U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2009
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ________
Commission File Number 333-139660
DEERFIELD RESOURCES, LTD.
(Exact Name of Registrant as Specified in its Charter)
| Nevada | 1000 | 98-0506246 |
| (State or other jurisdiction of | (Primary SIC Number) | (IRS Employer ID Number) |
| Incorporation or organization) | | |
c/o Sichenzia Ross Friedman Ference, LLP
61 Broadway, 32nd Floor
New York, New York 10006
(212) 930-9700
(Address and telephone number of principal executive offices)
(Former address of principal executive offices)
Indicate whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 ¨
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 ¨ No ¨
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. (Check One):
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company þ |
| | | (Do not check if a smaller reporting company) | |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
There were 32,600,000 shares of Common Stock outstanding as of February 4, 2010.
DEERFIELD RESOURCES, LTD.
TABLE OF CONTENTS
| | Page |
| Part I Financial Information | |
| | | |
| Item 1 | Financial Statements | |
| | | |
| | Balance Sheets (unaudited) | 2 |
| | | |
| | Interim Statements of Operations (unaudited) | 3 |
| | | |
| | Interim Statements of Cash Flows (unaudited) | 4 |
| | | |
| | Notes to the Unaudited Interim Financial Statements | 5 |
| | | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 |
| | | |
| Item 4T | Controls and Procedures | 12 |
| | |
| Part II Other Information | 13 |
| | | |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| | | |
| Item 4 | Submission of Matters to a Vote of Security Holders | 13 |
| | | |
| Item 5 | Other Information | 13 |
| | | |
| Item 6 | Exhibits | 13 |
| | |
| Signatures | 14 |
| | |
| Exhibit – Certification of Principal Executive Officer and Principal Financial Officer | |
| | |
| Exhibit – Certification of Chief Executive Officer and Chief Financial Officer | |
PART I – FINANCIAL INFORMATION
Item 1. Interim Financial Statements
The accompanying interim unaudited financial statements of Deerfield Resources, Ltd., (a Nevada corporation) are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the Company's most recent audited financial statements for the year ended September 30, 2009 included in a Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on December 24, 2009. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed financial statements for the period ended December 31, 2009 are not necessarily indicative of the operating results that may be expected for the full year ending September 30, 2010.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
Balance Sheets
| | | As of | | | As of | |
| | | December 31, | | | September 30, | |
| | | 2009 | | | 2009 | |
| | | (Unaudited) | | | | |
ASSETS | | | | | | |
| Current Assets | | | | | | |
| Cash | | $ | - | | | $ | 2,755 | |
| Total Current Assets | | | - | | | | 2,755 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | - | | | $ | 2,755 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | $ | 40,311 | | | $ | 3,005 | |
| Notes payable – related party (note 6) | | | 100,950 | | | | 60,950 | |
| Accrued interest, notes payable – related party (note 6) | | | 8,566 | | | | 5,709 | |
| Total Current Liabilities | | | 149,827 | | | | 69,664 | |
| | | | | | | | | |
| Long-Term Liabilities | | | | | | | | |
| Note payable- related party (note 6) | | | 25,000 | | | | 65,000 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 174,827 | | | | 134,664 | |
| | | | | | | | | |
| STOCKHOLDERS’ DEFICIT (note 3) | | | | | | | | |
| Preferred stock, par value $0.001, 10,000,000 shares authorized, none issued and outstanding | | | - | | | | - | |
| Common stock, par value $0.001, 300,000,000 shares authorized, 32,600,000 shares issued and outstanding | | | 32,600 | | | | 32,600 | |
| Additional paid-in capital | | | 89,274 | | | | 89,274 | |
| Deficit accumulated during the exploration stage | | | (296,701 | ) | | | (253,783 | ) |
| Total Stockholders’ Deficit | | | (174,827 | ) | | | (131,909 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | - | | | $ | 2,755 | |
The accompanying notes are an integral part of these financial statements.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
