Prospectus Supplement No. 1 (To Prospectus dated May 26, 2009) | Filed pursuant to Rule 424(b)(3) Registration Statement No. 333-131081 |
22,779,000 Shares of Common Stock
This prospectus supplement supplements the Prospectus dated May 26, 2009, relating to the sale, transfer or distribution of up to 22,779,000 shares of our common stock by selling securityholders. You should read this prospectus supplement in conjunction with the prospectus, and this prospectus supplement is qualified by reference to the prospectus, except to the extent that the information contained in this prospectus supplement supersedes the information contained in the prospectus. This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the prospectus, including any amendments or additional supplements thereto.
________________________
Quarterly Report on Form 10-Q
On August 14, 2009, we filed with the Securities and Exchange Commission the attached Quarterly Report on Form 10-Q for the quarter ended June 30, 2009. The text of the 10-Q is attached hereto.
_______________________
Investing in our common stock involves risks. See “Risk Factors and Uncertainties” beginning on page 3 of the prospectus.
These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is October 21, 2009.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2009
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ___________ to _____________
Commission File Number: 333-131081
CLIFF ROCK RESOURCES CORP.
(Exact name of registrant as specified on its charter)
NEVADA | 98-0459440 |
(State or other jurisdiction of | (IRS. Employer |
incorporation or organization) | Identification No.) |
| |
195 Dalcastle Way NW | |
Calgary, Alberta, Canada | T3A 2N5 |
(Name and address of principal executive offices) | (Zip Code) |
(403) 699-5293
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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 required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o Not Applicable
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer o |
| Non-accelerated filer o (Do not check is a smaller reporting company) | 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).
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be field by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ? No ?
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date: There are 45,282,000 shares issued and outstanding as of August 14, 2009.
PART I – FINANCIAL INFORMATION
Item 1. | Financial Statements |
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Balance Sheets
(Expressed in US dollars)
| June 30, | September 30, |
| 2009 | 2008 |
| $ | $ |
| (unaudited) | |
ASSETS | | |
| | |
Current Assets | | |
| | |
Cash | 9 | 818 |
| | |
Total Assets | 9 | 818 |
| | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | |
| | |
Accounts payable | 20,203 | 6,178 |
Accrued liabilities (Note 4) | 39,593 | 35,946 |
Due to related parties (Note 5) | 39,386 | 37,098 |
| | |
Total Liabilities | 99,182 | 79,222 |
| | |
| | |
Commitments and Contingencies (Notes 1 and 3) | | |
| | |
Stockholders’ Deficit | | |
| | |
Common Stock, 300,000,000 shares authorized, $0.001 par value 45,282,000 shares issued and outstanding (Note 6) | 45,282 | 45,282 |
| | |
Additional Paid-in Capital | 9,118 | 9,118 |
| | |
Donated Capital (Note 5) | 28,000 | 22,000 |
| | |
Deficit Accumulated During the Exploration Stage | (181,573) | (154,804) |
| | |
Total Stockholders’ Deficit | (99,173) | (78,404) |
| | |
Total Liabilities and Stockholders’ Deficit | 9 | 818 |
| | |
(The accompanying notes are an integral part of these financial statements)
2
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Statements of Operations
(Expressed in US dollars)
(unaudited)
| Accumulated from | For the | For the | For the | For the |
| February 4, 2005 | Three months | Three months | Nine months | Nine months |
| (Date of Inception) to | Ended | Ended | Ended | Ended |
| June 30, | June 30, | June 30, | June 30, | June 30, |
| 2009 | 2009 | 2008 | 2009 | 2008 |
| $ | $ | $ | $ | $ |
| | | | | |
| | | | | |
Revenue | – | – | – | – | – |
| | | | | |
Expenses | | | | | |
| | | | | |
Donated services and expenses (Note 5) | 28,000 | 2,000 | 2,000 | 6,000 | 6,000 |
General and administrative | 144,779 | 11,852 | 12,651 | 26,209 | 27,140 |
Foreign exchange (gain) loss | (1,982) | 4,100 | – | (5,440) | – |
Mineral property costs | 10,776 | – | 433 | – | 599 |
| | | | | |
Total Expenses | 181,573 | 17,952 | 15,084 | 26,769 | 33,739 |
| | | | | |
Net Loss | (181,573) | (17,952) | (15,084) | (26,769) | (33,739) |
| | | | | |
| | | | | |
Net Loss Per Share – Basic and Diluted | | – | – | – | – |
