- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period ended     December 31, 2009

¨	Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Transition Period from _______________ to ____________________

Commission File No. 33-55254-42

M45 Mining Resources Inc.

(Exact name of registrant as specified in its charter)

NEVADA		87-0485310
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

1212 Redpath Crescent, Montreal (Quebec) Canada		H3G 2K1
(Address of principal executive offices)		(Postal Code)

Registrant’s telephone number, including area code: [phone]

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  þ 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  ¨   Smaller reporting company  þ

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

54,041,286 shares of Company’s common stock, par value $0.001 per share, were outstanding as of February 15, 2010.

 

 

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M45 Mining Resources Inc.

(A Developmental Stage Company)

TABLE OF CONTENTS FOR FORM 10-Q

PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Balance Sheets as of December 31, 2009 (unaudited) and March 31, 2009		3
	Statements of Operations for the three and nine months ended December 31, 2009 and 2008, and for the period from April1, 2004 (inception) to December 31, 2009 (Unaudited)		4
	Statements of cash flows for the nine months ended December 31, 2009 and 2008, and for the period from April 1, 2004 (inception) to December 31, 2009 (Unaudited)		5
	Notes to unaudited financial statements		6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		15
ITEM 4	CONTROLS AND PROCEDURES		15
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS		16
ITEM 1A.	RISK FACTORS		16
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		16
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		17
ITEM 5.	OTHER INFORMATION		17
ITEM 6.	EXHIBITS		17
	SIGNATURES		18

 

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PART I - FINANCIAL INFORMATION

ITEM I.   FINANCIAL STATEMENTS

M45 MINING RESOURCES INC.

(A Development Stage Company)

BALANCE SHEETS

		December 31,				March 31
		2009				2009
		(Unaudited)
Assets
Current assets
Cash		$	-			$	-
Prepaid expense			-				2,336
Total current assets			-				2,336
Fixed assets, net			67,162				75,274
Intangible Assets bet of amortization			7,487				-
Total assets		$	74,649			$	77,610
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable and accrued liabilites		$	-			$	3,000
Payables due to related parties			301,279				146,422
Total current liabilities			301,279				149,422
Stockholders' deficit
Common stock, $.001 par value; 55,000,000 shares authorized, 54,008,386 shares issued and outstanding			54,008				54,008
Additional paid-in capital			6,862,985				6,862,985
Deficit accumulated during the development stage			(7,143,623	)			(6,988,805	)
Total stockholders deficit			(226,630	)			(71,812	)
Total liabilities and stockholders' deficit		$	74,649			$	77,610

The accompanying notes are an integral part of these financial statements.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

																		Date of
		Three Months Ended								Nine Months Ended								Inception to
		December 31,								December 31,								December 31,
		2009				2008				2009				2008				2009
Sales		$	-			$	-			$	-			$	-			$	-
Expenses:
Mining claim acquisition costs			-				-				-				-				2,156,486
General and administrative			87,700				76,141				122,992				247,315				4,423,411
Marketing							-				-				3,988				48,503
Research and development			5,000				1,414				7,336				4,242				175,775
Interest on loan			3,633				6,232				8,667				14,790				77,279
Depreciation and Amortization			5,698				7,726				15,823				22,938				55,120
Total expenses			102,031				91,513				154,818				293,273				6,936,574
Net loss before discontinued operations and income taxes			(102,031	)			(91,513	)			(154,818	)			(293,273	)			(6,936,574	)
Net effect of recapitlization			-				-				-				-				(124,668	)
Discontinued operations - subsidiary			-				-				-				-				(255,997	)
Disposal of subsidiary			-				-				-				-				173,616
Net loss before income taxes			(102,031	)			(91,513	)			(154,818	)			(293,273	)			(7,143,623	)
Income taxes			-				-				-				-				-
Net loss		$	(102,031	)		$	(91,513	)		$	(154,818	)		$	(293,273	)		$	(7,143,623	)
Basic and Diluted Loss Per Share:
Net loss per weighted average share
Net operating loss		$	-			$	-			$	-			$	(0.01	)
Discontinued operations			-				-				-				-
Disposal of subsidiary			-				-				-				-
		$	-			$	-			$	-			$	(0.01	)
Weighted average number of common shares used to compute net loss per weighted average share			54,008,386				36,699,030				54,008,386				36,699,030

The accompanying notes are an integral part of these financial statements.

