10-Q 1 g2579.txt QTRLY REPORT FOR THE QTR ENDED 7-31-08 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 JULY 31, 2008 Commission file number 333-145471 GRAY CREEK MINING INC. (Exact name of registrant as specified in its charter) NEVADA (State or other jurisdiction of incorporation or organization) 313 - 6688 Willington Ave. Burnaby, British Columbia, Canada V5H 2V8 (Address of principal executive offices, including zip code) (604) 434-8539 (telephone number, including area code) Val-U-Corp Services, Inc. 1802 North Carson Street, Suite 212 Carson City, NV 89701-9141 (800) 555-0738 (775) 887-0738 (Name and Address of Agent for Service) (Telephone Number) (Fax Number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [X] NO [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 5,250,000 shares as of September 15, 2008. ITEM 1. FINANCIAL STATEMENTS The un-audited quarterly financial statements for the period ended July 31, 2008, prepared by the company, immediately follow. 2 Gray Creek Mining, Inc. (An Exploration Stage Company) Balance Sheet --------------------------------------------------------------------------------
As of As of July 31, April 30, 2008 2008 -------- -------- ASSETS CURRENT ASSETS Cash $ 2,616 $ 8,488 -------- -------- TOTAL CURRENT ASSETS 2,616 8,488 OTHER ASSETS Mining Land 8,000 8,000 -------- -------- TOTAL OTHER ASSETS 8,000 8,000 -------- -------- TOTAL ASSETS $ 10,616 $ 16,488 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Loan from Director $ 20,000 $ 15,000 Accounts Payable 1,350 -------- -------- TOTAL CURRENT LIABILITIES 21,350 15,000 TOTAL LIABILITIES 21,350 15,000 STOCKHOLDERS' EQUITY Common stock, ($0.001 par value, 75,000,000 shares authorized; 5,250,000 shares issued and outstanding as of July 31 and April 30, 2007 respectively 5,250 5,250 Additional paid-in capital 20,250 20,250 Deficit accumulated during Development stage (36,234) (24,012) -------- -------- TOTAL STOCKHOLDERS' EQUITY (10,734) 1,488 -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,616 $ 16,488 ======== ========
See Notes to Financial Statements 3 Gray Creek Mining, Inc. (An Exploration Stage Company) Statement of Operations --------------------------------------------------------------------------------
August 10, 2006 Three Months Three Months (inception) Ended Ended through July 31, July 31, July 31, 2008 2007 2008 ---------- ---------- ---------- REVENUES Revenues $ -- $ -- $ -- ---------- ---------- ---------- TOTAL REVENUES -- -- -- GENERAL & ADMINISTRATIVE EXPENSES 12,222 6,622 36,234 ---------- ---------- ---------- TOTAL GENERAL & ADMINISTRATIVE EXPENSES (12,222) (6,622) (36,234) ---------- ---------- ---------- NET INCOME (LOSS) $ (12,222) $ (6,622) $ (36,234) ========== ========== ========== BASIC EARNINGS PER SHARE $ (0.00) $ (0.00) ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 5,250,000 5,182,500 ========== ==========
See Notes to Financial Statements 4 Gray Creek Mining, Inc. (An Exploration Stage Company) Statement of Cash Flows --------------------------------------------------------------------------------
August 10, 2006 Three Months Three Months (inception) Ended Ended through July 31, July 31, July 31, 2008 2007 2008 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(12,222) $ (6,622) $(36,234) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: Loan from Director 5,000 -- 20,000 Accounts Payable 1,350 -- 1,350 -------- -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (5,872) (6,622) (14,884) CASH FLOWS FROM INVESTING ACTIVITIES Purchase Mining Property -- -- (8,000) -------- -------- -------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- (8,000) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock -- -- 5,250 Additional paid-in capital -- -- 20,250 -------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -- -- 25,500 -------- -------- -------- NET INCREASE (DECREASE) IN CASH (5,872) (6,622) 2,616 CASH AT BEGINNING OF PERIOD 8,488 17,326 -- -------- -------- -------- CASH AT END OF YEAR $ 2,616 $ 10,704 $ 2,616 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during year for: Interest $ -- $ -- $ -- ======== ======== ======== Income Taxes $ -- $ -- $ -- ======== ======== ========
See Notes to Financial Statements 5 GRAY CREEK MINING, INC. (An Exploration Stage Company) Notes to Financial Statements July 31, 2008 (Stated in U.S. Dollars) -------------------------------------------------------------------------------- 1. NATURE AND CONTINUANCE OF OPERATIONS Gray Creek Mining Inc., ("the Company") was incorporated under the laws of the State of Nevada on August 10, 2006, with an authorized capital of 75,000,000 common shares with a par value of $0.001. The Company's year end is April 30th. The Company is in the exploration stage of its resource business. During the year ended April 30, 2007 the Company commenced operations by issuing shares and acquiring a mineral property located in the Province of British Columbia, Canada. The Company has not yet determined whether this property contains reserves that are economically recoverable. The recoverability of costs incurred for acquisition and exploration of the property will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the underlying property, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreement and to complete the development of the property and upon future profitable production or proceeds for the sale thereof. These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $36,234 as of July 31, 2008 and further losses are anticipated in the development of its business raising substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are present in U.S. dollars. EXPLORATION STAGE COMPANY The Company complies with the Financial Accounting Standards Board Statement No. 7, it's characterization of the Company as an exploration stage enterprise. MINERAL INTERESTS Mineral property acquisition, exploration and development costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. The Company has adopted the provisions of SFAS No. 143 "Accounting for Asset Retirement Obligations" which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment, or other disposal of long -lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at July 31, 2008, any potential costs relating to the retirement of the Company's mineral property has not yet been determined. 