Post by
BNPResources on Apr 08, 2018 3:17pm
BNP - March 2018 - Letter to Shareholders
RE: March 2018 - Letter to Shareholders Dear Shareholders: The purpose of this monthly letter is to bring BNP shareholders up to date, on issues and news, since the last letter. Sorry for the late issue but Ive been working on the document for the past week, and over the Easter break. This letter is more of a business plan going forward, than a standard letter to shareholders. Many thanks to our Calgary shareholder, who encouraged me to look at the tax losses in more detail. 1. The following is a summary of business development activities and research for this month: (a) The main asset of BNP Resources is our estimated $13 million in tax losses. We were not successful in 2016-2017 in obtaining debt financing. One of our shareholders requested that we accelerate our turnaround efforts. Cost estimates and level of effort will be provided, to do so. (b) Met with a Calgary accountant regarding the monetization of our estimated $13 million in tax losses (we dont know exact amount yet). Accountant advises that we must file our taxes from 2013 2017 (unaudited), and apply with CRA, to allow use of the tax losses. Tax losses are valid for 20 years maximum. Our losses are business losses, and cannot be used for capital gains or dividend income. Business income must be active. Active income includes commercial rental income, residential rental income, hotel income, manufacturing income, but excludes passive income, such as dividends and interest. (c) I will start organizing the tax files with the intent of filing unaudited returns for 2013-2017, by year end 2018. We will then apply with the CRA for the use of the tax losses. Our original BNP bookkeeper (2006 2013) has agreed to assist. We will refer to this as the Accounting Project. (d) Once this stage is completed, we can seek an acquisition of an income producing asset, currently in the 50% tax bracket. With an acquisition by BNP Resources, we can defer the payment of taxes, by shielding $12-$13 million in taxable income. The actual tax loss value will be determined through the filings, expected to be completed by year end. (e) I checked with a Canadian business owner, experienced with 7 figure tax bills, and he confirmed his corporate tax rate was in the range of 50%. I am assuming 35% federal and 15% provincial. A $13 million tax loss should be able to shield $4.5 million in federal taxes payable, assuming a 35% federal rate. Provincial taxes must still be paid. (f) We will also determine a better estimate of our working capital deficiency, which can help plan our future shares for debt program (after we are trading again). Once we determine the net present value of the tax losses, we will adjust our balance sheet to show the main asset as a tax loss, valued at $3.0 - $4.5 million (To be determined), less working capital deficiency, less abandonment costs in excess of deposit on file with the AER. (g) Total cost estimate to get the shares trading again is $160,000 - $200,000, most of which is audit fees. The exchange will allow us to issue 40 million shares at $0.005 per share, to fund this purpose. We retain this as an option but will also investigate other alternatives. This alternative was discussed with a Toronto broker that specializes in this field. If we are able to acquire a debt financed asset, we will have sufficient cash flow to cover audit expenses for 2013 2017 and applications to resume trading, without issuing shares. 2. My focus for the remainder of the year will be tax filings and working on our confidential project (to be referred to hereafter as the Marthas Vineyard Project). This would allow us to start monetizing our main tax asset. The following is a cost estimate, related to the CRA income tax filing and 2018 G/A costs to operate the company: (a) $5,000 to cover the 2013 2017 tax filings. Does not include audit fees. (b) $3,500 to cover 2013 2017 unaudited accounting expenses. (c) $250 annual license fee for Quickbooks software. Data entry by book keeper. (d) Storage locker - $155 per month cost of the storage locker, where we store our tax files. Annual cost is $1,860. 3. Once the filings are completed, we require a committee of the board, to search for and work with the board to make offers on Canadian hotels, apartments and businesses. This will be referred to as the Asset Acquisition Project (Hotels). We will require a $10-$15 million asset (or multiple $5-$7.5 million assets), with $1-$1.5 million per year in income, to utilize our estimated $13 million in tax losses, prior to their 20 year expiry date. Our asset purchase offer will involve 100% debt (60% - 75% bank loan and 25% - 40% Vendor financing) and we require an understanding seller, that has a long history of paying a 50% tax rate on earnings, beyond the first $500,000 in annual income (12% tax owing on first $500,000 in taxable income). BNP Resources must purchase the asset directly, as