| | | | | |
| | | | | |
Weighted Average Shares Outstanding | | 45,282,000 | 45,282,000 | 45,282,000 | 45,282,000 |
(The accompanying notes are an integral part of these financial statements)
3
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in US dollars)
(unaudited)
| | | |
| | For the Nine months Ended | For the Nine months Ended |
| | June 30, | June 30, |
| | 2009 | 2008 |
| | $ | $ |
| | | |
| | | |
Operating Activities | | | |
| | | |
Net loss for the period | | (26,769) | (33,739) |
| | | |
Adjustment to reconcile net loss to cash used | | | |
in operating activities: | | | |
Donated services and expenses | | 6,000 | 6,000 |
| | | |
Changes in operating assets and liabilities: | | | |
Accounts payable and accrued liabilities | | 17,673 | 12,108 |
Due to related party | | 2,287 | (677) |
| | | |
Net Cash Used in Operating Activities | | (809) | (16,308) |
| | | |
Financing Activities | | | |
| | | |
Advances from related parties | | – | 13,000 |
| | | |
Net Cash Provided by Financing Activities | | – | 13,000 |
| | | |
Decrease In Cash | | (809) | (3,308) |
| | | |
Cash – Beginning of Period | | 818 | 4,131 |
| | | |
Cash – End of Period | | 9 | 823 |
| | | |
Supplemental Disclosures | | | |
Interest paid | | – | – |
Income taxes paid | | – | – |
| | | |
| | | |
| | | |
(The accompanying notes are an integral part of these financial statements)
4
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
June 30, 2009
(Expressed in US dollars)
(unaudited)
1. | Exploration Stage Company |
Cliff Rock Resources Corp. (the “Company”) was incorporated in the State of Nevada on February 4, 2005. The Company has acquired a mineral property in British Columbia, Canada. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “Accounting and Reporting by Development Stage Enterprises”. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and to determine the existence, discovery and successful exploitation of economically recoverable reserves in its resource properties, confirmation of the Company’s interests in the underlying properties, and the attainment of profitable operations. As at June 30, 2009, the Company has a working capital deficit of $99,173 and has accumulated losses of $181,573 since inception. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
2. | Summary of Significant Accounting Policies |
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is September 30.
| b) | Interim Financial Statements |
The interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended September 30, 2008.
The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at June 30, 2009 and September 30, 2008, and the results of its operations and cash flows for the nine months ended June 30, 2009 and 2008. The results of operations for the nine months ended June 30, 2009 are not necessarily indicative of the results to be expected for future quarters or the full year.
The preparation of financial statements in conformity with US 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. The Company regularly evaluates estimates and assumptions related to donated expenses, and deferred income tax valuations. 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.
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 June 30, 2009 and 2008, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
June 30, 2009
(Expressed in US dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
| e) | 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 No. 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 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. At June 30, 2009, there are no dilutive potential common shares.
| f) | Cash and Cash Equivalents |
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
The Company has been in the exploration stage since its formation on February 4, 2005 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred using the guidance in EITF 04-2 “Whether Mineral Rights Are Tangible or Intangible Assets”. The Company assesses the carrying costs for impairment under SFAS 144, “Accounting for Impairment or Disposal of Long Lived Assets” at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then 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. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
As of the date of these financial statements, the Company has incurred only acquisition and exploration costs which have been expensed.
To date, the Company has not established any proven or probable reserves on its mineral properties.
In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, 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.
