QUARTERLY REPORT ON FORM 10QSB FOR THE QUARTER ENDED DECEMBER 31, 2003
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 333-59872
RELAY MINES LIMITED
(Exact name of small business issuer as specified in its charter)
State or other jurisdiction of incorporation or organization- Nevada
IRS Employer Identification Number- 88-0488851
1040 West Georgia Street, suite 1160
Vancouver, BC Canada V6E 4H1
(Address of principal executive offices)
Issuer's telephone number: 604-605-0885
Check whether the issuer (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of February 10, 2004, the Company had 36,683,604 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Documents incorporated by reference: None.
PART I. FINANCIAL INFORMATION
Relay Mines Limited
(An Exploration Stage Company)
December 31, 2003
Index | |
| Balance Sheets | F-1 |
| Statements of Operations | F-2 |
| Statements of Cash Flows | F-3 |
| Notes to the Financial Statements | F-4 |
Relay Mines Limited
(An Exploration Stage Company)
Balance Sheets
(expressed in U.S. dollars)
| December 31, 2003 $ (unaudited) |
| June 30, 2003 $ (audited) |
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ASSETS |
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Current Assets |
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Cash | 804 |
| 854 |
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Total Assets | 804 |
| 854 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities |
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Accrued liabilities | 1,750 |
| 5,250 |
Advances from related parties (Note 4) | 14,080 |
| 7,852 |
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Total Liabilities | 15,830 |
| 13,102 |
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Contingency (Note 1) |
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Stockholders' Deficit |
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Common Stock, 100,000,000 shares authorized with a par value of $0.00001; 36,683,604 shares issued and outstanding (Note 5) | 367 |
| 367 |
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Additional Paid-in Capital | 386,026 |
| 386,026 |
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Deficit Accumulated During the Exploration Stage | (401,419) |
| (398,641) |
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Total Stockholders' Deficit | (15,026) |
| (12,248) |
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Total Liabilities and Stockholders' Deficit | 804 |
| 854 |
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Relay Mines Limited
(An Exploration Stage Company)
Statements of Operations
(expressed in U.S. dollars)
(unaudited)
| Accumulated from |
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| February 2, 2001 |
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| (Date of Inception) |
| Three Months Ended |
| Six Months Ended | ||||
| to December 31, |
| December 31, |
| December 31, | ||||
| 2003 $ |
| 2003 $ |
| 2002 $ |
| 2003 $ |
| 2002 $ |
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Revenue | - |
| - |
| - |
| - |
| - |
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Expenses |
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Consulting | 282,946 |
| - |
| 10,000 |
| - |
| 10,000 |
General and administration | 37,644 |
| (85) |
| 15,293 |
| 50 |
| 21,100 |
Mining exploration | 8,938 |
| - |
| (136) |
| - |
| 3,484 |
Professional fees | 56,315 |
| 2,128 |
| 3,000 |
| 2,728 |
| 8,035 |
Rent (Note 4(a)) | 9,905 |
| - |
| 3,631 |
| - |
| 7,642 |
Transfer agent and regulatory fees | 2,797 |
| - |
| 2,547 |
| - |
| 2,547 |
Travel | 2,874 |
| - |
| 1,055 |
| - |
| 1,055 |
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Total Expenses | 401,419 |
| 2,043 |
| 35,390 |
| 2,778 |
| 53,863 |
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Net Loss for the Period | (401,419) |
| (2,043) |
| (35,390) |
| (2,778) |
| (53,863) |
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Net Loss Per Share - Basic and Diluted |
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| - |
| (0.01) |
| - |
| (0.01) |
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Weighted Average Shares Outstanding |
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| 36,684,000 |
| 33,342,000 |
| 36,684,000 |
| 31,668,000 |
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Relay Mines Limited
(An Exploration Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
| Six Months Ended | ||
| December 31, | ||
| 2003 $ |
| 2002 $ |
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Cash Flows To Operating Activities |
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Net loss for the period | (2,778) |
| (53,863) |
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Changes in operating assets and liabilities |
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Prepaid expenses | - |
| 3,620 |
Accounts payable | - |
| (2,174) |
Accrued liabilities | (3,500) |
| 600 |
Advances from related parties | 6,228 |
| 6,941 |
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Net Cash Used In Operating Activities | (50) |
| (44,876) |
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Cash Flows To Investing Activities | - |
| - |
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Cash Flows From Financing Activities |
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Sale of common stock | - |
| 41,270 |
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Net Cash Provided By Financing Activities | - |
| 41,270 |
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Net Decrease in Cash | (50) |
| (3,606) |
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Cash - Beginning of Period | 854 |
| 9,773 |
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Cash - End of Period | 804 |
| 6,167 |
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Non-Cash Financing Activities | - |
| - |
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Supplemental Disclosures |
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Interest paid | - |
| - |
Income taxes paid | - |
| - |
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1. Exploration Stage Company
The Company was incorporated in the State of Nevada on February 2, 2001. In February 2001, the Company, through an unrelated third party, acquired 100% of the rights, title and interest in six mining claims situated in the Mugwump property, Rocky Creek Valley, in the Province of British Columbia, Canada. The Company's principal business plan is to acquire, explore and develop mineral properties and to ultimately seek earnings by exploiting the mineral claims.
