UNITED STATES
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 April 30, 2009
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission File Number: 333-153510
SILVER BAY RESOURCES INC.
(Exact name of Registrant as specified in its charter)
Nevada 26-2801338
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4133 Stanford Ave. Telephone: 214-368-7746
Dallas, Texas 75225 (Registrant's telephone number,
(Address of principal executive offices) including area code)
Former Name, Address and Fiscal Year, If Changed Since Last Report
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 past 90 days. Yes [X] No [ ]
We had a total of 22,000,000 shares of common stock issued and outstanding at
June 12 2009.
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Transitional Small Business Disclosure Format: Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The interim financial statements included herein are unaudited but reflect, in
management's opinion, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of our financial
position and the results of our operations for the interim periods presented.
Because of the nature of our business, the results of operations for the
quarterly period ended April 30, 2009 are not necessarily indicative of the
results that may be expected for the full fiscal year.
2
SILVER BAY RESOURCES INC.
(An Exploration Stage Company)
Balance Sheets
(Stated in US Dollars)
As of As of
April 30, July 31,
2009 2008
--------- ---------
(Unaudited) (Audited)
Assets
Current assets
Cash $ -- $ (0)
--------- ---------
Total current assets -- (0)
--------- ---------
Total Assets $ -- $ --
========= =========
Liabilities
Current liabilities
Accounts payable $ 2,600 $ 1,440
--------- ---------
Total current liabilities 2,600 1,440
Long Term Liabilities
Shareholder Loan 86,150 60,000
--------- ---------
Total Liabilities 88,750 61,440
--------- ---------
Stockholders' Deficiency
Common Stock, $0.001 par value 75,000,00 Common Shares
Authorized 22,000,000 Shares Issued 22,000 22,000
Additional paid-in capital (2,000) (2,000)
Deficit accumulated during exploration period (108,750) (81,440)
--------- ---------
Total stockholders deficit (88,750) (61,440)
--------- ---------
Total liabilites and stockholders equity $ -- $ --
========= =========
The accompanying condensed notes are an integral
part of these financial statements.
3
SILVER BAY RESOURCES INC.
(An Exploration Stage Company)
Statements of Operations
(Stated in US Dollars)
(Unaudited)
For the three month For the nine month From inception
period ended period ended (June 12, 2008) to
April 30, April 30, April 30,
2009 2009 2009
----------- ----------- -----------
Revenue $ -- $ -- $ --
----------- ----------- -----------
Expenses
Recognition of an Impairment Loss (Mineral Claims) 1,094 1,094 21,094
Accounting & Professional Fees 21 26,216 86,816
Filing Fees -- -- 840
----------- ----------- -----------
Total Expenses 1,115 27,310 108,750
----------- ----------- -----------
Provision for income tax -- -- --
----------- ----------- -----------
Net Income (Loss) $ (1,115) $ (27,310) $ (108,750)
=========== =========== ===========
Basic & Diluted (Loss) per Common Share (0.000) (0.001) (0.005)
----------- ----------- -----------
Weighted Average Number of Common Shares 22,000,000 22,000,000 22,000,000
The accompanying condensed notes are an integral
part of these financial statements.
4
SILVER BAY RESOURCES INC.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
From Inception (June 12, 2008) to April 30, 2009
(Stated in US Dollars)
(Unaudited)
Deficit
Accumulated
Common Stock During
-------------------- Paid in Exploration Total
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Shares issued to founders -
June 12, 2008 at $0.001 per share 22,000,000 $22,000 $(2,000) $ -- $ 20,000
Net (Loss) for period (81,440) (81,440)
----------- ------- ------- --------- --------
Balance, July 31, 2008 22,000,000 22,000 (2,000) (81,440) (61,440)
----------- ------- ------- --------- --------
Net (Loss) for period (27,310) (27,310)
----------- ------- ------- --------- --------
Balance, April 30, 2009 22,000,000 $22,000 $(2,000) $(108,750) $(88,750)
=========== ======= ======= ========= ========
The accompanying condensed notes are an integral
part of these financial statements.
5
SILVER BAY RESOURCES INC.