 

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M45 RESOURCES INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

										Date of
		Nine Months Ended								Inception to
		December 31,				December 30,				December 30,
		2009				2008				2009
Cash Flows From Operations:
Net loss		$	(154,818	)		$	(293,273	)		$	(7,196,409	)
Adjustment to reconcile net loss to net net cash used by operating activities:
Disposal of subsidiary			-				-				(173,616	)
Discontinued operations			-				-				255,997
Depreciation			15,823				22,938				65,244
Expenses paid with stock			-				-				2,899,987
Employee stock option plan			-				-				3,319,117
Prior period foreign exchange fluctuation			-				-				(15,548	)
Changes in operating assets and liabilities:
Receivables							-				-
Prepaid deposits			2,336				4,242				2,336
Payables			(3,000	)			-				(2,914	)
Net cash used for operating activities			(139,659	)			(266,093	)			(845,806	)
Cash flows from investing activities:
Acquisition of intangible and fixed assets			(15,198	)			(7,303	)			(116,441	)
Leasehold Improvements			-				-				(13,329	)
Net effect of recapitalization			-				-				124,668
Net cash provided by (used for) investing activities			(15,198	)			(7,303	)			(5,102	)
Cash flows from financing activities:
Issuance of common stock			-				-				28,182
Net effect of recapitalization			-				-				5,470
Variation of advances from related parties			154,857				273,396				817,256
Net cash provided by financing activities			154,857				273,396				850,908
Net incresase in cash			-				-				-
Cash, beginning of period			-				-				-
Cash, end of period		$	-			$	-			$	-
Supplemental disclosures of cash flow information:
Interest		$	-			$	-			$	50,744
Income tax		$	-			$	-			$	-

The accompanying notes are an integral part of these financial statements.

 

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M45 Mining Resources Inc

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

NOTE 1 :  ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES

Basis of Presentation

The accompanying unaudited financial statements of M45 Mining Resources Inc (“M45” or “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for a complete presentation of the financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments (consisting of a normal and recurring nature) necessary for a fair presentation of the Company’s financial position at December 31, 2009 (unaudited) and the results of its operations for the three and nine month periods ended December 31, 2009 (unaudited) and cash flows for the nine months ended December 31, 2009 (unaudited). Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the three and nine month periods ended December 31, 2009 are not necessarily indicative of the operating results that may be expected for the fiscal year ending March 31, 2010.

These financial statements and the notes hereto should be read in conjunction with financial statements and notes thereto included in the Company’s Form 10-K for the year ended March 31, 2009, which was filed October 30, 2009.

M45 Mining Resources Inc.’s, new strategy is focused on building shareholder value through the exploration and development of mineral claims, particularly in the Matagami Mining Camp located in Quebec, Canada. The Matagami Mining Camp is known for its zinc-rich massive sulphide deposits. Initial exploratory work in the Camp can be traced back to the 1930's with Noranda's activities in the region. Ten of the eighteen deposits discovered to date have been mined and have produced a total of 3.9 Mt zinc and 0.4 Mt copper.

 

The mining titles are situated on the east side of Matagami Mining Camp adjacent to properties owned by Xstrada plc, the world's fifth largest diversified mining company by market capitalization. These strategic territories strengthen M45's presence in the Matagami Camp by adding a new series of high-grade potential mining titles to the Company's existing "West Wind" territories. The Matagami Mining Camp is a world-class mining district, composed of 18 known volcanogenic massive sulphide (VMS) deposits. The area is host to historical production of 8.6 billion pounds of Zinc and 853 million pounds of Copper and has established infrastructure including a railway, paved road and a 2,350 t/day mill owned by Falconbridge/Xstrada plc.

