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 December 31, 2009

 

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

For the Transition Period from ___________ to _____________

 

Commission File Number: 333-131081

 

 

 

CLIFF ROCK RESOURCES CORP.

(Exact name of registrant as specified in its charter)

 

(403) 389-3488

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has 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   o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  
  Yes   o      No   o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes x    No  o

 

Number of common shares outstanding at February 12, 2010:   45,282,000

PART I – FINANCIAL INFORMATION

 

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Balance Sheets

(Expressed in US dollars)

 

 

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Statements of Operations

(Expressed in US dollars)

(unaudited)

 

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Statements of Cash Flows

(Expressed in US dollars)

(unaudited)

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Notes to the Financial Statements

December 31, 2009

(Expressed in US dollars)

(unaudited)

 

 

Cliff Rock Resources Corp. (the “Company”) was incorporated in the State of Nevada on February 4, 2005. The Company has acquired a mineral property in British Columbia, Canada. The Company is an Exploration Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and to determine the existence, discovery and successful exploitation of economically recoverable reserves in its resource properties, confirmation of the Company’s interests in the underlying properties, and the attainment of profitable operations. As at December 31, 2009, the Company has a working capital deficit of $129,068 and has accumulated losses of $215,468 since inception. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is September 30.

The interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended September 30, 2009.

The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at December 31, 2009 and September 30, 2009, and the results of its operations and cash flows for the three months ended December 31, 2009 and 2008. The results of operations for the three months ended December 31, 2009 are not necessarily indicative of the results to be expected for future quarters or the full year.

The preparation of financial statements in conformity with US 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. The Company regularly evaluates estimates and assumptions related to donated expenses, and deferred income tax valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2009 and 2008, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Notes to the Financial Statements

December 31, 2009

(Expressed in US dollars)

(unaudited)

 

2.         Summary of Significant Accounting Policies (continued)

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 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 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. At December 31, 2009, there are no dilutive potential common shares.

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

The Company has been in the exploration stage since its formation on February 4, 2005 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred. The Company assesses the carrying costs for impairment each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then 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. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

As of the date of these financial statements, the Company has incurred only acquisition and exploration costs which have been expensed.

To date, the Company has not established any proven or probable reserves on its mineral properties.

The financial instruments of the Company consist principally of cash, accounts payable and amounts due to related parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, the fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes, as of its inception. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Notes to the Financial Statements

December 31, 2009

(Expressed in US dollars)

(unaudited)

 

 

2.      Summary of Significant Accounting Policies (continued)

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, using the fair value method. The Company has not issued any stock options since its inception.

In May 2009, FASB issued ASC 855, Subsequent Events, which establishes general standards for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material effect on the Company’s financial statements. Refer to Note 8.

In June 2009, the FASB issued guidance now codified as ASC 105, Generally Accepted Accounting Principles, as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s financial statements, but did eliminate all references to pre-codification standards.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

On February 4, 2005, the Company entered into an agreement to acquire a 100% interest in the IQUE mineral claim located on Vancouver Island, British Columbia, Canada, in consideration for $7,500. This mineral claim is subject to a 2.5% net smelter returns royalty (“NSR”) and a 7.5% gross rock revenue royalty. The Company can acquire 1.5% of the NSR for $1,500,000 within twelve months from commencement of commercial production. Advance royalty payments of $25,000 are payable annually commencing on February 4, 2008. As at December 31, 2009, the Company has not made the advance royalty payment due on February 4, 2008. As a result, the Company allowed the claim to lapse and restaked land surrounding the property.

Accrued liabilities of $58,594 (September 30, 2009 - $46,945) consists of professional fees and transfer agent fees.

 

 

Cliff Rock Resources Corp.

(An Exploration Stage Company)

Notes to the Financial Statements

December 31, 2009

(Expressed in US dollars)

(unaudited)

 

 

On April 30, 2009, the Company effected a 3 to 1 forward stock split of the authorized, issued and outstanding common stock. As a result, the authorized share capital increased from 100,000,000 shares of common stock with a par value of $0.001 per share to 300,000,000 shares of common stock with a par value of $0.001 per share. The issued and outstanding shares increased from 15,094,000 shares of common stock to 45,282,000 shares of common stock. All share amounts have been retroactively adjusted for all periods presented.

 

In accordance with ASC 855, Subsequent Events, the Company evaluated subsequent events through February 12, 2010, the date of issuance of the financial statements. During this period the Company did not have any material recognizable subsequent events.

