Attached files
file | filename |
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EX-32.2 - Cedar Creek Mines Ltd. | v199513_ex32-2.htm |
EX-31.2 - Cedar Creek Mines Ltd. | v199513_ex31-2.htm |
EX-31.1 - Cedar Creek Mines Ltd. | v199513_ex31-1.htm |
EX-32.1 - Cedar Creek Mines Ltd. | v199513_ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended August 31,
2010
or
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from to ________________ to _______________
Commission
File Number: 333-160552
CEDAR CREEK MINES
LTD.
(Exact
name of Registrant as specified in its charter)
Delaware
|
None
|
(State
or other jurisdiction of incorporation or
organization) |
(I.R.S.
Employer Identification No.)
|
4170
Still Creek Drive, Suite 200
|
|
Burnaby,
British Columbia, Canada
|
V5C
6C6
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(604)
320-7877
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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
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 (§ 229.405 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 ¨
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” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer ¨ (Do not check if
a smaller reporting company)
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Act).
x
Yes ¨
No
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the Registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
¨
Yes ¨
No
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
51,297,026
shares of common stock as of October 1, 2010.
TABLE
OF CONTENTS
USE
OF NAMES
|
1
|
FORWARD-LOOKING
STATEMENTS
|
1
|
PART
I – FINANCIAL INFORMATION
|
2
|
Item
1. Financial Statements
|
2
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operation
|
3
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
6
|
Item
4T. Controls and Procedures
|
6
|
PART
II – OTHER INFORMATION
|
8
|
Item
1. Legal Proceedings
|
8
|
Item
1A. Risk Factors
|
8
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
8
|
Item
3. Defaults Upon Senior Securities
|
8
|
Item
4. [Removed and Reserved]
|
8
|
Item
5. Other Information
|
8
|
Item
6. Exhibits
|
9
|
USE
OF NAMES
In this
Quarterly Report, the terms “Cedar Creek,” “Company,” “we,” or “our,” unless the
context otherwise requires, mean Cedar Creek Mines Ltd. and its
subsidiaries.
FORWARD-LOOKING
STATEMENTS
This
Quarterly Report on Form 10-Q and other reports that we file with the SEC
contain statements that are considered forward-looking
statements. Forward-looking statements give the Company’s current
expectations, plans, objectives, assumptions or forecasts of future
events. All statements other than statements of current or historical
fact contained in this Quarterly Report, including statements regarding the
Company’s future financial position, business strategy, budgets, projected costs
and plans and objectives of management for future operations, are
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “anticipate,” “estimate,”
“plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,”
“we believe,” “we intend,” and similar expressions. These statements
are based on the Company’s current plans and are subject to risks and
uncertainties, and as such the Company’s actual future activities and results of
operations may be materially different from those set forth in the
forward-looking statements. Any or all of the forward-looking
statements in this periodic report may turn out to be inaccurate and as such,
you should not place undue reliance on these forward-looking
statements. The Company has based these forward-looking statements
largely on its current expectations and projections about future events and
financial trends that it believes may affect its financial condition, results of
operations, business strategy and financial needs. The
forward-looking statements can be affected by inaccurate assumptions or by known
or unknown risks, uncertainties and assumptions due to a number of factors,
including:
·
|
dependence
on key personnel;
|
·
|
competitive
factors;
|
·
|
the
operation of our business; and
|
·
|
general
economic conditions in the United States and
Canada.
|
This list
is not an exhaustive list of the factors that may affect any of our
forward-looking statements. These and other factors should be considered
carefully and readers should not place undue reliance on our forward-looking
statements.
These
forward-looking statements speak only as of the date on which they are made, and
except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements contained in this periodic report.
1
ITEM
1. FINANCIAL STATEMENTS
CEDAR
CREEK MINES LTD.
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
FINANCIAL STATEMENTS
AUGUST
31, 2010
2
CEDAR
CREEK MINES LTD.