 

As of February 22, 2010, the Company has no full-time employees. The President and Secretary-Treasurer have agreed to allocate a portion of their time without compensation to the activities of the Company.

The Company had no revenues for the three and nine month periods ended December 31, 2009 and 2008.  In 2008 the Company has hired an external geologist firm to conduct geologic reports NI-43-101 on its Matagami property for an approximate cost of $90,000. The Company also incurred operation costs related to completing marketing material such as; Logo’s Web site, summaries and other corporate presentation material. In accordance with an expense sharing agreement entered into on April 1, 2007, the Company pays rent, telephone, utilities, and other expenses for operational support at a set price of $3,500 per month. Total expenses also include expenses incurred for legal fees, filing expenses, press releases, traveling expenses, representation costs, mailings, research costs, and various operational costs. For the three and nine month periods ended December 31, 2009 and 2008, the Company reported total expenses of  $102,031 and $91,513 and $154,818 and $293,273, respectively.  Two majority control shareholders advance the Company funds needed to pay for the expenses incurred during the three and nine month periods ended December 31, 2009 and 2008. These shareholders have agreed to continue to support operational costs until the Company can generate revenues from commercial operations or funds from financing activities.

 

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M45 Mining Resources Inc

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

Significant Accounting Policies

Cash and cash equivalents.

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company holds cash and cash equivalent balances in a bank and other financial institutions. Balances in excess of FDIC limitations may not be insured. There are no cash equivalents as of December 31, 2009.

 

Property and equipment.

Property and equipment are carried at cost less accumulated depreciation. Major additions and improvements are capitalized, while maintenance and repairs that do not extend the lives of assets are expensed. Gain or loss, if any, on the disposition of fixed assets is recognized currently in operations. Depreciation is calculated primarily on a straight-line basis over estimated useful lives of the assets.

 

Research and development.

Research and development costs principally represent consulting fees of the Company’s geologist and engineering professionals, material and payments to third parties for clinical trials and additional product development and testing. All research and development costs are charged to expense as incurred.

Exploration Stage Company

The Company complies with Financial Accounting Standard Board Statement No. 7 and The Securities and Exchange Commission Exchange Act Guide 7 for its characterization of the Company as pre-exploration stage.

Capitalization of Mineral Claim Costs

Cost of acquisition, exploration, carrying and retaining unproven properties are expensed as incurred until such time as reserves are proven.  Costs incurred in proving and developing a property ready for production are capitalized and amortized over the life of the mineral deposit or over a shorter period if the property is shown to have an impairment in value.  Expenditures for mining equipment are capitalized and depreciated over their useful life.

Use of estimates.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions, such as useful lives of property and equipment, 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 expenses during the reporting period. Actual results could differ from those estimates.

Stock-based compensation.

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation , which requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values. Stock-based compensation is included in general and administrative expenses for all periods presented.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

Fair value of financial instruments.

ASC Topic 820, Fair Value Measurements and Disclosure ("ASC 820") establishes a new framework for measuring fair value and expands related disclosures. Broadly, ASC 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a three-level valuation hierarchy based upon observable and non-observable inputs. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

Long-lived assets.

In accordance with ASC Topic 360-10 (formerly SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets), the Company reviews the carrying values of its long-lived assets, including long-term investments, for possible impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair value less costs to sell.

Income taxes.

The Company follows the liability method of accounting for income taxes in accordance with FASB ASC 740, Income Taxes , (“ASC 740”), formerly SFAS No. 109, Accounting for Income Taxes . Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

The Company’s policy is to record a valuation allowance against deferred tax assets, when the deferred tax asset is not recoverable. The Company considers estimated future taxable income or loss and other available evidence when assessing the need for its deferred tax valuation allowance.

Comprehensive income (loss).