 

 

As used in this quarterly report on Form 10-Q, unless otherwise indicated, the terms “we,” “us,” “our,” “Cliff Rock” and the “Company” all refer to Cliff Rock Resources Corp. All dollar amounts in this quarterly report are expressed in US dollars unless otherwise indicated.

Forward-Looking Statements

This quartterly report on Form 10-Q and the exhibits attached hereto contain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We use words like “expects,” “believes,” “intends,” “anticipates,” “plans,” “targets,” “projects” or “estimates” in this quarterly report. When used, these words and other, similar words and phrases or statements that an event, action or result “will,” “may,” “could,” or “should” result, occur, be taken or be achieved, identify “forward-looking” statements. Such forward-looking statements are subject to certain risks and uncertainties, both known and unknown, and assumptions, including, without limitation, risks related to:

 

The preceding bullets outline some of the risks and uncertainties that may affect our forward-looking statements. For a full description of risks and uncertainties, see the sections entitled “Risk Factors”, “Description of the Business” and “Management’s Discussion and Analysis” in our annual report on Form 10-K for our fiscal year ended September 30, 2009, filed with the SEC on December 31, 2009. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.

Our management has included projections and estimates in this quarterly report, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the Securities and Exchange Commission or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

We qualify all the forward-looking statements contained in this quarterly report on Form 10-Q by the foregoing cautionary statements.

 

 

8

 

Company Overview

 

We were incorporated on February 4, 2005 under the laws of the state of Nevada. Our principal offices are located at 2436 – 27th Street SW, Calgary, Alberta, Canada. Our phone number is (403) 389-3488.

 

We are an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “Accounting and Reporting for Development Stage Enterprises”. Our principal business is the acquisition and exploration of mineral resources. As we have not yet generated or realized any revenues from our business operations, we must raise cash in order to implement our plan of operation and stay in business.

 

Plan of Operation

 

On February 4, 2005 we acquired a 100% interest in one (1) unpatented mineral claim, representing 20 units, known as the IQUE Claim, located on Vancouver Island, British Columbia, Canada from Laurence Stephenson (“Stephenson”), of White Rock, British Columbia, for $7,500. Our plan of operation is to conduct mineral exploration activities on our IQUE Claim (sometimes referred to herein as the “Property”) in order to assess whether it possesses commercially exploitable reserves of copper, gold or other metals. We have not, nor has any predecessor, identified any commercially exploitable reserves of these minerals on the IQUE Claim. We are an exploration stage company and there is no assurance that a commercially viable mineral deposit exists on the IQUE Claim. At this time we are uncertain of the number of mineral exploration phases we will have to conduct before concluding that there are, or are not, commercially viable minerals on the IQUE Claim. Our continued existence and plans for future growth depend on our ability to obtain the capital necessary to operate by issuance of additional equity shares.

 

Under the terms of the acuisition agreement for the IQUE Claim, Stephenson provided a geological report on the IQUE Claim that contained a recommended work program. Phase I of the recommended work program was carried out in January 2006 at a cost of $2,119 (Cdn$2,500) and involved a geological review to develop a detailed geological base model for the IQUE Claim. Due primarily to financial constraints, Phase II of the exploration program has not yet commenced. Since 2007, we have re-staked the IQUE Claim or made cash payments in lieu of work done on the Property at a total cost of Cdn$1,794.60 to maintain IQUE Claim in good standing. The expiry date of the IQUE Claim is February 1, 2011. Should we not have sufficient funds to carry out the Phase II program without raising additional capital, our director has agreed to cover any short-fall in costs. The 2009/2010 snow conditions in British Columbia were and remain such that our geologist now expects that the Phase II exploration program will not be completed before the summer of 2010.

 

The details of Phases II and III of the recommended program are set out below:

 

Budget – Phase II

 

 

When Phase II of the recommended program has been completed, we will review the report on Phases I and II and the engineer’s conclusions and recommendations for a Phase III program, if warranted. Our engineer is of the opinion that both Phases I and II are necessary to complete the initial evaluation of the IQUE Claim and to select drill targets which would be Phase III.

 

 

9

 

Budget – Phase III

 

If warranted, the proposed budget for the Phase III program is as follows:

 

 

The total budget for Phases I (completed), II and III is estimated at $9,115 (Cdn$10,000).