(AN
EXPLORATION STAGE COMPANY)
INDEX
PAGE
|
||
CONSOLIDATED
BALANCE SHEETS
|
F-2
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
F-3
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
|
F-4
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
F-5
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-6
|
F-1
Cedar
Creek Mines Ltd.
(An
Exploration Stage Company)
Consolidated
Balance Sheets
(Unaudited)
August
31,
|
May
31,
|
|||||||
|
2010
|
2010
|
||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 9,471 | $ | 13,776 | ||||
Total
Current Assets
|
9,471 | 13,776 | ||||||
Property
and Equipment, net
|
265 | 424 | ||||||
Total
Assets
|
$ | 9,736 | $ | 14,200 | ||||
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ | 28,443 | $ | 26,062 | ||||
Accrued
liabilities
|
16,111 | 17,811 | ||||||
Due
to related party
|
38,076 | 30,667 | ||||||
Total
Current Liabilities
|
82,630 | 74,540 | ||||||
Stockholders'
Deficit
|
||||||||
Preferred
Stock: $0.00001 par value, 50,000,000 shares
|
||||||||
Authorized;
none issued and outstanding
|
– | – | ||||||
Common
stock: $0.00001 par value, 150,000,000 shares authorized;
|
||||||||
51,297,026
and 51,055,000 shares outstanding at August 31, 2010
|
||||||||
and
May 31, 2010, respectively
|
512 | 510 | ||||||
Additional
paid in capital
|
286,827 | 226,323 | ||||||
Common
stock subscribed
|
15,000 | 60,506 | ||||||
Accumulated
deficit during the exploration stage
|
(375,233 | ) | (347,679 | ) | ||||
Total
Stockholders' Deficit
|
(72,894 | ) | (60,340 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 9,736 | $ | 14,200 |
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
F-2
Cedar
Creek Mines Ltd.
(An
Exploration Stage Company)
Consolidated
Statements of Operations
(Unaudited)
For the
|
For the
|
For the Period
|
||||||||||
Three Months
Ended
|
Three Months
Ended
|
April 3, 2008
(Inception) to
|
||||||||||
August 31,
|
August 31,
|
August 31,
|
||||||||||
2010
|
2009
|
2010
|
||||||||||
OPERATING
EXPENSES
|
||||||||||||
Management
fees
|
7,500 | 7,500 | 78,815 | |||||||||
Professional
fees
|
11,957 | 38,305 | 197,796 | |||||||||
General
and administrative
|
8,097 | 9,010 | 92,937 | |||||||||
Incorporation
cost
|
– | – | 671 | |||||||||
Mineral
property costs
|
– | – | 5,014 | |||||||||
Total
operating expenses
|
27,554 | 54,815 | 375,233 | |||||||||
NET
LOSS
|
$ | (27,554 | ) | $ | (54,815 | ) | $ | (375,233 | ) | |||
NET
LOSS PER COMMON SHARE
|
||||||||||||
Basic
and Diluted
|
(0.00 | ) | (0.00 | ) | ||||||||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
51,200,000 | 51,015,000 |
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
F-3
Cedar
Creek Mines Ltd.
(An
Exploration Stage Company)
Consolidated
Statements of Changes in Stockholders' Equity (Deficit)
For the
three months ended August 31, 2010
(Unaudited)
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Common Stock
|
Additional
|
Common
|
During
|
|||||||||||||||||||||
$0.00001 Par Value
|
Paid in
|
Stock
|
Exploration
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Subscribed
|
Stage
|
Total
|
|||||||||||||||||||
Balance
as of May 31, 2010
|
51,055,000 | $ | 510 | $ | 226,323 | $ | 60,506 | $ | (347,679 | ) | $ | (60,340 | ) | |||||||||||
July
7, 2010 – common shares
|
||||||||||||||||||||||||
Issuance
of subscribed stock at $0.25 per share
|
242,026 | 2 | 60,504 | (60,506 | ) | – | – | |||||||||||||||||
Common
stock subscribed
|
– | – | – | 15,000 | – | 15,000 | ||||||||||||||||||
Net
loss for period
|
– | – | – | – | (27,554 | ) | (27,554 | ) | ||||||||||||||||
Balance
as of August 31, 2010 (Unaudited)
|
51,297,026 | $ | 512 | $ | 286,827 | $ | 15,000 | $ | (375,233 | ) | $ | (72,894 | ) |
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
F-4
Cedar
Creek Mines Ltd.