FASB ASC 220-10 (formerly known as SFAS No. 130, Reporting Comprehensive Income (Loss), requires companies to classify items of other comprehensive income (loss) in a financial statement. Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive net loss is equal to its net loss for all periods presented.

Foreign Currency Translation.

The Company's functional currency is the Canadian dollar. Foreign currency transactions occasionally occur, and are primarily undertaken in Canadian dollars. The Company translates foreign currency transactions and balances to its reporting currency, United States Dollars, in accordance with ASC 830, Foreign Currency Matters (formerly SFAS No. 52, Foreign Currency Translation) .  Monetary balance sheet items denominated in foreign currencies are translated into Canadian dollars at rates of exchange in effect at the balance sheet date. Daily closing rates are used to translate revenues and expenses into Canadian dollars at rates of exchange in effect on a specific date. Resulting translation gains and losses are charged to operations. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. Transactions in foreign currency are translated into United States dollars as follows: (i) Monetary items at the rate prevailing at the balance sheet date; (ii) non-monetary items at the historical exchange rate;   and   (iii) revenue and expenses that are monetary items are valued at the average rate in effect during the applicable accounting period.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

Interest Rate Risk.

The Company is exposed to fluctuating interest rates.

Basic and Diluted Net Income (Loss) Per Share.

We compute basic earnings per share (“basic EPS”) by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period; diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding. The Company had no potential common stock instruments which would result in a diluted loss per share.

Development Stage Company.

The Company currently has no revenues and is considered to be a development stage company under the provision of FASB ASC 915 (formerly SFAS No. 7, Accounting and reporting by Development Stage Enterprises ) .

Reclassifications.

Certain amounts reported in the previous year’s consolidated financial statements have been reclassified to conform to the current period’s presentation.

Revenue Recognition.

In accordance with the ASC Topic 605, Revenue Recognition , the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.

Recent Accounting Pronouncements

 

In April 2009, the FASB issued FASB ASC Topic 158-320-05 and 320-10-05, Recognition and Presentation of Other-Than-Temporary Impairments (FASB Staff Position, or FSP, No. FAS 115-2 and FAS 124-2) , to amend the other-than-temporary impairment guidance in debt securities to be based on intent to sell instead of ability to hold the security and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements.  This pronouncement is effective for periods ending after June 15, 2009.  We adopted this standard effective July 1, 2009, and it did not have a material impact on our financial position and results of operations.

In April 2009, the FASB issued FASB ASC Topic 820-10-05, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4).  FASB ASC Topic 820-10-05 provides additional authoritative guidance to assist both issuers and users of financial statements in determining whether a market is active or inactive, and whether a transaction is distressed.  This pronouncement is effective for periods ending after June 15, 2009.  We adopted this standard effective July 1, 2009, and it did not have a material impact on our financial position and results of operations.

In April 2009, the FASB issued FASB ASC Topic 270-10-05, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1).  FASB ASC Topic 270-10-05 enhances consistency in financial reporting by increasing the frequency of fair value disclosures.  This guidance relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value.  Before this guidance was adopted, fair values for these assets and liabilities were disclosed only once a year.  The guidance now requires these disclosures to be made on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.  This pronouncement is effective for periods ending after June 15, 2009.  We adopted this standard effective July 1, 2009, and it did not have a material impact on our financial position and results of operations.

 

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

Recent Accounting Pronouncements (continued)

 

In April 2009, the FASB issued FASB ASC Topic 805-10-10, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (SFAS 141(R)-1), to amend the provisions related to the initial recognition and measurement, subsequent measurement and disclosure of assets and liabilities arising from contingencies in a business combination under FASB ASC Topic 805-10-10, Business Combinations (SFAS 141(R)).  Under this guidance, assets acquired and liabilities assumed in a business combination that arise from contingencies should be recognized at fair value on the acquisition date if fair value can be determined during the measurement period.  If fair value cannot be determined, companies should typically account for the acquired contingencies using existing guidance.  We do not believe adoption of FASB ASC Topic 805-10-10 will have a material impact on our consolidated financial statements.

