U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2009
Commission File Number 333-145898
RED SUN MINING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
200 W. Columbine Avenue, Suite I-2
Santa Ana, CA 92707
(Address of principal executive offices, including zip code)
(760) 413-9275
(Telephone number, including area code)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the last 90 days. YES [X] 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,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 or the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,000,000 shares as of February 9,
2009.
ITEM 1. FINANCIAL STATEMENTS
The un-audited quarterly financial statements for the 3 months ended January 31,
2009, prepared by the company, immediately follow.
2
Red Sun Mining, Inc.
(An Exploration Stage Company)
Balance Sheet
- --------------------------------------------------------------------------------
As of As of
January 31, July 31,
2009 2008
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 2,603 $ 14,337
-------- --------
TOTAL CURRENT ASSETS 2,603 14,337
OTHER ASSETS -- --
-------- --------
TOTAL OTHER ASSETS -- --
-------- --------
TOTAL ASSETS $ 2,603 $ 14,337
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 275 $ 275
Advances from Officers 1,500 1,500
-------- --------
TOTAL CURRENT LIABILITIES 1,775 1,775
TOTAL LIABILITIES 1,775 1,775
STOCKHOLDERS' EQUITY
Common stock, ($0.0001 par value, 100,000,000 shares
authorized; 3,000,000 shares issued and outstanding
as of January 31, 2009 and July 31, 2008 300 300
Additional paid-in capital 37,200 37,200
Deficit accumulated during Development stage (36,672) (24,938)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 828 12,562
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 2,603 $ 14,337
======== ========
See Notes to Financial Statements
3
Red Sun Mining, Inc.
(An Exploration Stage Company)
Statement of Operations
- --------------------------------------------------------------------------------
June 28, 2007
Three Months Six Months Three Months Six Months (inception)
Ended Ended Ended Ended through
January 31, January 31, January 31, January 31, January 31,
2009 2009 2008 2008 2009
---------- ---------- ---------- ---------- ----------
REVENUES
Revenues $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
TOTAL REVENUES -- -- -- -- --
GENERAL & ADMINISTRATIVE EXPENSES 2,372 11,734 2,650 7,855 36,672
---------- ---------- ---------- ---------- ----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES (2,372) (11,734) (2,650) (7,855) (36,672)
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (2,372) $ (11,734) $ (2,650) $ (7,855) $ (36,672)
========== ========== ========== ========== ==========
BASIC EARNINGS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,000,000 3,000,000 3,000,000 3,000,000
========== ========== ========== ==========
See Notes to Financial Statements
4
Red Sun Mining, Inc.
(An Exploration Stage Company)
Statement of Cash Flows
- --------------------------------------------------------------------------------
June 28, 2007
Six Months Six Months (inception)
Ended Ended through
January 31, January 31, January 31,
2009 2008 2009
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(11,734) $ (7,855) $(36,672)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Increase(Decrease) in Accounts payable and accrued liabilities -- -- 275
Increase(Decrease) in Advance from Officers -- 1,500 1,500
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (11,734) (6,355) (34,897)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock -- 100 300
Additional paid-in capital -- 24,900 37,200
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -- 25,000 37,500
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (11,734) 18,645 2,603
CASH AT BEGINNING OF PERIOD 14,337 4,687 --
-------- -------- --------
CASH AT END OF PERIOD $ 2,603 $ 23,332 $ 2,603
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
See Notes to Financial Statements
5
Red Sun Mining, Inc.
(An Explortion Stage Company)
Notes to Financial Statements
January 31, 2009
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Red Sun Mining, Inc. (the Company) was incorporated on June 28, 2007 under the
laws of the State of Delaware. The Company is beneficial owner of Nob 1-4
Mineral Claims, Monte Cristo Range Area, "Gilbert" 7-1/2' Map, Esmeralda County,
Nevada. The Company is primarily engaged in the acquisition and exploration of
mining properties.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its planned operations. Upon the location of
commercially mineable reserves, the Company plans to prepare for mineral
extraction and enter the development stage.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company reports revenues and expenses using the accrual method of accounting
for financial and tax reporting purposes.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing these financial
Statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues
and expenses.
PRO FORMA COMPENSATION EXPENSE
No stock options have been issued by Red Sun Mining, Inc. Accordingly, no pro
forma compensation expense is reported in these financial statements.
