SEC Company Response from FEC Resources Inc. (FECOF) (CIK 0000849997) (FECOF) — Jun 12, 2020
FEC Resources Inc. (FECOF) (CIK 0000849997)
Date: June 12, 2020 · CIK: 0000849997 · Accession: 0001594062-20-000054
AI Filing Summary & Sentiment
File numbers found in text: 333-235559
Letter
Division of Corporation Finance Office of Energy & Transportation Re: FEC Resources Inc. (the “Company”) Amendment No. 3 to Registration Statement on Form F-1 Filed May 12, 2020 File No. 333-235559
Dear Levenberg:
This filing supersedes the Correspondence filed on June 2, 2020. Please find attached to this correspondence revised pages from our Registration Statement on Form F-1 that have been marked with pink text to reflect changes made to the document subsequent to the filing of our Amendment No. 3 to such Registration Statement. Pages F-1 through F-12 included herein are entirely new content and consist of the interim financial report for the three months ended March 31, 2020. These changes have been made to reflect the points discussed during a telephone conversation held on Thursday, May 21, 2020, between members of the SEC staff and our legal counsel.
Sincerely,
/s/ Paul Wallace
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CORRESP
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filename1.htm
FEC Resources Inc.
Suite 2300, Bentall 5, 550 Burrard Street
Vancouver, British Columbia
V6C 2B5
June 12, 2020
Timothy S. Levenberg
Division of Corporation Finance
Office of Energy & Transportation
US Securities and Exchange Commission
Washington, D.C. 20549
Re: FEC Resources Inc. (the “Company”)
Amendment No. 3 to Registration Statement on Form F-1
Filed May 12, 2020
File No. 333-235559
Dear Levenberg:
This filing supersedes the Correspondence filed on June 2, 2020. Please find attached to this correspondence revised pages from our
Registration Statement on Form F-1 that have been marked with pink text to reflect changes made to the document subsequent to the filing of our Amendment No. 3 to such Registration Statement. Pages F-1 through F-12 included herein are entirely new
content and consist of the interim financial report for the three months ended March 31, 2020. These changes have been made to reflect the points discussed during a telephone conversation held on Thursday, May 21, 2020, between members of the SEC
staff and our legal counsel.
Sincerely,
/s/ Paul Wallace
Paul Wallace
INDEX TO THE FINANCIAL STATEMENTS
Unaudited Condensed Statement of Financial Position for March 31, 2020 and December 31, 2019
F-3
Unaudited Condensed Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019
F-4
Unaudited Condensed Interim Statement of Changes in Equity for Three Months Ended March 31, 2020 and 2019
F-5
Unaudited Condensed Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019
F-6
Notes to the Condensed Financial Statements
F-7
Report of Independent Registered Public Accounting Firm
F-14
Statement of Financial Position
F-15
Statements of Comprehensive Income (Loss) for years ended December 31, 2019 and 2018
F-16
Statements of Changes in Equity for the years ended December 31, 2019 and 2018
F-17
Statements of Cash Flows for years ended December 31, 2019 and 2018
F-18
Notes to the Financial Statements
F-19
F-1
FEC RESOURCES INC.
Condensed Interim Financial Statements
For the three months ended March 31, 2020
(Expressed in United States dollars)
Unaudited
F-2
FEC RESOURCES
FEC RESOURCES INC.
CONDENSED STATEMENT OF FINANCIAL POSITION
Expressed in United States Dollars
UNAUDITED
As at
March 31,
2020
December 31,
2019
ASSETS
Current assets
Cash
$
73,304
$
42,548
Receivables
1,288
3,072
Prepaid expenses
4,107
7,288
$
78,699
52,908
Non-current assets
Deferred transaction costs (Note 11)
44,351
39,381
Equipment
189
205
Investment in Forum Energy Limited (Note 9)
1,665,000
1,665,000
$
1,788,239
$
1,757,494
LIABILITIES
Current liabilities
Trade and accrued payables
$
39,668
$
122,116
Short term loans (Note 6)
150,000
-
189,668
122,116
Shareholders’ Equity
Share capital (Note 5)
16,732,397
16,732,397
Contributed surplus (Note 5)
3,058,063
3,058,063
Deficit
(18,191,889
)
(18,155,082
)
1,598,571
1,635,378
$
1,788,239
$
1,757,494
SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:
“Paul Wallace” “Lyle Brown”
Director Director
The accompanying notes form an integral part of these financial statements
F-3
FEC RESOURCES INC.
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
Expressed in United States Dollars
UNAUDITED
Three Month Period Ended
March 31, 2020
March 31, 2019
General and administration expenses
General and administration (Note 7)
$
36,907
$
61,334
Operating loss
(36,907
)
(61,334
)
Interest income
100
958
Net and Comprehensive loss
$
(36,807
)
$
(60,376
)
Earnings (loss) per common share
- Basic and diluted
$
0.00
$
0.00
The accompanying notes to the condensed interim financial statements are an integral part of these statements.
F-4
FEC RESOURCES INC.
CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY
Expressed In United States Dollars
UNAUDITED
For the three months ended March 31, 2020
Share capital
Contributed surplus
Deficit
Total
Balance January 1, 2020
$
16,732,397
$
3,058,063
$
(18,155,082
)
$
1,635,378
Total comprehensive loss for the period
-
-
(36,807
)
(36,807
)
Balance March 31, 2020
$
16,732,397
$
3,058,063
(18,191,889
)
$
1,598,571
For the three months ended March 31, 2019
Share capital
Contributed surplus
Deficit
Total
Balance January 1, 2019
$
16,732,397
$
3,058,063
$
(17,943,399
)
$
1,847,061
Total comprehensive loss for the period
-
-
(60,376
)
(60,376
)
Balance March 31, 2019
$
16,732,397
$
3,058,063
$
(18,003,775
)
$
1,786,685
The accompanying notes to the condensed interim financial statements are an integral part of these statements.