 

Since we are in the exploration stage of our business plan, we have not yet earned any revenues from our planned operations. As of December 31, 2009 we have incurred a total of $11,789 in acquisition and exploration costs for the IQUE Claim.

 

Results of Operations –Three Months Ended December 31, 2009

 

We did not earn any revenues during the three month period ended December 31, 2009. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral property. 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 property, or if such resources are discovered, that we will enter into commercial production.

 

We incurred operating expenses in the amount of $15,920 for the three months ended December 31, 2009 compared to ($64) during the same period ended December 31, 2008. Operating expenses consisted of general and administrative expenses of $11,699 ($6,283 – 2008) and donated services and expenses of $2,000 ($2,000 – 2008). We had a foreign exchange loss of $1,704 during the three months ended December 31, 2009 compared to foreign exchange gain of $8,347 for the same period in 2008. We incurred $517 in mineral property costs during the three month period ended December 31, 2009 ($0 – 2008).

 

We incurred a net loss in the amount of $15,920 for the three months ended December 31, 2009 compared to net income of $64 for the same period in 2008.

 

Our president provides management services and office premises to the Company valued at $500 and $1,500 per quarter, respectively. During the period ended December 31, 2009, donated services of $500 (2008 - $500) and donated rent of $1,500 (2008 - $1,500) were charged to operations.

 

As at December 31, 2009:

 

 

 

 

 

10

 

 

 

On April 30, 2009, we completed a forward stock split of our common stock on a ratio of three shares for every one share issued and outstanding on the record date. The record date of the forward stock split was April 21, 2009, the payment date of the forward split was on April 29, 2009, and the ex-dividend date of the forward split was April 30, 2009.

Liquidity and Capital Resources

 

There is limited financial information about our company upon which to base an evaluation of our performance. We are an exploration stage company and have not generated any revenues from operations. We have not declared or paid any cash dividends on our shares since incorporation and do not anticipate doing so in the foreseeable future.

 

As at December 31, 2009 we had cash of $9, total liabilities of $129,077, a working capital deficit of $129,068 and an accumulated deficit since inception on February 4, 2005 of $215,468. As at our year end of September 30, 2009, we had cash of $9, total liabilities of $115,157, a working capital deficiat of $115,146, and an accumlated deficit since inception of $199,548.

 

Since we have not yet earned any revenues from our planned operations, our recurring losses and negative cash flow from operations raise substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent upon continued financial support from our shareholders, our ability to obtain necessary financing to continue operations, and the attainment of profitable operations. We can give no assurance that future financing will be available to us on acceptable terms if at all or that we will attain profitability. Unprecedented disruptions in the credit and financial markets in the past eighteen months have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for us to obtain, or increase our cost of obtaining, capital and financing for our operations. If we are not able to obtain financing or generate sufficient revenues and cash flows, we will be unable to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Polcies

 

Mineral Property Costs

 

We have been in the exploration stage since formation on February 4, 2005 and have not yet realized any revenues from planned operations. We are primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred. We assesse the carrying costs for impairment each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then 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. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

 

As of the date of these financial statements, we have incurred only acquisition and exploration costs which have been expensed.

 

To date, we have not established any proven or probable reserves on our mineral properties.

 

 

11

 

 

 

Stock-based Compensation

 

Our records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, using the fair value method. We have not issued any stock options since its inception.

 

 

Not applicalbe.

 

 

At the end of the period covered by this report on Form 10-Q for the three months ended December 31, 2009, an evaluation was carried out by the Company’s President and Treasurer, who is our principal executive officer and principal financial and accounting officer, of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation the President and Treasurer has concluded that the Company’s disclosure controls and procedures were adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our President and Treasurer, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

12

 

 

PART II – OTHER INFORMATION

 

ITEM 1.   Legal Proceedings

 

None.

 

ITEM 1A.   Risk Factors

 

Not applicable.

 

ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3.   Defaults Upon Senior Securities

 

None.

 

ITEM 4.   Submission of Matters to a Vote of Security Holders

 

None.

 

ITEM 5.   Other Information

 

None.

 

ITEM 6.   Exhibits

 

 

13

 

SIGNATURES

 

Pursuant to the requirements 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 on February 16, 2010.

 

 

 

By   /s/ Michael Raymont                                                 

 and Principal Financial and Accounting Officer

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

 

 

 

 

 

 

 

14

 

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