run for an initial period of two years with the aim of optimizing light emitting diodes to assess photosynthetic efficiency of horticultural plants. The project is focused on the refinement of the photosynthetically active
radiation efficiency (PAR curve) of plants using light emitting diodes (LEDs), and the basic science research will be used to optimize the lighting in our cubic farming system to maximize production and reduce energy costs.
Critical Accounting Policies
Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies are included in note 2 of the Notes to our Financial
Statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our
management.
Inventory
Inventory is comprised of seeds for growing agricultural products and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory
equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future and market conditions.
Intangible Assets
Intangible assets consist of patent development costs. Intangible assets acquired are initially recognized and measured at cost and amortized over its expected useful life once the patents are in use. Impairment tests are conducted annually or more
frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value, and an impairment loss is recognized in income for the excess, if
any. The amortization methods and estimated useful lives of intangible assets are reviewed annually.
Foreign Currency Translation
The Company’s functional and reporting currency is the U.S. dollar. Monetary assets and liabilities of integrated operations and other monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange
rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis
as the related asset. The resulting exchange gains or losses are recognized in income.
6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure. We carried out an evaluation,
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures as of October
31, 2014. Based on the evaluation of these disclosure controls and procedures
the Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective. Our independent auditors,
Saturna Group Chartered Accountants LLP, were not required to carry out an
evaluation of our internal controls and have not verified or confirmed the
accuracy of managements assertions over its effectiveness of internal controls
over financial reporting.
Changes in Internal Controls
During the quarter covered by this report there were no changes
in our internal control over financial reporting (as defined in Rule 13a-15(f)
and Rule 15d-15(f) under the Exchange Act) that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None that are material in nature.
ITEM 1A. RISK FACTORS.
Not required.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCCEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
The following exhibits are included with this quarterly filing:
7
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.
December 20, 2014
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Urban Barns Foods Inc.
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/s/ Richard Groome
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By: Richard Groome
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Chief Executive Officer, President & Director
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/s/ Horst Hueniken
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By: Horst Hueniken
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Chief Financial Officer, Principal Accounting Officer & Director
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8
Exhibit 31.1
CERTIFICATION
I, Richard Groome, certify that:
1. |
I have reviewed this report on Form 10-Q of Urban Barns Foods Inc.
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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;
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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;
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4. |
The registrant’s other certifying officer(s) 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:
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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;
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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;
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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
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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
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5. |
The registrant’s other certifying officer(s) 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
registrant’s board of directors (or persons performing the equivalent functions):
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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
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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.
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Date: December 20, 2014
/s/ Richard Groome
Richard Groome
Chief Executive Officer, President & Director
Exhibit 31.2
CERTIFICATION
I, Horst Hueniken, certify that:
1. |
I have reviewed this report on Form 10-Q of Urban Barns Foods Inc.
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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;
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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;
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4. |
The registrant’s other certifying officer(s) 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:
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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;
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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;
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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
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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
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5. |
The registrant’s other certifying officer(s) 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
registrant’s board of directors (or persons performing the equivalent functions):
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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
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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.
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Date: December 20, 2014
/s/ Horst Hueniken
Horst Hueniken
Chief Financial Officer, Principal Accounting Officer & Director
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE 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 Urban Barns Foods Inc. (the “Company”) on Form 10-Q for the period ending October 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Richard Groome, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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IN WITNESS WHEREOF, the undersigned has executed this certification as of the 20th day of December, 2014.
/s/ Richard Groome
Richard Groome
Chief Executive Officer, President & Director
Exhibit 32.2
CERTIFICATION OF 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 Urban Barns Foods Inc. (the “Company”) on Form 10-Q for the period ending October 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Horst Hueniken, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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IN WITNESS WHEREOF, the undersigned has executed this certification as of the 20th day of December, 2014.
/s/ Horst Hueniken
Host Hueniken
Chief Financial Officer, Principal Accounting Officer & Director
Urban Barns Foods (CE) (USOTC:URBF)
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