it cannot be a share purchase. We are open to asset purchases anywhere in Canada, including Yarmouth or Halifax, Nova Scotia, Moncton or St. John, New Brunswick, Windsor, Sarnia and London, Ontario, Regina or Saskatoon, Saskatchewan, Red Deer, Edmonton, Calgary, Fort McMurray, Alberta, Prince George, Kamloops, Hope, Langley or White Rock, BC. This process could take anywhere from a few months to a year. We need exact tax losses to be registered with the CRA, prior to proceeding. The seller must work with us to put the funding in place prior to the sale, and be willing to place a Vendor take back mortgage on the property (balloon payment due within 3-5 years). Real estate fees would be paid out of the financing by the seller. Due to the rules regarding our May 2014 cease trade order, we are not allowed to promise to issue shares until after BNP shares are trading again. Income from the business could be used to get the shares trading again, with no dilution to the shareholders. 4. Timelines We should know by July August of 2018, if the Marthas Vineyard project (Confidential) will go ahead. If it is positive, we will issue a news release at that time, and continue working on the program. If not, we will let the shareholders know that we were unsuccessful, and move on to the Asset Acquisition Project (Canadian Hotels). 5. The following is a list of potential businesses, that we could develop, once the shares are trading again: (a) Canadian Hotels 70 100 rooms (b) Canadian residential rental property 100 unit apartment complexes (c) Purchase light oil assets in Mississippi (d) Del Bonita Midstream and Oil Trucking (e) Del Bonita Pipelines (f) Del Bonita Power (3-Phase overhead lines and power generation) (g) Golf courses (BNP Links) (h) BNP Fuels (gasoline stations at Canadian airports). Calgary still does not have a gas station at the airport. (i) BNP Oil and Gas (offshore horizontal drilling for light oil near Lambton and Chattam Kent) (j) BNP Insurance Agencies (k) BNP Ford - Car Dealerships / Car Rentals (l) BNP Liquor Stores (after Rob Ford government privatization of Ontario liquor stores) (m) BNP farm machinery dealerships (Saskatchewan) (n) BNP Stainless Steel Rebar Company (use of stainless steel rebar in concrete bridges to prevent corrosion) (o) BNP Timber (p) BNP Gold Mines (Buy out Eldorado Gold in Greece). Sign up Greece to a free trade agreement with Canada to trade commodities and manufactured goods, in return for permits. Trade oil and timber for olive oil and sunshine. (q) Buy Short Line Railway to Churchill Manitoba (needs new ore body discovery to pay for railway repairs) (r) Buy Churchill Grain Terminal. Need new ore body discovery to pay for the railway upgrade (s) BNP Toll Bridge Management (t) BNP Merchant Banking (buying and selling assets for a fee) (u) Bring Vapiano Italian food to Davie Street in Vancouver. Build a new Boardwalk at the bottom of Davie Street, to draw crowds to the restaurant. (v) Purchase former Hyatt Hotel, 775 rooms, in Dearborn, Michigan and upgrade. Develop convention business. (w) Purchase Fairlane Mall, adjacent to former Hyatt Hotel, Dearborn. This mall is in need of an upgrade. We would want Nordstrom as an anchor, plus an Apple store. For restaurants, a Cheesecake Factory, PF Changs, Vapiano and Bubba Gump Shrimp Co. would be preferred. A strong mall will help drive convention business at the old Hyatt Hotel location. (x) Purchase Hilton Hotel at JFK Airport, Jamaica, Queens. (y) Buy an existing NHL Hockey team and possibly look at bringing the NHL back to Quebec City. (z) Canadian Lobbying and Consulting firm. Canadian tax specialization & consulting. It just takes a little capital, and our first deal. Dont lose hope and stay positive. I believe that we are getting closer. At this stage, we have a good chance of becoming a Canadian Hotel operator. 6. Our BNP USA field office will be moved from NY to the Chicagoland area of Illinois in early May. This will be closer to Calgary as well as being closer to our Marthas Vineyard Project location. We will have access to direct flights between Chicago OHare and Calgary. 7. Our 1st Annual BNP Golf Tournament will be held this summer, in lovely Windsor, Ontario, and will be organized by our independent director. So far we have two confirmations for golf and 5 people scheduled for the golf dinner. Dates, time and location, to be advised. Please RSVP to me, and advise on your interest in attending. We are currently looking at a 9 hole, par 3 program, depending on demand. The Calgary business climate is still very weak and the next federal election is just over a year away. Rob Ford won the leadership of the Ontario PC Party on a fiscally conservative platform. Caroline Mulroney was the favorite but wasnt successful. The TransMountain Pipeline and the TransCanada Keystone Pipeline are not yet proceeding. Advised by an industry insider that shipping oil by rail now costs $20 per barrel, compared to $7.50 for pipelines.