QUARTERLY REPORT ON FORM 10QSB FOR THE QUARTER ENDED MARCH 31, 2004
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 MARCH 31, 2004
[ ] 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 April 23rd, 2004 the Company had 36,683,604 shares of common stock issued
and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Documents incorporated by reference: None.
PART I. FINANCIAL INFORMATION
Relay Mines Limited
(An Exploration Stage Company)
March 31, 2004
Index
Balance Sheets F-1
Statements of Operations F-2
Statements of Cash Flows F-3
Notes to the Financial Statements F-4
Relay Mines Limited
(An Exploration Stage Company)
Balance Sheets
(expressed in U.S. dollars)
March 31, June 30,
2004 2003
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 43 854
______________________________________________________________
Total Assets 43 854
==============================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 549 -
Accrued liabilities 1,250 5,250
Due to related party(Note 4) 15,605 7,852
______________________________________________________________
Total Liabilities 17,404 13,102
______________________________________________________________
Contingency (Note 1)
Stockholders' Deficit
Common Stock,100,000,000 shares authorized
with a par value of $0.00001;
36,683,604 shares issued and outstanding
(Note 5) 367 367
Additional Paid-in Capital 386,026 386,026
Deficit Accumulated During the
Exploration Stage (402,754) (398,641)
______________________________________________________________
Total Stockholders' Deficit (17,361) (12,248)
______________________________________________________________
Total Liabilities and Stockholders'
Deficit 43 854
==============================================================
Relay Mines Limited
(An Exploration Stage Company)
Statement of Operations
(expressed in U.S. dollars)
(unaudited)
Accumulated from
February 2, 2001
(Date of Inception) Three Months Nine Months
to March 31, Ended March 31, Ended March 31
2004 2004 2003 2004 2003
$ $ $ $ $
Revenue - - - - -
________________________________________________________________
Expenses
Consulting 284,946 - - - 10,000
General and
administration 37,910 316 5,471 316 26,571
Mining
Exploration 9,432 494 - 494 3,484
Professional fees 57,340 1,025 625 3,753 8,660
Rent(Note4(a)) 9,905 - 911 - 8,553
Transfer agent and
regulatory fees 3,347 550 - 550 2,547
Travel 2,874 - - - 1,055
________________________________________________________________
Total Expenses 403,754 2,335 7,007 5,113 60,870
________________________________________________________________
Net Loss for
The Period (403,754) (2,335) (7,007) (5,113)(60,870)
=================================================================
Net Loss Per Share-
Basic and Diluted - - - -
=================================================================
Weighted Average
Shares Outstanding
Thousands (,000) 36,684 30,174 36,684 30,060
=================================================================
Relay Mines Limited
(An Exploration Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
Nine Months Ended
March 31,
2004 2003
$ $
Cash Flows to Operating Activities
Net loss for the period (5,113) (60,870)
Changes in operating assets and
liabilities
Prepaid expenses - 3,620
Accounts payable 549 2,150
Accrued liabilities (4,000) 1,200
Due to related parties 7,753 7,852
___________________________________________________________
Net Cash Used In Operating activities (811) (50,348)
___________________________________________________________
Cash Flows To Investing Activities - -
___________________________________________________________
Cash Flows From Financing Activities
Sale of common stock - 41,270
___________________________________________________________
Net Cash Provided By Financing Activities - 41,270
___________________________________________________________
Net Decrease in Cash (811) (9,078)
Cash-Beginning of Period 854 9,773
___________________________________________________________
Cash-End of Period 43 695
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Non-Cash Financing Activities - -
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Supplemental Disclosures
Interest paid - -
Income taxes paid - -
===========================================================
Relay Mines Limited
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in U.S. Dollars)
1. Exploration Stage Company
The Company was incorporated in the State of Nevada on February 2,
2001. In February 2001, the Company, through an unrelated third party,
acquired 100% of the rights, title and interest in six mining claims
situated in the Mugwump property, Rocky Creek Valley, in the Province
of British Columbia, Canada. The Company's principal business plan is
to acquire, explore and develop mineral properties and to ultimately
seek earnings by exploiting the mineral claims.
The Company has been in the exploration stage since its formation on
February 2, 2001 and has not yet realized any revenue from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of mining properties. Upon location of a commercial
mineable reserve, the Company will actively prepare the site for
extraction and enter a development stage. At present, management
devotes most of its activities to raise sufficient funds to further
explore and develop its mineral properties. Planned principal
activities have not yet begun. The ability of the Company to emerge
from the exploration stage with respect to any planned principal
business activities is dependent upon its successful efforts to raise
additional equity financing and/or generate significant revenue.
Management has plans to seek additional capital through a private
placement and public offering of its common stock. There is no
guarantee that the Company will be able to complete any of the above
objectives. These factors raise substantial doubt regarding the
Company's ability to continue as a going concern.
At March 31, 2004, the Company had a working capital deficit of
$17,361. A minimum of $2,000 per quarter is needed to cover expenses.