MINERAL PROPERTY ACQUISITION AND EXPLORATION COSTS
The company expenses all costs related to the acquisition and exploration of
mineral properties in which it has secured exploration rights prior to
establishment of proven and probable reserves. To date, the Company has not
established the commercial feasibility of any exploration prospects; therefore,
all costs are being expensed.
DEPRECIATION, AMORTIZATION AND CAPITALIZATION
The Company records depreciation and amortization when appropriate using both
straight-line and declining balance methods over the estimated useful life of
the assets (five to seven years). Expenditures for maintenance and repairs are
charged to expense as incurred. Additions, major renewals and replacements that
6
Red Sun Mining, Inc.
(An Explortion Stage Company)
Notes to Financial Statements
January 31, 2009
- --------------------------------------------------------------------------------
increase the property's useful life are capitalized. Property sold or retired,
together with the related accumulated depreciation is removed from the
appropriated accounts and the resultant gain or loss is included in net income.
INCOME TAXES
The Company accounts for its income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under
Statement 109, a liability method is used whereby deferred tax assets and
liabilities are determined based on temporary differences between basis used for
financial reporting and income tax reporting purposes. Income taxes are provided
based on tax rates in effect at the time such temporary differences are expected
to reverse. A valuation allowance is provided for certain deferred tax assets if
it is more likely than not, that the Company will not realize the tax assets
through future operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial accounting Standards statements No. 107, "Disclosures About Fair Value
of Financial Instruments", requires the Company to disclose, when reasonably
attainable, the fair market values of its assets and liabilities which are
deemed to be financial instruments. The Company's financial instruments consist
primarily of cash and certain investments.
INVESTMENTS
Investments that are purchased in other companies are valued at cost less any
impairment in the value that is other that temporary in nature.
PER SHARE INFORMATION
The Company computes per share information by dividing the net loss for the
period presented by the weighted average number of shares outstanding during
such period.
NOTE 3 - PROVISION FOR INCOME TAXES
The provision for income taxes for the period ended January 31, 2009 represents
the minimum state income tax expense of the Company, which is not considered
significant.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is not presently involved in any litigation.
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Red Sun Mining, Inc.
(An Explortion Stage Company)
Notes to Financial Statements
January 31, 2009
- --------------------------------------------------------------------------------
NOTE 5 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, "Accounting for
Uncertainty in Income Taxes--An Interpretation of FASB Statement No. 109" (FIN
48). This Interpretation clarifies the accounting for uncertainty in income
taxes recognized in a company's financial statements. FIN 48 requires companies
to determine whether it is "more likely than not" that a tax position will be
sustained upon examination by the appropriate taxing authorities before any part
of the benefit can be recorded in the financial statements. It also provides
guidance on the recognition, measurement and classification of income tax
uncertainties, along with any related interest and penalties. FIN 48 will also
require significant additional disclosures. This Interpretation will be
effective for fiscal years beginning after December 15, 2006. We will implement
this Interpretation in the first quarter of 2007 on a prospective basis. We are
currently evaluating the potential impact this Interpretation will have on our
financial position and results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157), which provides guidance on how to measure assets and liabilities that use
fair value. SFAS 157 will apply whenever another US GAAP standard requires (or
permits) assets or liabilities to be measured at fair value but does not expand
the use of fair value to any new circumstances. This standard also will require
additional disclosures in both annual and quarterly reports. SFAS 157 will be
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and will be adopted by us beginning in the first quarter of
2008. We are currently evaluating the potential impact this standard may have on
our financial position and results of operations, but do not believe the impact
of the adoption will be material.
In September 2006, the SEC staff issued Staff Accounting Bulletin (SAB) No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 was
issued in order to eliminate the diversity of practice in how public companies
quantify misstatements of financial statements, including misstatements that
were not material to prior years' financial statements. We will initially apply
the provisions of SAB 108 in connection with the preparation of our annual
financial statements for the year ending December 31, 2006. We have evaluated
the potential impact SAB 108 may have on our financial position and results of
operations and do not believe the impact of the application of this guidance
will be material.
8
Red Sun Mining, Inc.
(An Explortion Stage Company)
Notes to Financial Statements
January 31, 2009
- --------------------------------------------------------------------------------
NOTE 6 - GOING CONCERN
Future issuances of the company's equity or debt securities will be required in
order for the company to continue to finance its operations and continue as a
going concern. The Company's present revenues are insufficient to meet operating
expenses.