(An
Exploration Stage Company)
Consolidated
Statements of Cash Flows
(Unaudited)
For
the
|
For
the
|
For
the Period
|
||||||||||
Three
Months
Ended
|
Three
Months
Ended
|
April
3, 2008
(Inception)
to
|
||||||||||
August
31,
|
August
31,
|
August
31,
|
||||||||||
2010
|
2009
|
2010
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
loss
|
$ | (27,554 | ) | $ | (54,815 | ) | $ | (375,233 | ) | |||
Adjustments
to reconcile net loss to cash used by operating
activities:
|
||||||||||||
Depreciation
|
159 | 159 | 1,459 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Prepaid
expenses
|
– | 8,937 | – | |||||||||
Accounts
payable
|
2,381 | 20,553 | 27,972 | |||||||||
Accrued
liabilities
|
(1,700 | ) | (8,350 | ) | 16,111 | |||||||
Employee
advances
|
– | – | 5,600 | |||||||||
Net
cash used by operating activities
|
(26,714 | ) | (33,516 | ) | (324,091 | ) | ||||||
Cash
flows from investing activities
|
||||||||||||
Acquisition
of subsidiary
|
– | – | 80,830 | |||||||||
Net
cash provided by investing activities
|
– | – | 80,830 | |||||||||
Cash
flows from financing activities
|
||||||||||||
Issuance
of shares
|
– | 38,250 | 112,900 | |||||||||
Common
stock subscribed
|
15,000 | (26,750 | ) | 102,256 | ||||||||
Advances
from related party
|
7,409 | 128 | 37,576 | |||||||||
Net
cash provided by financing activities
|
22,409 | 11,628 | 252,732 | |||||||||
Net
increase (decrease) in cash
|
(4,305 | ) | (21,888 | ) | 9,471 | |||||||
Cash
and cash equivalents, beginning of period
|
13,776 | 26,406 | – | |||||||||
Cash
and cash equivalents, end of period
|
$ | 9,471 | $ | 4,518 | $ | 9,471 | ||||||
Supplemental
Disclosures
|
||||||||||||
Interest
paid
|
$ | – | $ | – | $ | – | ||||||
Income
tax paid
|
$ | – | $ | – | $ | – |
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
F-5
Cedar
Creek Mines Ltd.
(An
Exploration Stage Company)
Notes to
Consolidated Financial Statements
(Amounts
and disclosures as at and for the three months ended August 31, 2010 are
unaudited)
NOTE
1 – BASIS OF PRESENTATION
The
unaudited interim consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q of Article 10 of
Regulations S-X in the United States of America and are presented in United
States dollars. They do not include all information and footnotes required by
United States generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no material
changes in the information disclosed in the notes to the consolidated financial
statements for the year ended May 31, 2010 included in the Company’s Annual
Report on Form 10-K filed with the Securities and Exchange
Commission.
The
interim unaudited consolidated financial statements should be read in
conjunction with those consolidated financial statements included in Form 10-K.
In the opinion of Management, all adjustments considered necessary for fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the three months ended August 31, 2010 are not necessarily
indicative of the results that may be expected for the year ending May 31,
2011.
NOTE
2 – GOING CONCERN
These
consolidated 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 never 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 the attainment of
profitable operations. As at August 31, 2010, the Company has accumulated losses
of $375,233 since inception. These factors raise substantial doubt regarding the
Company’s ability to continue as a going concern. These consolidated 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.