The Company has been in the exploration stage since its formation on February 2, 2001 and has not yet realized any revenue from its planned operations. It is primarily engaged in the acquisition, exploration and development of mining properties. Upon location of a commercial mineable reserve, the Company will actively prepare the site for extraction and enter a development stage. At present, management devotes most of its activities to raise sufficient funds to further explore and develop its mineral properties. Planned principal activities have not yet begun. The ability of the Company to emerge from the exploration stage with respect to any planned principal business activities is dependent upon its successful efforts to raise additional equity financing and/or generate significant revenue. Management has plans to seek additional capital through a private placement and public offering of its common stock. There is no guarantee that the Company will be able to complete any of the above objectives. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
At December 31, 2003, the Company had a working capital deficit of $15,026. A minimum of $3,000 per quarter is needed to cover expenses. Thus in the next year the Company will require $27,026 to cover both new expenses and preserve working capital. This amount would operate the Company but leave little or nothing for exploration. The Company expects to fund itself in the next twelve months by sales of shares.
2. Summary of Significant Accounting Principles
a) Year End
The Company's year end is June 30.
b) Basis of Accounting
These financial statements are prepared in conformity with accounting principles generally accepted in the United States and are presented in US dollars.
c) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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.
e) Long-Lived Assets
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" establishes a single accounting model for long-lived assets to be disposed of by sale including discontinued operations. SFAS 144 requires that these long-lived assets be measured at the lower of the carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations.
2. Summary of Significant Accounting Principles (continued)
f) Foreign Currency Transactions/Balances
The Company's functional currency is the United States dollar. Occasional transactions occur in Canadian currency, and management has adopted SFAS No. 52, "Foreign Currency Translation". Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at rates of exchange in effect at the balance sheet date. Non-monetary assets, liabilities and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction.
g) Exploration and Development Costs
The Company has been in the exploration stage since its formation in February 2, 2001 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mining properties. Mineral exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. Payments related to the acquisition of the land and mineral rights are capitalized as incurred.
h) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 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 including stock options, 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.
i) Financial Instruments
The carrying value of cash, accounts payable, accrued liabilities, and advances from related party approximate fair value due to the relatively short maturity of these instruments.
j) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2003 and 2002, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
k) Interim Financial Statements
These interim unaudited financial statements have been prepared on the same basis as the annual 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.
l) Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current year presentation.
2. Summary of Significant Accounting Principles (continued)
m) Recent Accounting Pronouncements
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The requirements of SFAS No. 150 apply to issuers' classification and measurement of freestanding financial instruments, including those that comprise more than one option or forward contract. SFAS No. 150 does not apply to features that are embedded in a financial instrument that is not a derivative in its entirety. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory redeemable financial instruments of non-p ublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The adoption of this standard did not have a material effect on the Company's results of operations or financial position.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", which amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 expands the disclosure requirements of SFAS No. 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition provisions of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The disclosure provisions of SFAS No. 148 are effective for financial statements for interim periods beginning after December 15, 2002. The transition provisions do not currently have an impact on the Company's financial position and results of operations as the Company currently has no stock-based employee compensation.
In June, 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The Company adopted SFAS No. 146 on January 1, 2003. The effect of adoption of this standard on the Company's results of operations and financial position was not material.
FASB has also issued SFAS No. 145, 147 and 149 but they will not have any relationship to the operations of the Company therefore a description of each and their respective impact on the Company's operations have not been disclosed.