6 GRAY CREEK MINING, INC. (Notes to Financials) -------------------------------------------------------------------------------- USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with 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 period. Actual results could differ from those estimates. FOREIGN CURRENCY TRANSLATION The financial statements are presented in United States dollars. In accordance with Statement of Financial Accounting Standards No. 52 "Foreign Currency Translation," foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non monetary assets and liabilities are translated at the exchange rates prevailing on the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion the Company is not exposed to significant interest currency or credit risks arising from these financial instruments. ENVIRONMENT COSTS Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probably, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company's commitments to plan of action based on the then known facts. INCOME TAXES The Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At July 31, 2008 a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. BASIC AND DILUTED LOSS PER SHARE The Company computes loss per share in accordance with SFAS No. 128. "Earnings per Share," which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments and, accordingly, basic loss and diluted loss per share are equal. 7 GRAY CREEK MINING, INC. (Notes to Financials) -------------------------------------------------------------------------------- STOCK BASED COMPENSATION In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payments," which replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees." In January 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 107, "Share-Based Payment," which provides supplemental implementation guidance for SFAS No. 123R SFAS No. 123R requires all share based payments to employees , including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. SFAS No. 123R was to be effective for interim or annual reporting periods beginning on or after June 15, 2005, but in April 2005, the SEC issued a rule that will permit most registrants to implement SFAS No. 123R at the beginning of their next fiscal year, instead of the next reporting period as required by SFAS No. 123R. The pro0forma disclosures previously permitted under SFAS No. 123R no longer will be an alternative to financial statement recognition. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation costs and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive options, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS No. 123R, while the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company adopted the modified prospective approach of SFAS No 123R. The Company did not record any compensation expense for the period ended July 31, 2008 because there were no stock options outstanding prior to the adoption or at July 31, 2008. RECENT ACCOUNTING PRONOUNCEMENTS The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances. 3. COMMON STOCK The total number of common shares authorized that my be issued by the Company is 75,000,000 shares with a par value of one tenth of one cent ($0.001) per share and no other class of shares is authorized. The company has issued 5,250,000 shares of common stock for total cash proceeds of $25,500. At July 31, 2008, there were no outstanding stock options or warrants. 4. MINERAL INTERESTS On November 29, 2006, the Company entered into a purchase and sale agreement to acquire a 100% interest in one mineral claim located in the mining division approximately 17 kilometers north of Merritt, British Columbia, Canada for a total consideration of $8,000. The mineral interest is held in trust for the Company by the vendor of the property. Upon request from the Company, the title will be recorded in the name of the Company with the appropriate mining recorder. 8 GRAY CREEK MINING, INC. (Notes to Financials) -------------------------------------------------------------------------------- 5. INCOME TAXES As of July 31, 2008, the Company had a net operating loss carry forwards of approximately $36,234 that may be available to reduce future years' taxable income through 2028. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards. 6. RELATED PARTY TRANSACTIONS Alan Cox, President and Todd Halfnight, Treasurer of the Company may, in the future, become involved in other business opportunities as they become available, thus they may face a conflict in selecting between the Company and their other business opportunities. The company has not formulated a policy for the resolution of such conflicts. While the company is seeking additional capital, Mr. Cox and Mr. Halfnight have advanced funds to the company to pay for any costs incurred by it. These funds are interest free. The balance due Mr. Cox and Mr. Halfnight was $10,000 and $10,000 respectively, on July 31, 2008. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. FORWARD LOOKING STATEMENTS This quarterly report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements. BUSINESS We are an exploration stage company. We are engaged in the acquisition and exploration of mineral properties with a view to exploiting any mineral deposits we discover that demonstrate economic feasibility. We have a 100% interest in three mineral claims known as the Swakum Mountain property. There is no assurance that a commercially viable mineral deposit exists on the property. Further exploration will be required before a final evaluation as to the economic and legal feasibility is determined. Our plan of operation is to conduct exploration work on the Swakum Mountain property in order to ascertain whether it possesses economic quantities of gold and silver. The project area lies within the Thompson Plateau physiographic division of the southern interior of B.C. in moderately rolling terrain between elevations of 1,200 and 1,700 meters above sea level. Access is via the Coquihalla Highway to a point about 20 km north of Merritt and from there via forest roads which lead west from the highway to the property area. There can be no assurance that economic mineral deposits or reserves exist on the Swakum Mountain property until appropriate exploration work is done and an economic evaluation based on such work concludes that production of minerals from the property is economically feasible. Even if we complete our proposed exploration programs on the Swakum Mountain property and they are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit. RESULTS OF OPERATIONS We are an exploration stage company and have generated no revenues. We incurred operating expenses in the amount of $12,222 and $6,622 for the three months ended July 31, 2008 and 2007. The operating expenses were comprised primarily of general and administrative expenses. Our net loss from inception through July 31, 2008 was $36,234. At July 31, 2008, we had total assets of $10,616 consisting of $2,616 in cash and $8,000 in mining land. At the same date we had $21,350 in liabilities consisting of $1,350 in accounts payable and $20,000 in a loan from our directors. We have not attained profitable operations and are dependent upon obtaining financing to pursue exploration activities. For these reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern. 10 The following table provides selected financial data about our company for the period ended July 31, 2008. Balance Sheet Data: 7/31/08 ------------------- ------- Cash $ 2,616 Total assets $ 10,616 Total liabilities $ 21,350 Shareholders' equity $(10,734) LIQUIDITY AND CAPITAL RESOURCES Our cash in the bank at July 31, 2008 was $2,616. Our directors have agreed to advance funds to pay for operating costs and the cost of reclamation of the property should exploitable minerals not be found and we abandon our exploration program and there are no remaining funds in the company. While they have agreed to advance the funds, the agreement is verbal and is unenforceable as a matter of law. During the period ended July 31, 2008 the directors loaned the company $5,000 ($2,500 each). The total amount of the loan is $20,000. We completed an offering of 3,000,000 shares of our common stock at a price of $0.001 per share. Of these shares, 2,000,000 were issued on August 30, 2006 to Alan J. Cox, our President, C.E.O. and director. The remaining 1,000,000 shares were issued on October 5, 2006 to Todd Halfnight, our Secretary, Treasurer, and director. The total amount received from these offerings was $3,000. These shares were issued pursuant to Regulation S of the Securities Act. Appropriate legends were affixed to the stock certificates representing these shares. We completed an offering of 2,250,000 shares of our common stock at a price of $0.01 per share to a total of 30 purchasers on October 14, 2006. The total amount received from this offering was $22,500. We completed this offering pursuant to Regulation S of the Securities Act. PLAN OF OPERATION Our plan of operation for the twelve months to complete the recommended exploration program on the Swakum Mountain property consisting of initial review and field examination. In addition, geophysical and geochemical surveys will be performed on the property. And finally, the data will be evaluated, interpreted and prepared in a report. We anticipate that the program will cost approximately $88,500. To date, we have not commenced exploration on the Swakum Mountain property. In the next 12 months, we also anticipate spending an additional $15,000 on professional fees and administrative expenses, including fees payable in connection with reporting obligations. Total expenditures over the next 12 months are therefore expected to be approximately $103,500. Our cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We may also seek to obtain short-term loans from our directors, although no such arrangement has been made. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing. 11 We do not expect to earn any revenue from operations until we have either commenced mining operations on the Swakum Mountain property or have sold an interest in the property to a third party. Before this occurs, we expect that we will have to complete current recommended exploration on the property, as well as additional exploration recommended by a geologist. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the small business issuer's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. ITEM 4. CONTROLS AND PROCEDURES. Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken. 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS. The following exhibits are included with this filing: Exhibit No. Description ----------- ----------- 3.1 Articles of Incorporation* 3.2 Bylaws* 31.1 Sec. 302 Certification of Chief Executive Officer 31.2 Sec. 302 Certification of Chief Financial Officer 32.1 Sec. 906 Certification of Chief Executive Officer 32.2 Sec. 906 Certification of Chief Financial Officer ---------- * Incorporated by reference and can be found in our original Form SB-2 Registration Statement, filed under SEC File Number 333-145471, at the SEC website at www.sec.gov. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. September 15, 2008 Gray Creek Mining, Inc., Registrant By: /s/ Alan J. Cox ------------------------------------------------ Alan J. Cox, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director 13