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
June 30, 2009
(Expressed in US dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
| i) | Financial Instruments and Fair Value Measures |
SFAS No. 157 “Fair Value Measurements” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. SFAS No. 157 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. SFAS No. 157 prioritizes the inputs into three levels that may be used to measure fair value:
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 payable, and amounts due to related parties. Pursuant to SFAS No. 157, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “Accounting for Income Taxes” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
| k) | Foreign Currency Translation |
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “Foreign Currency Translation”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
| l) | Stock-based Compensation |
The Company records stock-based compensation in accordance with SFAS No. 123R “Share Based Payments”, using the fair value method. The Company has not issued any stock options since its inception.
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
June 30, 2009
(Expressed in US dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
| m) | Recently Issued Accounting Pronouncements |
In June 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”. FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In May 2009, FASB issued SFAS No. 165 (SFAS 165),“Subsequent Events”. SFAS 165 establishes general standards of for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of SFAS 165 did not have a material effect on the Company’s consolidated financial statements.
In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – An interpretation of FASB Statement No. 60”. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In March 2008, FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133”. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations”. This statement replaces SFAS 141 and defines the acquirer in a business combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS 141R also requires the acquirer to recognize contingent consideration at the acquisition date, measured at its fair value at that date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
June 30, 2009
(Expressed in US dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
| m) | Recently Issued Accounting Pronouncements (continued) |
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51”. This statement amends ARB 51 to establish accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this statement did not have a material effect on the Company’s financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement did not have a material effect on the Company’s financial statements.
On February 4, 2005, the Company entered into an agreement to acquire a 100% interest in the IQUE mineral claim located on Vancouver Island, British Columbia, Canada, in consideration for $7,500. This mineral claim is subject to a 2.5% net smelter returns royalty (“NSR”) and a 7.5% gross rock revenue royalty. The Company can acquire 1.5% of the NSR for $1,500,000 within twelve months from commencement of commercial production. Advance royalty payments of $25,000 are payable annually commencing on February 4, 2008. As at June 30, 2009, the Company has not made the advance royalty payment due on February 4, 2008. As a result, the Company allowed the claim to lapse and restaked land surrounding the property.
Accrued liabilities of $39,593 (September 30, 2008 - $35,946) consists of professional fees.
5. | Related Party Transactions |
| a) | A director provides management services and office premises to the Company valued at $500 per quarter and $500 per month, respectively. During the nine months ended June 30, 2009, donated services of $1,500 (2008 - $1,500) and donated rent of $4,500 (2008 - $4,500) were charged to operations. |
| b) | As at June 30, 2009, the Company owes $50 (September 30, 2008 - $400) to a private company controlled by a director for payment of professional fees on behalf of the Company. The amount owing is unsecured, non-interest bearing and has no terms of repayment. |
| c) | As at June 30, 2009, the Company owes $13,280 (September 30, 2008 - $13,280) to the former President of the Company which includes advance of $5,000 (September 30, 2008 - $5,000) and $8,280 (September 30, 2008 - $8,280) of expenses paid on behalf of the Company. The advance of $5,000 is unsecured, non-interest bearing and is repayable on demand. The remaining $8,280 owing is unsecured, non-interest bearing and has no terms of repayment. |
| d) | As at June 30, 2009, the Company owes $26,056 (September 30, 2008 - $23,418) to a shareholder of the Company for advances made to the Company. The amount owing is unsecured and non-interest bearing. Of the $26,056, $8,000 is repayable on demand and the remaining $18,056 has no terms of repayment. |
Cliff Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
June 30, 2009
(Expressed in US dollars)
(unaudited)
On April 10, 2009, the Company effected a 3 to 1 forward stock split of the authorized, issued and outstanding common stock. As a result, the authorized share capital increased from 100,000,000 shares of common stock with a par value of $0.001 per share to 300,000,000 shares of common stock with a par value of $0.001 per share. The issued and outstanding shares increased from 15,094,000 shares of common stock to 45,282,000 shares of common stock. All share amounts have been retroactively adjusted for all periods presented.
In accordance with SFAS 165, we have evaluated subsequent events through August 14, 2009, the date of issuance of the unaudited financial statements. During this period we did not have any material recognizable subsequent events.
Item 2 | Management’s Discussion and Analysis of Financial Condition and Plan of Operations |
The following discussion and analysis explains the major factors affecting our financial condition. We are a start-up, exploration-stage company and have not yet generated or realized any revenues from our business operations. We must raise cash in order to implement our plan and stay in business.