NOTE
3 – DUE TO RELATED PARTY
|
a)
|
At
August 31, 2010, the Company is indebted to the President of the Company
for $38,076 (May 31, 2010 – $30,667) for expenses paid for on behalf of
the Company, which is non-interest bearing, unsecured and due on
demand.
|
|
b)
|
During
the period ended August 31, 2010, the Company expensed $7,500 (2009 –
$7,500) for management services provided by the President of the
Company.
|
NOTE
4 – COMMON STOCK
|
a)
|
On
July 7, 2010, the Company issued 242,026 common shares at a price of $0.25
per share for cash proceeds of $60,506 which was included in common stock
subscribed at May 31, 2010.
|
|
b)
|
On
August 6, 2010, the Company received subscriptions of 60,000 shares of
common stock.at $0.25 per share for cash proceeds of
$15,000.
|
NOTE
5 – SUBSEQUENT EVENT
On
September 3, 2010, the Company received subscriptions of 32,000 common shares at
$0.25 per share for cash proceeds of $8,000.
F-6
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
You
should read the following plan of operation together with our financial
statements and related notes appearing elsewhere in this Quarterly
Report. This plan of operation contains forward-looking statements
that involve risks, uncertainties, and assumptions. The actual
results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors
Overview
Cedar
Creek Mines Ltd. is an exploration stage company in the business of mineral
resource exploration. We were incorporated as a Delaware company on April 3,
2008. We have one wholly owned subsidiary, Cedar Creek Mines Inc.
(“CCMI”), incorporated pursuant to the laws of the Province of British Columbia,
Canada, on April 27, 2007, which we acquired on May 16,
2008. However, on February 23, 2010, we changed the name of our
wholly owned subsidiary from Cedar Creek Mines Inc. to Cedar Creek Mines
(British Columbia) Inc. Our executive office is located at 4170 Still
Creek Drive, Suite 200, Burnaby, B.C., Canada, V5C 6C6. Our telephone
number is (604) 320-7877. Our fiscal year end is May 31.
We intend
to build our business by acquiring, exploring and developing mineral resource
properties in the United States and Canada. We currently own, through
our wholly owned subsidiary CCMI, an undivided 100% interest in four mineral
claims located near the Similkameen Valley, 25 kilometers south of Keremeos,
British Columbia (the “Leamington Property”). CCMI acquired our
interest in the Leamington Property pursuant to a purchase agreement with Mr.
Ron Schneider dated June 25, 2008. In consideration for this
interest, we paid Mr. Schneider approximately $2,914. Our specific
exploration plan for the Leamington Property, along with information regarding
its location, accessibility, geology and history, is available under the
headings “Item 1 - Business”
and “Item 2 -
Properties” in our Form 10-K filed on EDGAR on September 13, 2010, and
which is incorporated herein by reference.
Our
project is at the exploration stage and there is no guarantee that any of our
mineral claims contain a commercially viable ore body. We have not presently
determined if the Leamington Property contains mineral reserves that are
economically recoverable, and we must complete an exploration program on the
claims before we can make such a determination. We will require additional
financing to carry out any exploration program, and there is no guarantee that
we will be able to secure the necessary funds to do so.
We have
only recently begun operations. We have not generated any revenues from our
business activities and we do not expect to generate revenues for the
foreseeable future. For the next 12 months we plan to spend approximately
$347,200 to maintain our operations, carry out the first phase of an exploration
program on the Leamington Property and acquire interests in other exploration
stage properties in Canada and the United States. Since our
inception, we have incurred operational losses.
Plan
of Operations
Our
registered independent 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 12 months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we locate mineral deposits and begin removing and selling minerals. There is no
assurance we will ever reach this point. Accordingly, we must raise cash from
sources other than the sale of minerals found on the property and any other
acquired properties. Thus, cash must be raised from other sources. Our only
other source for cash at this time is investments by others in the Company. We
must raise cash to implement our project and stay in business.
3
Our
exploration target is to find mineral bodies containing precious
metals. Our success depends upon finding mineralized
material. This will require a determination by a geological
consultant as to whether any of our mineral properties currently owned and
intended to be acquired contains reserves. Mineralized material is a
mineralized body, which has been delineated by appropriate spaced drilling or
underground sampling to support sufficient tonnage and average grade of minerals
to justify removal. If we don't find mineralized material or we
cannot remove mineralized material, either because we do not have the money to
do it or because it is not economically feasible to do it, we will cease
operations and you will lose your investment.