The financial statements of the Company have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and the satisfaction of liabilities in the
normal course of business. The Company has incurred cumulative net losses of $
34,300 since its inception and requires capital for its contemplated operational
and marketing activities to take place. The Company's ability to raise
additional capital through the future issuances of common stock is unknown. The
obtainment of additional financing, the successful development of the Company's
contemplated plan of operations, and its transition, ultimately, to the
attainment of profitable operations are necessary for the Company to continue
operations. The ability to successfully resolve these factors raise substantial
doubt about the Company's ability to continue as a going concern.
The financial statements of the Company do not include any adjustments that may
result from the outcome of these aforementioned uncertainties.
NOTE 7 - RELATED PARTY TRANSACTIONS
Matthew Taylor, President of the Company, may in the future become involved in
other business opportunities as they become available, thus he may face a
conflict in selecting between the Company and his other business opportunities.
The company has not formulated a policy for the resolution of such conflicts.
Matthew Taylor, President of the Company, was not paid for any underwriting
services that he performed on behalf of the Company with respect to the
Company's SB-2 offering which closed on December 14, 2007. Mr. Taylor has
advanced funds to the Company which are interest free, and the balance due Mr.
Taylor was $1,500 on January 31, 2009.
NOTE 8 - STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
9
Red Sun Mining, Inc.
(An Explortion Stage Company)
Notes to Financial Statements
January 31, 2009
- --------------------------------------------------------------------------------
On July 11, 2007, the Company issued a total of 2,000,000 shares of common stock
to Mr. Taylor, a director of the company, for cash in the amount of $0.00625 per
share for a total of $12,500.
On December 14, 2007, the Company issued a total of 1,000,000 shares of common
stock to 28 individuals for cash in the amount of $.025 per share for a total of
$25,000.
As of January 31, 2009, the Company had 3,000,000 shares of common stock issued
and outstanding.
NOTE 9 - STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of January 31, 2009:
Common stock, $0.0001 par value: 100,000,000 shares authorized; 3,000,000 shares
issued and outstanding.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of this 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 our 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. We are an exploration stage company
and have not yet generated or realized any revenues.
BUSINESS
We are an exploration stage company with no revenues and a limited operating
history. Our independent auditor has issued an audit opinion which includes a
statement expressing substantial doubt as to our ability to continue as a going
concern.
We currently own a 100% undivided interest in a mineral property located in
Esmeralda County, Nevada that we call the "Nob Property." There is little
likelihood of our mineral claim containing little or no economic mineralization
or reserves of silver and other minerals. We are presently in the exploration
stage of our business, and we can provide no assurance that any commercially
viable mineral deposits exist on our mineral claims, that we will discover
commercially exploitable levels of mineral resources on our property, or, if
such deposits are discovered, that we will enter into further substantial
exploration programs. Further exploration is required before a final
determination can be made as to whether our mineral claims possess commercially
exploitable mineral deposits. If our claim does not contain any reserves all
funds that we spend on exploration will be lost.
In July, 2007, we purchased a 100% undivided interest in a mineral claim known
as the Nob 1-4 Mineral Claims consisting of four located mineral claims (20.66
acres each) in one contiguous group located in the Monte Cristo Range Area,
Esmeralda County, Nevada. The Nob Property lies in the west central part of the
State of Nevada northwest of the town of Tonopah and is accessible from Highway
95 by traveling north of the Town of Tonopah, Nevada for 21 miles and then
generally to the northwest for approximately 14.5 miles to the property. The
claims were recorded with the County and the Bureau of Land Management.
PLAN OF OPERATION
We have completed phase one of our exploration program. Our plan of operation
for the twelve months following the date of this report is to review the
geologist's recommendations and if we determine it is in the best interests of
the company complete phase two of the exploration program on our claims
consisting of detailed prospecting, mapping, soil geochemistry, and magnetometer
and VLF electromagnetic surveys. In addition to the $10,500 we anticipate
spending for the second phase of the exploration program as outlined below, we
anticipate spending an additional $5,000 on professional fees, including fees
payable in connection with complying with reporting obligations and general
administrative costs. Total expenditures over the next 12 months are therefore
expected to be approximately $15,000. If we experience a shortage of funds our
director has agreed to loan the company funds to complete the first two phases
of the exploration program, however he has no legal obligation to do so and the
agreement is not in writing.