Our plan of operations is to conduct mineral exploration activities on our IQUE Claim in order to assess whether it possesses commercially exploitable reserves of copper, gold or other metals. We have not, nor has any predecessor, identified any commercially exploitable reserves of these minerals on the IQUE Claim. We are an exploration stage company and there is no assurance that a commercially viable mineral deposit exists on the IQUE Claim.
At this time we are uncertain of the number of mineral exploration phases we will have to conduct before concluding that there are, or are not, commercially viable minerals on the IQUE Claim.
Our continued existence and plans for future growth depend on our ability to obtain the capital necessary to operate by issuance of additional equity shares.
Phase I of the recommended work program was carried out in January 2006, which involved a geological review to develop a detailed geological base model for the IQUE Claim, at a cost of $2,119 (Cdn$2,500) to complete. Snow conditions precluded the immediate commencement of Phase II of the recommended program. As it is not possible to predict winter weather conditions in the area of the IQUE Claim, we made a decision to delay the commencement of Phase II until June 2006. However, the 2006/2007 exploration seasons in British Columbia were unusually busy, and then severe weather conditions set in. As a result, the Phase II exploration program has not yet commenced. We paid cash of Cdn$332.47 in lieu of work on the property to keep the claim in good standing until May 31, 2007. On April 2, 2007 we restaked the IQUE Claim at a cost of Cdn$197.61, which resulted in extending the good standing date to April 2, 2008. On August 7, 2008 we further restaked the IQUE Claim at a cost of Cdn$197.60, which resulted in extending the good standing date to August 7, 2009, and on August 6, 2009 we paid Cdn$292.34 in lieu of work performed on the property to extend the expiry date to September 30, 2009. Should we not have sufficient funds to carry out the Phase II program without raising additional capital, our director has agreed to cover any short-fall in costs. The 2008/2009 snow conditions in British Columbia were and remain such that our geologist now expects that Phase II will not be completed before the Spring of 2010.
The details of Phases II and III of the program are set out below:
Budget – Phase II
| US$ | Cdn$ |
1. Follow-up geochemical and detailed geology sampling | 1,398 | 1,500 |
2. Assays 25 @ $17 (Cdn$20) per assay | 467 | 500 |
3. Contingency | 467 | 500 |
Total: | 2,332 | 2,500 |
When Phase II of the recommended program has been completed, we will review the report on Phases I and II and the engineer’s conclusions and recommendations for a Phase III program, if warranted. Our engineer is of the opinion that both Phases I and II are necessary to complete the initial evaluation of the IQUE Claim and to select drill targets which would be Phase III.
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Budget – Phase III
If warranted, the proposed budget for the Phase III program is as follows:
| US$ | Cdn$ |
1. Follow-up trenching and geological mapping, sampling | 2,332 | 2,500 |
2. Assays 50 @ $17 (Cdn$20) per assay | 933 | 1,000 |
3. Reporting and supervision | 933 | 1,000 |
3. Contingency | 466 | 500 |
Total: | 4,664 | 5,000 |
The total budget for Phases I (completed), II and III is estimated at $9,115 (Cdn$10,000).
Since we are in the exploration stage of our business plan, we have not yet earned any revenues from our planned operations. As of June 30, 2009 we have incurred a total of $10,776 in acquisition and exploration costs for the IQUE Claim.
Results of Operations – Nine and Three Months Ended June 30, 2009
We did not earn any revenues during the nine or three month periods ended June 30, 2009. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral property. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our property, or if such resources are discovered, that we will enter into commercial production.
We incurred operating expenses in the amount of $26,769 for the nine months ended June 30, 2009, compared to $33,739 during the same period ended June 30, 2008. Operating expenses consisted of general and administrative expenses of $26,209 ($27,140 – 2008) and donated services and expenses of $6,000 ($6,000 – 2008). We had a foreign exchange gain of $5,440 during the nine months ended June 30, 2009.