In May 2009, the FASB issued FASB ASC Topic 855-10-05, Subsequent Events (SFAS 165).  This standard is intended to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  Specifically, this standard sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  FASB ASC Topic 855-10-05 is effective for fiscal years and interim periods ending after June 15, 2009.  We adopted this standard effective July 1, 2009 and have evaluated any subsequent events through the date of this filing.  We do not believe there are any material subsequent events that would require further disclosure

On September 1, 2009, the Company adopted the accounting pronouncement on noncontrolling interests in consolidated financial statements (ASC Topic 810).   This pronouncement requires that noncontrolling (or minority) interests in subsidiaries be reported in the equity section of a company’s balance sheet, rather than in a mezzanine section of the balance sheet between liabilities and equity and changes the manner in which the net income of the subsidiary is reported and disclosed in the controlling company’s income statement and establishes guidelines for accounting for changes in ownership percentages and for deconsolidation.   This pronouncement required retrospective application to all prior periods presented.  The adoption of the Codification had no impact on the Company’s financial condition, results of operations or cash flows.

On September 1, 2009, the Company adopted the revised accounting pronouncement relating to business combinations (ASC Topic 805), including assets acquired and liabilities assumed arising from contingencies.  This pronouncement requires the use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date, and applies to all transactions and other events in which one entity obtains control over one or more other businesses.  This pronouncement also amends the accounting and disclosure requirements for assets and liabilities in a business combination that arise from contingencies.   In addition, with the adoption of this pronouncement, changes to valuation allowances for deferred income tax assets and adjustments to unrecognized tax benefits generally are to be recognized as adjustments to income tax expense rather than goodwill.  This adoption had no impact on the Company’s financial condition, results of operations or cash flows.  

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

Recent Accounting Pronouncements (continued)

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162 (the “Codification”) (ASC Topic 105).  The Codification reorganized existing U.S. accounting and reporting standards issued by the FASB and other related private sector standard setters into a single source of authoritative accounting principles arranged by topic.  The Codification supersedes all existing U.S. accounting standards; all other accounting literature not included in the Codification (other than SEC guidance for publicly-traded companies) is considered non-authoritative.  The Codification was effective on a prospective basis for interim and annual reporting periods ending after September 15, 2009.  As a result of the adoption of this pronouncement, Quarterly Reports on Form 10-Q for all quarters ending after December 31, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature.  Accordingly, all accounting references will be updated and SFAS references will be replaced with ASC references as if the SFAS has been adopted into the Codification.    We do not expect the adoption of the adoption of the Codification to have a material impact on the Company’s financial condition, results of operations, or cash flows.

NOTE 2: GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As shown in these consolidated financial statements, the Company has an accumulated deficit of $ 7,143,623 from inception to December 31, 2009 and does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business. The Company’s continuation as a going concern is dependent upon management to meet any costs and expenses incurred. Management realizes that this situation may continue until the Company obtains additional working capital through equity financing.

NOTE 3: PROPERTY AND EQUIPMENT

 

Machinery and equipment consist of the following:

		December 31,				March 31,			Estimated
		2009				2009			Useful Lives
Furniture and equipment		$	108,743			$	101,243		3 - 5 years
Leasehold improvements			13,329				13,329		3 years
			122,072				114,572
Less accumulated depreciation			54,910				39,298
Property and equipment, net		$	67,162			$	75,274

 

Depreciation of fixed assets utilized in research and development activities is included in research and development expense. All other depreciation is included in general and administrative expense. Depreciation expense for the quarter ended December 31, 2009 and 2008 was $5,698 and $15,823, respectively.