Interim Statements of Operations
(Unaudited)
| | | | | | | | | Cumulative | |
| | | | | | | | | from Inception | |
| | | | | | | | | (June 21, 2006) | |
| | | Three Months Ended December 31, | | | to December 31, | |
| | | 2009 | | | 2008 | | | 2009 | |
| Income | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | |
| Mineral property costs | | | 10,000 | | | | 2,500 | | | | 52,152 | |
| Professional fees | | | 30,038 | | | | 103,956 | | | | 236,189 | |
| Office and administrative | | | - | | | | - | | | | 1,808 | |
| Total Operating Expenses | | | 40,038 | | | | 106,456 | | | | 290,149 | |
| | | | | | | | | | | | | |
| Other Income (Expense) | | | | | | | | | | | | |
| Interest income | | | - | | | | - | | | | 2,037 | |
| Interest expense | | | (2,880 | ) | | | (501 | ) | | | (8,589 | ) |
| Total Other Income (Expense) | | | (2,880 | ) | | | (501 | ) | | | (6,552 | ) |
| | | | | | | | | | | | | |
| Net Loss Applicable to Common Shares | | $ | (42,918 | ) | | $ | (106,957 | ) | | $ | (296,701 | ) |
| | | | | | | | | | | | | |
| Basic and Diluted Loss per Common Share | | $ | (0.00 | ) | | $ | (0.07 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted Average Number of Common Shares Outstanding | | | 32,600,000 | | | | 1,622,132 | | | | | |
The accompanying notes are an integral part of these financial statements.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
Interim Statements of Cash Flows
(Unaudited)
| | | | | | | | | Cumulative from | |
| | | | | | | | | Inception | |
| | | | | | | | | (June 21, 2006) to | |
| | | Three Months Ended December 31, | | | December 31, | |
| | | 2009 | | | 2008 | | | 2009 | |
| | | | | | | | | | |
| Operating Activities | | | | | | | | | |
| Loss for the period | | $ | (42,918 | ) | | $ | (106,957 | ) | | $ | (296,701 | ) |
| Adjustments to reconcile net loss to net cash used in operations | | | | | | | | | | | | |
| Issuance of common stock for consulting services | | | - | | | | 31,674 | | | | 31,674 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | |
| Decrease in prepaid expenses | | | - | | | | 187 | | | | - | |
| Increase in accounts payable | | | 37,306 | | | | 20,893 | | | | 40,311 | |
| Increase in accrued interest, notes payable – related party | | | 2,857 | | | | 501 | | | | 8,566 | |
| Net cash used in operating activities | | | (2,755 | ) | | | (53,702 | ) | | | (216,150 | ) |
| | | | | | | | | | | | | |
| Investing Activities | | | - | | | | - | | | | - | |
| Net cash used in investing activities | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| Financing Activities | | | | | | | | | | | | |
| Proceeds from notes payable – related party | | | - | | | | 35,000 | | | | 125,950 | |
| Issuance of common stock for cash | | | - | | | | - | | | | 90,200 | |
| Net cash provided by financing activities | | | - | | | | 35,000 | | | | 216,150 | |
| | | | | | | | | | | | | |
| Net Decrease in Cash and Cash Equivalents | | | (2,755 | ) | | | (18,702 | ) | | | - | |
| Cash and Cash Equivalents – Beginning of Period | | | 2,755 | | | | 22,176 | | | | - | |
| Cash and Cash Equivalents – End of Period | | $ | - | | | $ | 3,474 | | | $ | - | |
| | | | | | | | | | | | | |
| Supplemental Cash Flow Disclosure: | | | | | | | | | | | | |
| Cash paid for interest | | $ | - | | | $ | - | | | $ | - | |
| Cash paid for income taxes | | $ | - | | | $ | - | | | $ | - | |
The accompanying notes are an integral part of these financial statements.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 2009
(Unaudited)
Deerfield Resources, Ltd. (the “Company”) was incorporated on June 21, 2006 in the State of Nevada, U.S.A. It is based in New York, New York where it has its executive offices. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is September 30.
The Company is an exploration stage company that engages primarily in the acquisition, exploration, and development of mineral resource properties. The Company has the right to conduct exploration work on six mineral mining claims in White Bay, Newfoundland, Canada, and has not determined whether these properties contain reserves that are economically recoverable. To date, the Company’s activities have been limited to its formation, the raising of equity capital, and some exploration work.