We incurred operating expenses in the amount of $17,952 for the three months ended June 30, 2009, compared to $15,084 during the same period in 2008. Operating expenses during the three months ended June 30, 2009 consisted of general and administrative expenses of $11,852 ($12,651 – 2008) and donated services and expenses of $2,000 ($2,000 – 2008). We had a foreign exchange loss of $4,100 during the three months ended June 30, 2009. We incurred $433 in mineral property costs during the three month period ended June 30, 2008.
We incurred a loss in the amount of $26,769 for the nine months ended June 30, 2009, compared to a net loss of $33,739 during the same period in 2008.
We incurred a loss in the amount of $17,952 for the three months ended June 30, 2009, compared to a net loss of $15,084 during the same period in 2008.
Our president provides management services and office premises to the Company valued at $500 per quarter and $500 per month, respectively. During the nine month period ended June 30, 2009, donated services of $1,500 (2008 – $1,500) and donated rent of $4,500 (2008 - $4,500) were charged to operations.
As at June 30, 2009
(a) | we owed $50 to a private company controlled by a director for payment of professional fees on behalf of the Company. The amount owing is unsecured, non-interest bearing and has no terms of repayment; |
(b) | we owed $13,280 to our former president which includes an advance of $5,000 and $8,280 of expenses paid on our behalf. The advance of $5,000 is unsecured, non-interest bearing and has no terms of repayment. The remaining $8,280 owing is unsecured, non-interest bearing and has no terms of repayment; and |
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(c) | we owed $26,056 to a shareholder of the Company for advances made to us. The amount owing is unsecured and non-interest bearing. A total of $8,000 is repayable on demand and the remaining $18,056 has no terms of repayment. |
On April 30, 2009, we completed a forward stock split of our common stock on a ratio of three shares for every one share issued and outstanding on the record date. The record date of the forward stock split was April 21, 2009, the payment date of the forward split was on April 29, 2009, and the ex-dividend date of the forward split was April 30, 2009.
Liquidity and Capital Resources
There is limited financial information about our company upon which to base an evaluation of our performance. We are an exploration stage company and have not generated any revenues from operations.
Our continued existence and plans for future growth depend on our ability to obtain the capital necessary to operate by the sale of equity shares. We will need to raise additional capital to fund normal operating costs and exploration efforts. If we are not able to generate sufficient revenues and cash flows or obtain additional or alternative funding, we will be unable to continue as a going concern. Our recurring losses and negative cash flow from operations raise substantial doubt about our ability to continue as a going concern.
As at June 30, 2009 we had cash of $9 and a working capital deficit of $99,173.
We have not declared or paid any cash dividends on our shares since incorporation and do not anticipate doing so in the foreseeable future.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Recent Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – An interpretation of FASB Statement No. 60”. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In March 2008, FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133”. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash
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flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations”. This statement replaces SFAS 141 and defines the acquirer in a business combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS 141R also requires the acquirer to recognize contingent consideration at the acquisition date, measured at its fair value at that date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51”. This statement amends ARB 51 to establish accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this statement did not have a material effect on the Company’s financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement did not have a material effect on the Company’s financial statements.
Forward-Looking Statements
Our plan of operations includes a number of forward looking statements that reflect management’s current views with respect to future events and financial performance. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this Report and in our other filings with the Securities and Exchange Commission. Important factors currently known to management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or review forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that management’s assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of
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the Company. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions.
Item 4T. | Controls and Procedures |
At the end of the period covered by this report on Form 10-Q for the nine months ended June 30, 2009, an evaluation was carried out by the Company’s President and Treasurer, who is our principal executive officer and principal financial and accounting officer, of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation the President and Treasurer has concluded that the Company’s disclosure controls and procedures were adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our President and Treasurer, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Items 1 to 5. | Not applicable. |
| 31.1 | Certification under Rule 13a-14(a) of the President, Secretary and Treasurer |
| 32.1 | Certification under Section 1350 of the President, Secretary and Treasurer |
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 on August 14, 2009.
| CLIFF ROCK RESOURCES CORP. |
By s// “Andrew Hamilton”
| President (Principal Executive Officer) Secretary |
| and Treasurer (Principal Accounting Officer) |
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