NOTE 4: PAYABLE DUE TO RELATED PARTIES

At December 31, 2009, the Company was indebted to multiple shareholders of the Company for $301,279. The notes bear interest at 6 % per annum.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

NOTE 5 :  COMMON STOCK

The Company has authorized capital stock of 55,000,000 shares of common stock with a par value of $.001, of which 54,008,386 shares were issued and outstanding as of February 15, 2010. The Company's common stock commenced trading on January 27, 1999 on the OTC Bulletin Board (OTCBB) operated by the National Association of Securities Dealers, Inc., under the symbol "MRES."

NOTE 6: BASIC AND DILUTED NET LOSS PER SHARE

 

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Diluted potential common shares consist of incremental shares issuable upon exercise of stock options and warrants. In computing diluted net loss per share for the three months ended December 31, 2009 and 2008, no adjustment has been made to the weighted average outstanding common shares as the assumed exercise of outstanding options and warrants is anti-dilutive.

NOTE 7: COMMITMENTS AND CONTINGENCIES

 

The Company is obligated under various operating lease agreements for office space. Generally, the lease agreements require the payment of base rent plus escalations for increases in building operating costs and real estate taxes. Rental expense under operating leases totaled $9,500 and $10,500 for the three months ended December 31, 2009 and 2008, respectively.

NOTE 8: INCOME TAXES

 

Income taxes are accounted for under the asset and liability method in accordance with FASB ASC 740, Income Taxes , (“ASC 740”), formerly SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.  A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company accounts for uncertainties in income taxes pursuant to ASC 740, formerly FASB Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of SFAS No. 109 , which clarifies the accounting for uncertainty in income taxes recognized in the financial statements. The Company recognizes tax liabilities for uncertain income tax positions (“unrecognized tax benefits”) pursuant to ASC 740 , where an evaluation has indicated that it is more likely than not that the tax positions will not be sustained on an audit. The Company estimates the unrecognized tax benefits as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis or when new information becomes available to management. The reevaluations are based on many factors, including but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, expirations due to statutes of limitations, and new federal or state audit activity. The Company also recognizes accrued interest and penalties related to these unrecognized tax benefits which are included in the provision for income taxes in the Condensed Consolidated Statement of Income. As of December 31, 2009, the Company has not recognized any adjustment for uncertain tax provisions.

 

Included in the Company’s net deferred tax assets are approximately $2.4 million of potential future tax benefits from prior unused tax losses.   Realization of these tax assets depends on sufficient future taxable income before the benefits expire.  It is not certain that the Company will have sufficient future taxable income to utilize the loss carryforward benefits before they expire. Therefore, an allowance has been provided for the full amount of the net deferred tax asset.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

ITEM 2.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to: i) changes in external factors or in our internal budgeting process which might impact trends in our results of operations; ii) unanticipated working capital or other cash requirements; iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the industries in which we operate; and iv) various competitive market factors that may prevent us from competing successfully in the marketplace

The following discussion of our financial condition and results of our operations should be read in conjunction with the Financial Statements and Notes attached thereto. Our current fiscal year ends March 31, 2010.

RISK FACTORS

Our auditor has raised a concern regarding our ability to continue as a going concern.  M45 is in the development stage and we have not generated revenues since inception.  We continue to incur operating expenses, legal and accounting expenses, consulting fees, and marketing expenses.  These factors raise substantial doubt about our ability to continue as a going concern.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

BUSINESS OVERVIEW

Business of Issuer

M45 Mining Resources Inc.'s new strategy is focused on building shareholder value through the exploration and development of mineral claims, particularly in the Matagami Mining Camp located in Quebec, Canada. The Matagami Mining Camp is known for its zinc-rich massive sulphide deposits. Initial exploratory work in the Camp can be traced back to the 1930's with Noranda's activities in the region. Ten of the eighteen deposits discovered to date have been mined and have produced a total of 3.9 Mt zinc and 0.4 Mt copper.

M45 Management believes that there are likely one or more deposits situated within the limits of the Claims due to the fact that the property is located near past producers and existing deposits.