3. Mineral Properties
In February 2001, the Company, through an unrelated third party, acquired 100% of the rights, title and interest in six mining claims situated in the Mugwump property, Rocky Creek Valley, in the Province of British Columbia, Canada. Title to the claims has been conveyed to the Company via an unrecorded deed. The Company has assigned no value to these claims, as there is no evidence showing proven and probable reserves.
4. Related Party Transactions
a) The Company occupies office space provided by a company whose Vice President is the President of the Company. Monthly rental is determined by usage. At December 31, 2003, the Company was indebted to this company for $7,852, which is non-interest bearing, unsecured and due on demand. Due to the minimal operations of the Company, no rent has been charged for the six months ended December 31, 2003 (2002 - $7,642).
b) b) The President of the Company is owed $6,228 at December 31, 2003 for payment of expenses on behalf of the Company. This amount is non-interest bearing, unsecured and due on demand.
5. Subsequent Event
On February 4, 2004, the Company issued five additional common shares for each one common share outstanding effective as of the record date of February 2, 2004. All per share amounts have been retroactively adjusted to reflect the stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 2003 contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, including statements that include the words "believes", "expects", "anticipates", or similar expressions. These forward-looking statements may include, among others, statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts.
The forward-looking statements in this Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 2003 involve known and unknown risks, uncertainties and other factors that could the cause actual results, performance or achievements of the Company to differ materially from those expressed in or implied by the forward-looking statements contained herein.
Overview:
The Company was incorporated in the State of Nevada on February 2, 2001. In February 2001, the Company acquired six mineral claims: the Mugwump Property, Relay Creek Valley, in the Province of British Columbia, Canada. The Company's principal business plan is to acquire, explore and develop mineral properties and to ultimately seek earnings by exploiting the mineral claims.
The Company has been in the exploration stage since its formation in February 2001 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mining properties.
Upon location of a commercial mineable reserve, the Company will actively prepare the site for extraction and enter a development stage. At present, management devotes most of its activities to raise sufficient funds to further explore and develop mineral properties and to maintain the corporate entity. Planned principal activities have not yet begun.
The ability of the Company to emerge from the exploration stage with respect to any planned principal business activities is dependent upon its successful efforts to raise additional equity financing and/or generate significant revenue. Management has plans to seek additional capital through a private placement and public offering of its common stock. There is no guarantee that the Company will be able to complete any of the above objectives. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
PLAN OF OPERATION
In the next twelve months, the Company does not expect any significant changes in the number of employees and does not expect the purchase or sale of plant or significant equipment, due to the present shortage of working capital. We also have no plan for research and development for any property or product other than our mineral claims. See above for development information on the Mugwump claims.
At December 31, 2003, the Company had a working capital deficit of $15,026. A minimum of $3,000 per quarter is needed to cover expenses. Thus in the next year the Company will require $27,026 to cover both new expenses and preserve working capital. This amount would operate the Company but leave little or nothing for exploration. The Company expects to fund itself in the next twelve months by sales of shares.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The ability of the Company to continue to grow and expand its business is highly dependent upon the ability of the Company to continue to raise external financing, from the sale of equity and/or the incurrence of debt. If the Company were unable to obtain debt and/or equity financing upon terms that were sufficiently favorable to the Company, or at all, it would have a materially adverse impact upon the ability of the Company to continue to expand its business and operations, or to implement its business plan as now contemplated by the Company.
RELIANCE ON KEY MANAGEMENT
The success of the Company is highly dependent upon the continued services of Carlo Civelli, its President, Treasurer, and Principal Accounting Officer, who is the primary person responsible for building the Company's business. If he were to leave the Company, it could have a materially adverse effect upon the business and operations of the Company.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act of 1934 is accumulated and communicated to the Company's management, including its principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.
The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its principal executive and financial officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the fiscal quarter. Based upon and as of the date of that evaluation, the Company's principal executive and financial officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act of 1934 is recorded, processed, summarized and reported as and when required.
(b) Changes in Internal Controls
There were no changes in the Company's internal controls or in other factors that could have significantly affected those controls subsequent to the date of the Company's most recent evaluation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RELAY MINES LIMITED.
---------------
(Registrant)
Date: February 10, 2004
/s/ Carlo Civelli
By: _________________________
Carlo Civelli, President, Treasurer,
Principal Accounting Officer and a
member of the Board Of Directors
INDEX TO EXHIBITS
Exhibit
Number Description of Document
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31 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