In
addition, we may not have enough money to complete our exploration of our
Leamington Property in British Columbia, Canada, or any newly acquired
properties. If it turns out that we have not raised enough money to
complete our anticipated exploration program, we will try to raise additional
funds from equity or debt financing. At the present time, we are in
the process of attempting to raise additional money through equity financing and
there is no assurance that we will raise additional money in the
future. If we require additional money and are unable to raise it, we
will have to suspend or cease operations.
We must
conduct exploration to determine what amount of minerals, if any, exist on our
current or any newly acquired properties and if any minerals which are found can
be economically extracted and profitably processed.
Before
mineral retrieval can begin, we must explore for and find mineralized
material. After that has occurred we have to determine if it is
economically feasible to remove the mineralized
material. Economically feasible means that the costs associated with
the removal of the mineralized material will not exceed the price at which we
can sell the mineralized material. We can't predict what that will be
until we find mineralized material.
We do not
claim to have any minerals or reserves whatsoever at this time on any of our
current properties.
If we are
unable to complete any phase of exploration because we do not have enough money,
we will cease operations until we raise more money. If we cannot or
do not raise more money, we will cease operations. If we are required
to cease operations, we will investigate all other opportunities to maintain
shareholder value.
We do not
intend to hire additional employees at this time. All of the work to
be conducted on any newly acquired properties will be conducted by unaffiliated
independent contractors that we will hire. The independent
contractors will be responsible for surveying, geology, engineering,
exploration, and excavation. The geologists will evaluate the information
derived from the exploration and excavation and the engineers will advise us on
the economic feasibility of removing the mineralized material.
Liquidity
and Capital Resources
As of
August 31, 2010, we had total current assets of $9,471 and total assets of
$9,736. Our total current assets as of August 31, 2010 are comprised
of cash in the amount of $9,471. Our total current liabilities as of
August 31, 2010 were $82,630 represented by accounts payable of $28,443, accrued
liabilities of $16,111 and due to related party of $38,076. As a
result, on August 31, 2010, we had a working capital deficiency of
$73,159.
4
Operating
activities used $324,091 in cash for the period from inception (April 3, 2008)
to August 31, 2010. Our net loss of $375,233 was the primary
component of our negative operating cash flow. Investing activities
for the period from inception (April 3, 2008) to August 31, 2010, provided
$80,830 from the acquisition of the subsidiary. Net cash flows
provided by financing activities for the period from inception (April 3, 2008)
to August 31, 2010 was $252,732 represented as proceeds from the sale of our
common stock of $112,900, subscriptions received for the purchase of our common
stock of $102,256 and advances from related party of $37,576.
As of the
date of this quarterly report, we have yet to generate any
revenues.
Results
of Operation
Three
Month Period Ended August 31, 2010
Management
fees: Management fees were $7,500 and $7,500 for the three
months ended August 31, 2010 and 2009, respectively. These fees were
paid pursuant to a management agreement between the Company and the President of
the Company dated April 3, 2008, pursuant to which the President of the Company
provides management services to the Company in consideration for $2,500 per
month.
General and administrative
fees: General and administrative expenses were $8,097 and
$9,010 for the three months ended August 31, 2010 and 2009,
respectively. General and administrative expenses decreased for the
three month period ended August 31, 2010, as the Company was less active during
this period.
Professional
fees: Professional fees were $11,957 and $38,305 for the three
months ended August 31, 2010 and 2009, respectively. The decrease in
professional fees was a result of the decreased activities of the Company during
the three month period ended August 31, 2010.
Net
Loss: Net loss was $27,554 and $54,815 for the three months
ended August 31, 2010 and 2009, respectively. This decrease in net
loss of $27,261 resulted primarily from an decrease in general and
administrative expenses and professional fees of the Company during the three
months ended August 31, 2010.