(An Exploration Stage Company)
Statements of Cash Flows
(Stated in US Dollars)
(Unaudited)
For the three month For the nine month From inception
period ended period ended (June 12, 2008) to
April 30, April 30, April 30,
2009 2009 2009
---------- ---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ (1,115) $ (27,310) $ (108,750)
Recognition of an Impairment Loss (Mineral Claims) -- -- 20,000
Accounts payable 1,115 1,160 2,600
---------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (0) (26,150) (86,150)
INVESTING ACTIVITES
Purchase of mineral claim -- -- (20,000)
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES -- -- (20,000)
FINANCING ACTIVITIES
Shareholder Loan -- 26,150 86,150
Common shares issued to founders @ $0.001 per share -- -- 20,000
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 26,150 106,150
Cash at beginning of period -- -- --
---------- ---------- ----------
CASH AT END OF PERIOD $ (0) $ (0) $ (0)
========== ========== ==========
Cash Paid For:
Interest $ -- $ -- $ --
========== ========== ==========
Income Tax $ -- $ -- $ --
========== ========== ==========
Non-Cash Activities
Shares issued in Lieu of Payment for Service $ -- $ -- $ --
========== ========== ==========
Stock issued for accounts payable $ -- $ -- $ --
========== ========== ==========
Stock issued for notes payable and interest $ -- $ -- $ --
========== ========== ==========
Stock issued for convertible debentures and interest $ -- $ -- $ --
========== ========== ==========
Convertible debentures issued for services $ -- $ -- $ --
========== ========== ==========
Warrants issued $ -- $ -- $ --
========== ========== ==========
Stock issued for penalty on default of convertible debentures $ -- $ -- $ --
========== ========== ==========
Note payable issued for finance charges $ -- $ -- $ --
========== ========== ==========
Forgiveness of note payable and accrued interest $ -- $ -- $ --
========== ========== ==========
The accompanying condensed notes are an integral
part of these financial statements.
6
SILVER BAY RESOURCES INC.
(An Exploration Stage Company)
Condensed Footnotes to the Financial Statements
From Inception to April 30, 2009
(Stated in US Dollars)
NOTE 1 - FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position, results of operations, and cash flows at April 30,
2009, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's July 31, 2008 audited financial statements. The results of
operations for the period ended April 30, 2009 are not necessarily
indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the Company
obtaining adequate capital to fund operating losses until it becomes
profitable. If the Company is unable to obtain adequate capital, it could
be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and
significant shareholders sufficient to meet its minimal operating expenses
and seeking equity and/or debt financing. However management cannot provide
any assurances that the Company will be successful in accomplishing any of
its plans.
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain
profitable operations. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to
continue as a going concern.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS.
The information in this discussion contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements involve risks and uncertainties,
including statements regarding Silver Bay Resources Inc. (the "Company") capital
needs, business strategy and expectations. Any statements contained herein that
are not statements of historical facts may be deemed to be forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as "may", "will", "should", "expect", "plan", "intend",
"anticipate", "believe", "estimate", "predict", "potential" or "continue", the
negative of such terms or other comparable terminology. Actual events or results
may differ materially. In evaluating these statements, you should consider
various factors, including the risks outlined below, and, from time to time, in
other reports the Company files with the SEC. These factors may cause the
Company's actual results to differ materially from any forward-looking
statement. The Company disclaims any obligation to publicly update these
statements, or disclose any difference between its actual results and those
reflected in these statements. The information constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.
As used in this quarterly report, the terms "we," "us," "our," and "our company"
mean Silver Bay Resources Inc. unless otherwise indicated. All dollar amounts in
this quarterly report are in U.S. dollars unless otherwise stated.
OVERVIEW.
Silver Bay Resources Inc. ("Silver Bay" or the "Company") was organized under
the laws of the State of Nevada on June 12, 2008, to explore mining claims and
property in North America.
The Company has staked one MTO mineral claim containing 12 cell claim units
totaling 248.686 hectares on the shore of Jervis Inlet on Deserted Bay,
approximately 100 km northwest of Vancouver, BC, and 65 km north of Sechelt, BC.
We refer to these mining claims as the Silver Bay Property.
We are an exploration stage company and we have not realized any revenues to
date. We do not have sufficient capital to enable us to commence and complete
our exploration program. We will require financing in order to conduct the
exploration program described in the section entitled, "Business of the Issuer."
