QUARTERLY REPORT ON FORM 10QSB FOR THE QUARTER ENDED SEPTEMBER 30, 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 September 30, 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
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0488851
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1040 West Georgia Street, suite 1160
Vancouver, BC Canada V6E 4H1
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(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 November 12, 2003 the Company had 6,113,934 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)
Balance Sheets
(expressed in U.S. dollars)
September 30,2003 June 30,2003
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 719 854
Prepaid mining and exploration expenses
Total Assets 719 854
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable 7,852 7,852
Accrued liabilities 5,850 5,250
Total Liabilities 13,702 13,102
Contingency (Note 1)
Stockholders' Equity (Deficit)
Common Stock, 100,000,000 shares authorized
with a par value of $0.00001; 6,113,934 and
5,715,114 shares issued and outstanding,
respectively 61 61
Additional Paid-in Capital 386,332 386,332
Stock Subscriptions Receivable
386,393 386,393
Deficit Accumulated During the Exploration Stage (399,376) (398,641)
Total Stockholders' Equity (Deficit) (12,983) (12,248)
Total Liabilities and Stockholders' Equity 719 854
Relay Mines Limited
(An Exploration Stage Company)
Statements of Operations
(expressed in U.S. dollars)
(unaudited)
Accumulated from
February 2, 2001
(Date of Inception) Three Months
Ended
to September 30, September 30,
2003 2003 2002
$ $ $
Revenue
Expenses
Consulting 282,946
General and administration 37,729 135 5,807
Mining exploration 8,938 3,620
Professional fees 54,187 600 5,035
Rent (Note 4) 9,905 4,011
Transfer agent and filing fees 2,797
Travel 2,874 -
399,376 735 18,473
Net Loss for the Period (399,376) (735) (18,473)
Net Loss Per Share Basic
Weighted Average Shares Outstanding 6,113,934 5,715,114
(Diluted loss per share has not been presented as the result is anti-dilutive)
Relay Mines Limited
(An Exploration Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
Three Months Ended
September 30,
2003 2002
$ $
Cash Flows From Operating Activities
Net loss (735) (18,473)
Adjustments to reconcile net loss to net
cash used by operating activities:
Payment of expenses from issuance of stock
Change in operating assets and liabilities
(Increase) decrease in deposits 3,620
Increase in accounts payable and
accrued liabilities 600 8,399
(Decrease) in due to related parties
Net Cash (Used In) Operating Activities (135) (6,454)
Cash Flows From Financing Activities
Proceeds from sale of common stock 10,701
Net Cash Provided By Financing Activities 10,701
Increase (Decrease) in Cash (135) 4,247
Cash Beginning of Period 854 9,773
Cash End of Period 719 14,020
Non-Cash Financing Activities
Stock issued in payment of
consulting and other expenses
Stock issued in payment of advances
Supplemental Disclosures
Interest paid
Income taxes paid
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 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 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 activity is dependent upon its successful efforts to raise
additional equity financing and/or attain profitable mining operations.
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 September 30, 2003, the Company had a working capital deficit of $12,983.
A minimum of $3,000 per quarter is needed to cover expenses. Thus in the next
year the Company will require $24,983 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.
The Company filed an SB-2 Registration Statement with the United States
Securities and Exchange Commission which was declared effective on February
14, 2002. The Company issued 1,113,934 shares for cash proceeds of $111,393
pursuant to this Registration Statement; the offering closed on November 1,
2002.
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.
2. Summary of Significant Accounting Principles (continued)
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.
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) Concentration of Risk
The Company maintains its cash accounts in primarily one commercial bank in
Vancouver, British Columbia, Canada. The Company's cash account is a business
checking account maintained in U.S. dollars, which totalled $719 on September
30, 2003. This account is not insured.
k) 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 September 30, 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.
2. Summary of Significant Accounting Principles (continued)
l) 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-public 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 is not expected to 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.
m) Reclassifications
Certain amounts in the prior period financial statements have been
reclassified to conform to the current year presentation.
n) 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.
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 Callinan Mines Limited.
Monthly rental is determined by usage. The Company expects that the
office rental arrangement will continue for at least the next year.
b) The amount owing to Callinan is non-interest bearing, unsecured and due
on demand.
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 June 30,
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 September 30, 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 activity is dependent upon its successful
efforts to raise additional equity financing and/or attain profitable mining
operations. 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 September 30, 2003, the Company had a working capital deficit of $12,983.
A minimum of $3,000 per quarter is needed to cover expenses. Thus in the next
year the Company will require $24,983 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
Hugh Grenfal, its President, Treasurer, 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.
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(Registrant)
/s/
Date: November 14, 2003 By: _________________________
Carlo Civelli
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