F-5
FEC RESOURCES INC.
CONDENSED STATEMENTS OF CASH FLOWS
Expressed in United States Dollars
UNAUDITED
For the three months ended
March 31, 2020
March 31, 2019
Cash provided by (used in)
OPERATING ACTIVITIES
Net loss for the period
$
(36,807
)
$
(60,376
)
Non-cash items included in loss
Amortization
16
22
(36,791
)
(60,354
)
Changes in working capital related to operating activities
Receivables
1,784
(123
)
Prepaid expenses
3,181
2,815
Accounts payable and accrued liabilities
(82,448
)
(1,848
)
Net cash used by operating activities
(114,274
)
(59,510
)
FINANCING ACTIVITIES
Deferred transaction costs
(4,970
)
-
Short term loans
150,000
-
Net cash provided by financing activities
145,030
-
Net (decrease) increase in cash
30,756
(59,510
)
Cash – beginning of the period
42,548
228,991
Cash – end of the period
$
73,304
$
169,481
The accompanying notes to the condensed interim financial statements are an integral part of these statements.
F-6
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2020
(Expressed in United States Dollars)
Note 1 Corporate Information
FEC Resources Inc. (“FEC” or the “Company”) was incorporated under the laws of Alberta, Canada and is a holding Company with an interest in Forum Energy Limited (“FEP”). The Company is listed
in the United States on the OTC Pink (“OTC Pink”), having the symbol FECOF.
At March 31, 2020, the Company has a 6.8% interest in FEP.
The principal address of the Company is Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, V6C 2B5. The Company’s ultimate parent company is PXP Energy Corporation (formerly Philex
Petroleum Corporation) (“PXP”) with a registered office at 2/F LaunchPad Reliance corner Sheridan Streets, Mandaluyong City, Philippines 1550.
Note 2 Basis of Preparation
a)
Statement of Compliance
These condensed interim financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). The financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting and have been prepared using the same accounting policies and methods as were used for the Company’s Annual Financial
Statements for the year ended December 31, 2019. These condensed interim financial statements should be read in conjunction with the Company’s annual financial statements dated December 31, 2019.
The condensed interim financial statements were authorized for issue by the Board of Directors on May 29, 2020.
b)
Basis of Measurement
The financial statements have been prepared on a historical cost basis and are presented in United States dollars, which is also the Company’s functional currency.
The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying
the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.
F-7
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2020
(Expressed in United States Dollars)
Note 2 Basis of Preparation (continued)
c)
Nature of Operations and Going Concern
As a holding company with an interest in FEP, the Company’s business is indirectly subject to risks inherent in oil and gas exploration and development operations. In
addition, there are risks associated with FEP’s stage of operations and the foreign jurisdiction in which it or FEP may operate or invest. The Company has identified certain risks pertinent to its investment including: exploration and reserve
risks, uncertainty of reserve estimates, ability to exploit successful discoveries, drilling and operating risks, title to properties, costs and availability of materials and services, capital markets and the requirement for additional capital,
market perception, loss of or changes to production sharing, joint venture or related agreements, economic, political and sovereign risks, possibility of less developed legal systems, corporate and regulatory formalities, environmental regulation,
reliance on strategic relationships, market risk, competition, dependence on key personnel, volatility of future oil and gas prices and foreign currency risk. The Company has an accumulated deficit since inception of $18,191,889.
Management considers that the current economic environment is difficult and the outlook for holding companies invested in oil and gas exploration companies presents significant challenges in
terms of raising funds through issuance of shares. To the extent necessary, the Company has relied on its ability to raise funds via dispositions of quantities of its shareholdings in FEP to PXP under terms that are consistent with the best
interests of shareholders, in order to finance its operations. The Company has been successful in disposing quantities of its shareholdings in FEP in previous fiscal years. However, there can be no assurance the Company will continue to be able to
dispose of quantities of its shares in FEP under suitable terms. Currently management has no plans to sell any additional FEP shares.
Since the delisting of FEP from the London Stock Exchange, there is no liquidity via a public market for the FEP shares. As the Company is wholly reliant on the information disclosed by PXP
concerning the business of FEP, the Company may not be able to obtain information necessary to facilitate a wider sales process and may be reliant on significant shareholders of PXP for the disposition of any of its FEP shares. Management has
looked at all options including raising funds to operate and participate in future FEP financings by way of debt or equity financings. Given the current share price of the Company, and given that any external financings may have been extremely
dilutive, the Company has announced that it is undertaking a rights offering to raise funds to sustain operations however there can be no assurance that the rights offering will be successful.
Management has concluded that the combination of these circumstances gives rise to a material uncertainty that casts substantial doubt on the ability of the Company to continue as a going
concern; therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.
F-8
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2020
(Expressed in United States Dollars)
Note 3 Summary of Significant Accounting Policies and Critical Accounts Estimates and Judgments
These interim condensed financial statements have been prepared using the same accounting policies and methods of computation as the annual financial statements for the year ended December 31,
2019. In addition, these interim condensed financial statements have been prepared using the same critical accounting estimates and judgments as the annual financial statements for the year ended December 31, 2019. Accordingly, the interim
condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2019.