Off-Balance
Sheet Arrangements
There are
no 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.
Going
Concern
We have
not generated any revenues and are dependent upon obtaining outside financing to
carry out our operations and pursue any acquisition and exploration
activities. If we are unable to raise equity or obtain alternative
financing, we may not be able to continue our operations and our business plan
may fail. You may lose your entire investment.
If our
operations and cash flow improve, we believe that we can continue to
operate. However, no assurance can be given that the actions of our
executive officers and directors will result in profitable operations or an
improvement in our liquidity situation. The threat of our ability to
continue as a going concern will cease to exist only when revenues have reached
a level able to sustain our business operations.
5
As a
“smaller reporting company (as defined by §229.10(f)(1)), we are not required to
provide the information required by this Item.
ITEM
4T. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
specified in the Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by this report, we have carried out an evaluation of the
effectiveness of the design and operation of our company’s disclosure controls
and procedures. Under the direction of our Chief Executive Officer,
we evaluated our disclosure controls and procedures and internal control over
financial reporting and concluded that (i) there continue to be material
weaknesses in the Company’s internal controls over financial reporting, that the
weaknesses constitute a “deficiency” and that this deficiency could result in
misstatements of the foregoing accounts and disclosures that could result in a
material misstatement to the financial statements for the current period that
would not be detected, and (ii) accordingly, our disclosure controls and
procedures were not effective as of August 31, 2010.
Internal
Control Over Financial Reporting
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:
(1)
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
(2)
|
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
|
6
(3)
|
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.
|
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
August 31, 2010 management assessed the effectiveness of our internal control
over financial reporting and 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 August 31, 2010.
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:
(1)
|
we
plan to create a position to segregate duties consistent with control
objectives and plan to increase our personnel resources and technical
accounting expertise within the accounting function when funds are
available to us; and
|
(2)
|
we
plan to appoint one or more outside directors to our Board of Directors
who shall be appointed to the 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.
|
7
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 May 31, 2011.
Changes
in Internal Control Over Financial Reporting
There
have been no changes in our internal control over financial reporting that
occurred during our fiscal quarter of the period covered by this quarterly
report on Form 10-Q that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
We know
of no material, active, or pending legal proceedings against our Company, nor
are we involved as a plaintiff in any material proceeding or pending
litigation. In addition, there are no proceedings in which any of our
Directors, officers, or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our
interest.
ITEM
1A. RISK FACTORS
As a
“smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this Item.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. [REMOVED AND RESERVED]
N/A.
ITEM
5. OTHER INFORMATION
On August
6, 2010, we received gross proceeds of $15,000 from one individual for the
purchase of 60,000 shares of our common stock at a price of $0.25 per
share. In addition, on September 3, 2010, we received gross proceeds
of $8,000 from one individual for the purchase of 32,000 shares of our common
stock at a price of $0.25 per share. We believe that the issuance of
such shares when issued will be exempt from registration under Regulation S
promulgated under the Securities Act of 1933, as amended (the “Act”), and/or
section 4(2) of the Act as the securities will be issued to the individuals
through offshore transactions which were negotiated and consummated outside of
the United States.
8
The funds
received from the investors mentioned above have been or will be used for
general corporate purposes.
ITEM
6. EXHIBITS
(a)
|
Exhibit
List
|
|
31.1
|
Certificate
pursuant to Rule 13a-14(a)
|
|
31.2
|
Certificate
pursuant to Rule 13a-14(a)
|
|
32.1
|
Certificate
pursuant to 18 U.S.C. §1350
|
|
32.2
|
Certificate
pursuant to 18 U.S.C. §1350
|
9
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.
CEDAR
CREEK MINES LTD.
(Registrant)
|
||
Date: October
20, 2010
|
By:
/s/ Guy Brusciano
|
|
Guy
Brusciano
|
||
President,
Chief Executive Officer,
Chief Financial Officer, Treasurer and Director (principal
executive officer and
principal financial officer) |