Thus in the next year the Company will require $25,361 to cover both
new expenses and preserve working capital. This amount would operate
the Company but leave little or nothing for exploration. The Company
expects to fund itself in the next twelve months by sales of shares.
2. Summary of Significant Accounting Principles
a) Year End
The Company's year end is June 30.
b) Basis of Accounting
These financial statements are prepared in conformity with
accounting principles generally accepted in the United States and
are presented in US dollars.
c) Use of Estimates
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity
of three months or less at the time of issuance to be cash
equivalents.
e) Long-Lived Assets
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" establishes a single accounting model for long-lived
assets to be disposed of by sale including discontinued operations.
SFAS 144 requires that these long-lived assets be measured at the
lower of the carrying amount or fair value less cost to sell,
whether reported in continuing operations or discontinued
operations.
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 and sums owed to a related party approximate fair value due to the
relatively short maturity of these instruments.
j) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes
standards for the reporting and display of comprehensive loss and
its components in the financial statements. As at March 31, 2004 and
2003, the Company has no items that represent comprehensive loss
and, therefore, has not included a schedule of comprehensive loss in
the financial statements.
k) Interim Financial Statements
These interim unaudited financial statements have been prepared on
the same basis as the annual financial statements and in the opinion
of management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or
for any future period.
l) Reclassifications
Certain amounts in the prior period financial statements have been
reclassified to conform to the current year presentation.
m) Recent Accounting Pronouncements
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). The requirements of
SFAS No. 150 apply to issuers' classification and measurement of
freestanding financial instruments, including those that comprise
more than one option or forward contract. SFAS No. 150 does not
apply to features that are embedded in a financial instrument that
is not a derivative in its entirety. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatory
redeemable financial instruments of non-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 did not have a material effect on the
Company's results of operations or financial position.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure", which amends
SFAS No. 123 to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 expands
the disclosure requirements of SFAS No. 123 to require more
prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results.
The transition provisions of SFAS No. 148 are effective for fiscal
years ended after December 15, 2002. The disclosure provisions of
SFAS No. 148 are effective for financial statements for interim
periods beginning after December 15, 2002. The transition provisions
do not currently have an impact on the Company's financial position
and results of operations as the Company currently has no stock-
based employee compensation.
In June, 2002, FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". The provisions of this
Statement are effective for exit or disposal activities that are
initiated after December 31, 2002, with early application
encouraged. This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in
a Restructuring)". This Statement requires that a liability for a
cost associated with an exit or disposal activity be recognized when
the liability is incurred. The Company adopted SFAS No. 146 on
January 1, 2003. The effect of adoption of this standard on the
Company's results of operations and financial position was not
material.
FASB has also issued SFAS No. 145, 147 and 149 but they will not
have any relationship to the operations of the Company therefore a
description of each and their respective impact on the Company's
operations have not been disclosed.
3. Mineral Properties
In February 2001, the Company, through an unrelated third party,
acquired 100% of the rights, title and interest in six mining claims
situated in the Mugwump property, Rocky Creek Valley, in the Province
of British Columbia, Canada. Title to the claims has been conveyed to
the Company via an unrecorded deed. The Company has assigned no value
to these claims, as there is no evidence showing proven and probable
reserves.
4. Related Party Transactions
a) The Company occupies office space provided by a company whose
former Vice-President and director is the President of the Company.
Monthly rental is determined by usage. Due to the minimal operations
of the Company, no rent has been charged for the nine months ended
March 31, 2004 (2003 - $8,553).
b) The President of the Company is owed $15,605 at March 31,2004
for payment of expenses on behalf of the Company. This amount is non-
interest bearing, unsecured and due on demand.
5. Common Stock
On February 4, 2004, the Company issued five additional common shares
for each one common share outstanding effective as of the record date
of February 2, 2004. All per share amounts have been retroactively
adjusted to reflect the stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended 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 March 31, 2004 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 March 31, 2004, the Company had a working capital deficit of $17,361. A
minimum of $2,000 per quarter is needed to cover expenses. Thus in the
next year the Company will require $25,361 to cover both new expenses and
preserve working capital. This amount would operate the Company but leave
little or nothing for exploration. The Company expects to fund itself in
the next twelve months by sales of shares
FACTORS THAT MAY AFFECT FUTURE RESULTS
The ability of the Company to continue to grow and expand its business is
highly dependent upon the ability of the Company to continue to raise
external financing, from the sale of equity and/or the incurrence of
debt. If the Company were unable to obtain debt and/or equity financing
upon terms that were sufficiently favorable to the Company, or at all,
it would have a materially adverse impact upon the ability of the Company
to continue to expand its business and operations, or to implement its
business plan as now contemplated by the Company.
RELIANCE ON KEY MANAGEMENT
The success of the Company is highly dependent upon the continued services
of Carlo Civelli, its President, Treasurer, 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)
Date: May 14, 2004
/s/
By: _________________________
Carlo Civelli, President, Treasurer,
Principal Accounting Officer and a
member of the Board Of Directors
INDEX TO EXHIBITS
Exhibit
Number Description of Document
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31 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002