The following work program has been recommended by the professional geologist
who prepared the geology report for our Nob 1-4 mineral claims located in the
Monte Cristo Range Area, Esmeralda County, Nevada.
11
The following three phase exploration proposal and cost estimates are offered
with the understanding that consecutive phases are contingent upon positive
(encouraging) results being obtained from each preceding phase and additional
funding for Phase 3:
Phase 1 Detailed Prospecting, mapping and $ 9,500 (completed)
soil geochemistry
Phase 2 Magnetometer and VLF electromagnetic, $10,500
grid controlled surveys over the areas
of interest determined by the Phase 1
survey. Included in this estimated
cost is transportation, travel, accommodation,
board, grid installation, two geophysical
surveys, maps and report
Phase 3 Induced polarization survey over grid $40,000
controlled anomalous area of interest
outlined by Phase 1 and 2 programs.
Hoe or bulldozer trenching, mapping and
sampling of bedrock anomalies. Includes
assays, detailed maps and reports.
-------
TOTAL ESTIMATED COSTS $60,000
=======
The above program costs are management's estimates based upon the
recommendations of the professional mining geologist's report and the actual
project costs may exceed our estimates.
James McLeod, the professional geologist who prepared the geology report on the
Nob 1-4 mining claims, has completed Phase 1 of the exploration program on the
Nob Property with detailed prospecting, mapping and soil geochemistry testing.
The cost of the first phase of exploration was $9,500. In his fieldwork summary
report to the company Mr. McLeod stated that the MMI soil data results of the
GES and the confirmed geological setting are in a number of instances
coincident. He feels the results are interesting enough to recommend further
exploration work be conducted. Management is currently reviewing the geologist's
recommendations to determine whether to proceed with phase two of our
exploration program. The estimated cost of this program is $10,500 and will take
approximately 6 days to complete and an additional one to two months for the
consulting geologist to receive the results from the assay lab and prepare his
report. If we decide to proceed we anticipate commencing the second phase of our
exploration program in Spring, 2009.
We will require additional funding or loans from our director to proceed with
further exploration. At this date, we have no current plans on how to raise the
additional funding. We cannot provide investors with any assurance that we will
be able to raise sufficient funds to proceed with any further work.
RESULTS OF OPERATIONS
We are still in our exploration stage and have generated no revenues to date.
We incurred operating expenses of $2,372 and $2,650 for the three months ended
January 31, 2009 and 2008, respectively. These expenses consisted of general
operating expenses and professional fees incurred in connection with the day to
day operation of our business and the preparation and filing of our periodic
reports. Our net loss from inception through January 31, 2009 was $36,672.
Cash provided by financing activities for the period from inception (June 28,
2007) through January 31, 2009 was $37,500 consisting of $12,500 from the sale
12
of 2,000,000 shares of common stock to a director of the company for $0.00625
per share and $25,000 from the sale of 1,000,000 share of common stock pursuant
to our SB-2 offering. As of January 31, 2009, we had $1,775 in outstanding
current liabilities, $275 in accounts payable and $1,500 owed to the officer and
director of the company, for which there is no specific terms of repayment.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated revenues and no revenues are anticipated until we
begin removing and selling minerals. There is no assurance we will ever reach
that point.
LIQUIDITY AND CAPITAL RESOURCES
Our current cash balance is $2,603. We are an exploration stage company and have
generated no revenue to date. We will require additional funding or loans from
our director to proceed with further exploration.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, 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 such that the material
information required to be included in our Securities and Exchange Commission
reports 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 significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our original Form SB-2
Registration Statement, filed under SEC File Number 333-144279, at the SEC
website at www.sec.gov:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Principal Executive Officer
31.2 Sec. 302 Certification of Principal Financial Officer
32.1 Sec. 906 Certification of Principal Executive Officer
32.2 Sec. 906 Certification of Principal Financial Officer
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) 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.
March 3, 2009 Red Sun Mining, Inc., Registrant
By: /s/ Matthew Taylor
---------------------------------------------
Matthew Taylor, President and Chief Executive
Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
March 3, 2009 Red Sun Mining, Inc., Registrant
By: /s/ Matthew Taylor
---------------------------------------------
Matthew Taylor, President, Secretary and
Treasurer, Chief Financial Officer (Principal
Executive Officer and Principal Accounting
Officer)
14