The Company decided, prior to the end of its fiscal year ended September 30, 2008, to refocus its business strategy towards identifying and pursuing options regarding the development of a new business plan and direction. The Company intends to explore various business opportunities that have the potential to generate positive revenue, profits, and cash flow in order to financially accommodate the costs of being a publicly-held company.
Exploration Stage Company
The Company is considered to be in the exploration stage as defined in FASC 915-10-05, “Development Stage Entity,” and interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. Until recently, the Company had been devoting substantially all of its efforts to development of business plans and the acquisition of mineral properties.
| 2. | Significant Accounting Policies |
Use of Estimates
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties, and markets that could affect the financial statements and future operations of the Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $0 and $2,755 in cash and cash equivalents at December 31, 2009 and September 30, 2009, respectively.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 2009
(Unaudited)
| 2. | Significant Accounting Policies –Continued |
Mineral Acquisition and Exploration Costs
The Company has been in the exploration stage since its formation on June 21, 2006 and has not yet realized any revenue from its planned operations. It is primarily engaged in the acquisition, exploration, and development of mining properties. Mineral property acquisition and 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 reserves.
Start-Up Costs
In accordance with FASC 720-15-20, “Start-up Activities,” the Company expenses all costs incurred in connection with the start-up and organization of the Company.
Net Income or (Loss) Per Share of Common Stock
The Company has adopted FASC 260-10-20, “Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
The following table sets forth the computation of basic and diluted earnings per share:
| | | Three Months Ended December 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net loss | | $ | (42,918 | ) | | $ | (106,957 | ) |
| | | | | | | | | |
| Weighted average common shares outstanding (Basic) | | | 32,600,000 | | | | 1,622,132 | |
| Options | | | - | | | | - | |
| Warrants | | | - | | | | - | |
| Weighted average common shares outstanding (Diluted) | | | 32,600,000 | | | | 1,622,132 | |
| | | | | | | | | |
| Net loss per share (Basic and Diluted) | | $ | (0.00 | ) | | $ | (0.07 | ) |
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 2009
(Unaudited)
| 2. | Significant Accounting Policies -Continued |
Foreign Currency Translations
The Company’s functional and reporting currency is the US dollar. All transactions initiated in other currencies are translated into US dollars using the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the US dollar at the rate of exchange in effect at the balance sheet date. Unrealized exchange gains and losses arising from such transactions are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized. No significant realized exchange gain or losses were recorded from inception (June 21, 2006) to December 31, 2009.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Recently Issued Accounting Pronouncements
In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
Statement of Financial Accounting Standards (“SFAS”) No. 165 (ASC Topic 855), “Subsequent Events,” SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,” SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R),” and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.
Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2010-08 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 2009
(Unaudited)
Authorized Stock
At inception, the Company authorized 100,000,000 common shares and 100,000,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
Effective December 1, 2008, the Company increased the number of authorized common shares to 310,000,000 shares, of which 300,000,000 shares are designated as common stock par value $0.001 per share, and 10,000,000 shares are designated as preferred stock, par value $0.001 per share.
Share Issuances
On December 24, 2008, the Company effected a 1 for 5 reverse split of its common stock, under which each stockholder of record on that date received 1 new share of the Corporation’s $0.001 par value stock for every five shares outstanding.
Since its inception, the Company has issued shares of its common stock as follows, retroactively adjusted to give effect to the 1 for 5 reverse split:
| | | | | | | | Price Per | | | | |
| Date | | Description | | Shares | | | Share | | | Amount | |
| | | | | | | | | | | | |
| 06/27/06 | | Stock issued for cash | | | 200,000 | | | $ | 0.025 | | | $ | 5,000 | |
| 08/01/06 | | Stock issued for cash | | | 400,000 | | | | 0.05 | | | | 20,000 | |
| 07/11/07 | | Stock issued for cash | | | 326,000 | | | | 0.20 | | | | 65,200 | |
| 12/26/08 | | Stock issued for services (note 6) | | | 31,674,000 | | | | 0.001 | | | | 31,674 | |
| | | | | | | | | | | | | | | |
| 12/31/09 | | Cumulative Totals | | | 32,600,000 | | | | | | | $ | 121,874 | |
Of these shares, 600,000 were issued to former directors and officers of the Company, 31,674,000 to its majority stockholder, and 326,000 to independent investors.