We are not a "blank check company," as we do not intend to participate in a
reverse acquisition or merger transaction. A "blank check company" is defined by
securities laws as a development stage company that has no specific business
plan or purpose or has indicated that its business plan is to engage in a merger
or acquisition with an unidentified company or companies, or other entity or
person.
RESULTS OF OPERATIONS FOR THE PERIOD ENDED APRIL 30, 2009.
The accompanying financial statements show that the Company has incurred a net
loss of $1,115 for the three month period ended April 30, 2009 and has not yet
generated any revenues that can offset operating expenses. We anticipate that we
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will not earn revenues until such time as we have entered into commercial
production, if any, of our mineral properties. We are presently in the
exploration stage of our business and we can provide no assurance that we will
discover commercially exploitable levels of mineral resources on our properties,
or if such resources are discovered, that we will enter into commercial
production of our mineral properties.
LIQUIDITY AND FINANCIAL CONDITION.
Based on our current operating plan, we do not expect to generate revenue that
is sufficient to cover our expenses for at least the next year. In addition, we
do not have sufficient cash and cash equivalents to execute our operations for
the next year. We will need to obtain additional financing to operate our
business for the next twelve months. We will raise the capital necessary to fund
our business through a private placement and public offering of our common
stock. Additional financing, whether through public or private equity or debt
financing, arrangements with shareholders or other sources to fund operations,
may not be available, or if available, may be on terms unacceptable to us. Our
ability to maintain sufficient liquidity is dependent on our ability to raise
additional capital. If we issue additional equity securities to raise funds, the
ownership percentage of our existing shareholders would be reduced. New
investors may demand rights, preferences or privileges senior to those of
existing holders of our common stock. Debt incurred by us would be senior to
equity in the ability of debt holders to make claims on our assets. The terms of
any debt issued could impose restrictions on our operations. If adequate funds
are not available to satisfy either short or long-term capital requirements, our
operations and liquidity could be materially adversely affected and we could be
forced to cease operations.
OFF-BALANCE SHEET ARRANGEMENTS.
We have no significant 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
stockholders.
INFLATION.
In the opinion of management, inflation has not had a material effect on our
operations.
CONSULTANTS.
The Company currently has no stock option plan.
RESEARCH AND DEVELOPMENT EXPENDITURES.
We have not incurred any research or development expenditures since our
incorporation.
PATENTS AND TRADEMARKS.
We do not own, either legally or beneficially, any patent or trademark.
REGISTRATION STATEMENT.
On September 17, 2008, we filed a S-1 with the Security and Exchange Commission.
The purpose of this registration was to register a class of securities under
Section 12 (g) of the Exchange Act. In October 31, 2008, The Company filed an
amendment to the registration statement on the form S-1.
9
HOLDERS OF OUR COMMON STOCK.
As of March 31, 2009, we had approximately 26 stockholder(s) holding 22,000,000
shares of our common stock.
DIVIDENDS.
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. We would not be able to pay our debts as they become due in the usual
course of business; or
2. Our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
We have not declared any dividends and we do not plan to declare any dividends
in the foreseeable future.
ITEM 3. CONTROLS AND PROCEDURES.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
10
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of March 31, 2009 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of March 31, 2009
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES.
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
11
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2009. Additionally, we plan to test our updated
controls and remediate our deficiencies by December 31, 2009.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING.
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
PART II. OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
We are not a party to any material legal proceedings and to our knowledge, no
such proceedings are threatened or contemplated.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to our security holders for a vote during the period
ending April 30, 2009.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit Number Description of Exhibit
- -------------- ----------------------
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
31.1 Certification by Chief Executive Officer and Chief Financial
Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the
Exchange Act, promulgated pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith
32.1 Certification by Chief Executive Officer and Chief Financial
Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the
Exchange Act and Section 1350 of Chapter 63 of Title 18 of
the United States Code, promulgated pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 filed herewith
- ----------
(1) Filed with the SEC as an exhibit to our Form S-1 Registration Statement
originally filed on September 17, 2008.
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SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: June 12, 2009
Silver Bay Resources Inc.
Signature Title Date
--------- ----- ----
By: /s/ DONALD GARDNER Chief Executive Officer, June 12, 2009
------------------------- Chief Financial Officer,
DONALD GARDNER President, Secretary, Treasurer
and Director (Principal Executive
Officer and Principal Accounting Officer)
13