There are no preferred shares outstanding. The Company has no stock option plan, warrants or other dilutive securities.
| 4. | Provision for Income Taxes |
The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years. Minimal exploration stage deferred tax assets arising as a result of net operating loss carry forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carry forwards generated during the period from June 21, 2006 (date of inception) through December 31, 2009 of $296,701 will begin to expire in 2026. Accordingly, deferred tax assets of approximately $103,800 were offset by a valuation allowance, which increased by approximately $15,000 and $37,000 during the three months ended December 31, 2009 and 2008, respectively.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 2009
(Unaudited)
| 4. | Provision for Income Taxes -Continued |
The Company adopted the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately no increase in the liability for unrecognized tax benefits.
The Company has no tax positions at December 31, 2009 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at December 31, 2009. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended exploration stage activities.
On October 10, 2006, the Company entered into a mineral claim purchase agreement (the Agreement) to purchase an undivided interest in six mining claims on property located in White Bay, Newfoundland, Canada (the Property) for $40,000. Payments on the Property are payable as follows:
| Upon signing of the agreement and transfer of title (paid) | | $ | 5,000 | |
| On or before October 10, 2007 (paid) | | | 5,000 | |
| On or before October 10, 2008 (paid) | | | 10,000 | |
| On or before October 10, 2009 (paid) | | | 10,000 | |
| On or before October 10, 2010 (paid) | | | 10,000 | |
| TOTAL | | $ | 40,000 | |
All payments due on the Property were made within 30 days of their due dates (unless otherwise negotiated), otherwise the Property would have reverted back to the vendor.
In addition to the Property payments, the Company is required to incur $50,000 of exploration work on the Property over four years and to pay a 3% royalty on all mineral commodities sold from the property. This royalty shall be reduced to 1.5% upon payment to the vendor of $1,000,000 USD at any time. The vendor has recommended a work program of approximately $15,000, which will be part of the expenditure commitment and must be completed in the first year. The program consists of surveying a control grid, soil and rock chip sampling and geological mapping.
Funds totaling $22,152 were advanced during August and October 2007 towards the work program, which was completed in September 2007. As of December 31, 2009, the Company has spent the recommended money on property option payments and exploration work on the Property.
The Company is also responsible for maintaining the mineral claims in good standing by paying all the necessary rents, taxes, and filing fees associated with the Property. As of December 31, 2009, the Company met these obligations.
| 6. | Related Party Transactions |
On November 3, 2008, the Company received $35,000 from its majority stockholder (the “Stockholder”) pursuant to an unsecured promissory note, bearing an annual interest rate of 9% with a maturity date of November 2, 2009. This note has been extended through May 2, 2010. On March 18, 2009, the Company received an additional $25,950 from the Stockholder pursuant to an unsecured promissory note, bearing an annual interest rate of 9% with a maturity date of March 17, 2010.
DEERFIELD RESOURCES, LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 2009
(Unaudited)
| 6. | Related Party Transactions –Continued |
On May 21, 2009, the Company received an additional $40,000 from the Stockholder pursuant to an unsecured convertible promissory note, bearing an annual interest rate of 9% with a maturity date of November 22, 2010. Subject to prior conversion, interest and principal are due on the note on November 22, 2010. The terms of conversion have not been determined but will be mutually determined by the Company and the holder.
On August 13, 2009, the Company received an additional $25,000 from the Stockholder pursuant to an unsecured convertible promissory note, bearing an annual interest rate of 9% with a maturity date of February 12, 2011. Subject to prior conversion, interest and principal are due on the note on February 12, 2011. The terms of conversion have not been determined but will be mutually determined by the Company and the holder.
Interest expense and accrued interest as of and for the period ended December 31, 2009 totaled $2,857 and $8,566, respectively.
During the quarter ended December 31, 2008, the Stockholder rendered consulting services totaling $31,674, for which it received 31,674,000 shares of the Company’s common stock issued at par value $0.001.
| 7. | Going Concern and Liquidity Considerations |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at December 31, 2009, the Company has a working capital deficiency of $149,827 and an accumulated deficit of $296,701. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months.
The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore, develop and purchase the mineral properties, and the discovery, development and sale of ore reserves.
In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
On January 26, 2010, the Board approved an 8.43558282-for-1 forward split of the Company’s common stock (the “Forward Split”). The Forward Split is anticipated to be effective as of the close of business on February 5, 2010, pending approval by FINRA. As a result of the Forward Split, each stockholder of record on February 1, 2010, will receive a dividend of an additional 7.43558282 shares of common stock of the Company, for every share of common stock they own.
The Company has evaluated subsequent events from the balance sheet date through February 4, 2010 and determined there are no additional items to disclose.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section of the report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Plan of Operation
We were incorporated in the State of Nevada on June 21, 2006. We were formed to engage in the search for mineral deposits or reserves. We conducted preliminary exploration activities on certain properties in Newfoundland, Canada on which we hold certain mining claims.
We recently decided to refocus our business strategy towards identifying and pursuing options regarding the development of a new business plan and direction. We intend to explore various business opportunities that have the potential to generate positive revenue, profits and cash flow in order to financially accommodate the costs of being a publicly-held company.
We have minimal operating costs and expenses at the present time due to our limited business activities. However, because of our absence of cash in the bank, we will be required to raise additional capital over the next twelve months to meet our ongoing expenses.
Further, we may raise capital in connection with or in anticipation of possible acquisition transactions. We do not currently engage in any product research and development and have no plans to do so in the foreseeable future. We have no present plans to purchase or sell any plant or significant equipment. We also have no present plans to add employees, although we may do so in the future if we engage in any merger or acquisition transactions.
Results of Operations
We are an exploration stage company and have generated minimal revenues from operations to date.
We incurred operating expenses of $40,038 for the three months ended December 31, 2009 as opposed to $106,456 for the three months ended December 31, 2008. These expenses consisted primarily of mineral property costs and professional and administrative fees incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports.
We generated no operational revenues or other income for each of the three month periods ended December 31, 2009 and December 31, 2008, respectively. We incurred $2,880 in interest expense for the three month period ended December 31, 2009, compared to $501 in interest expense for the three months ended December 31, 2008. Our net loss for the three months ended December 31, 2009 and 2008 was $42,918 and $106,957, respectively.
Liquidity and Capital Resources
At December 31, 2009, we had cash and cash equivalents in the bank of $0, as opposed to $2,755 at September 30, 2009.
We have minimal operating costs and expenses at the present time due to our limited business activities. To meet our recent needs for cash, on May 21, 2009 we received $40,000 from our majority stockholder pursuant to a 9% unsecured promissory note with a maturity date of November 22, 2010. We also received an additional $25,000 from the stockholder on August 13, 2009 pursuant to a 9% unsecured promissory note with a maturity date of February 12, 2011. Both notes are convertible into the Company’s common stock, but conversion terms have not yet been determined, but will be mutually determined by the Company and the stockholder. These proceeds are not sufficient to meet our current administrative expenses or those expected during the next three months. We will, therefore, be required to raise additional capital over the next three to six months to meet our current administrative expenses, and we may also do so in connection with or in anticipation of possible acquisition transactions. This financing may take the form of additional sales of debt or equity securities and/or loans from our director or principal stockholder. There is no assurance that additional financing, if required, will be available, or available on terms favorable to us.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Item 4T. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective in providing reasonable assurance that material information required to be disclosed in the reports we file pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.
Additionally, there were no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.
PART II – OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
| Exhibit No. | | Description |
| 31.1/31.2 | | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 32.1/32.2 | | Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: February 5, 2010 | DEERFIELD RESOURCES, LTD. |
| | |
| | By: | | /s/ James W. Morgon |
| | | Name: | James W. Morgon |
| | | Title: | Principal Executive Officer and Principal Financial Officer |