 

The mining titles are situated on the east side of Matagami Mining Camp adjacent to properties owned by Xstrata plc, the world's fifth largest diversified mining company by market capitalization. These strategic territories strengthen M45's presence in the Matagami Camp by adding a new series of high-grade potential mining titles to the Company's existing "West Wind" territories. The Matagami Mining Camp is a world-class mining district, composed of 18 known volcanogenic massive sulphide (VMS) deposits. The area is host to historical production of 8.6 billion pounds of Zinc and 853 million pounds of Copper and has established infrastructure including a railway, paved road and a 2,350 t/day mill owned by Falconbridge/Xstrata plc.

 

The Company expects to encounter intense competition in its efforts to become a leader in mining exploration. Many large and small companies compete in this intense market. The principal means of competition vary among categories and business groups; however, the value of the territories is certainly to be taken into consideration. The competing entities will have significantly greater experience, financial resources, facilities, contacts and managerial expertise, than the Company.

Results of Operation

For the three and nine month periods ended December 31, 2009 and 2008, the Company reported $-0- revenue, respectively. For the quarter ended December 31, 2009, total expenses were $102,032, a $10,519, or 11%, increase from the $91,513 reported for the same period in 2008. Approximately $24,000 of this increase is attributable to a increase in consulting and professional fees. For the nine months ended December 31, 2009, total expenses were $154,818, a $138,455, or 47%, decrease from the $293,273 reported for the same period in 2009. Approximately $44,000 of this decrease is attributable to a decrease in consulting and professional fees.

Total expenses reported for the three and nine month periods ended December 31, 2009 and 2008 primarily represent expenses incurred for general administration, occupancy (rent, utilities, and other related costs at $3,500 monthly), amortization and depreciation, consulting, travel, filing fees, professional services, and interest against a note payable to a shareholder. Significant shareholders of the Company have been making advances to the Company for the payment of operating expense; they have agreed to continue providing capital for ongoing operations, until such time the Company can generate revenues from commercial operations or increase capital through various financing arrangements. They have also agreed to convert these advances into equity (issuance of restricted shares).

Liquidity and Capital Resources

 

M45 is a development stage company, and through the date of this Report, it has not generated revenue from operations.  The Company does not have sufficient cash or cash equivalents to satisfy its cash requirements for the next twelve months.

 

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M45 MINING RESOURCES INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

December 31, 2009

Liquidity and Capital Resources (continued)

The Company has an accumulated deficit of $7,143,623. The Company continues to report negative stockholders’ equity and does not have sufficient assets to pay current liabilities as they come due. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s continued existence is dependent upon several factors; including the ability to attain profitable business operations and generate a positive cash flow. Management plans to raise additional capital investment in the Company, and it believes the necessary investment will be forthcoming within the next six month period. There can be no assurance that equity financings will be available to the Company in the future that will be obtained on terms satisfactory to the Company. In the event that the Company’s efforts to obtain such financing prove unsuccessful, the Company may be required to abandon its current business goals and cease operations.

M45’s current management have indicated a willingness to continue rendering services to the Company, to advance sufficient funds to meet our operational needs, and not to demand payment of sums owed. The Company believes, therefore, that it can continue as a going concern in the near future.

Off-Balance Sheet Arrangements

 

For the period ending December 31, 2009, the Company had no off-balance sheet arrangements.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk .

 

Not required for smaller reporting companies as defined in Rule 12b-2 of the Exchange Act .

ITEM 4.   Controls and Procedures

Our management, under the supervision of and with the participation of the chief executive officer and chief financial officer performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2009, the period covered by this report.  Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls were not effective as of that date.

In our Annual Report on Form 10-KSB/A filed for the year ended March 31, 2008, the Company reported a material weakness in internal control over financial reporting relating to lack of policies and procedures, lack of sufficient accounting staff, lack of segregation of duties necessary for a good system of internal control, over-reliance upon independent financial reporting consultants, the adequacy of accounting systems with procedures to ensure that financial information is secure and accurately recorded and reported. A material weakness is defined in Public Company Accounting Oversight Board Auditing Standard No. 5 as a deficiency, or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement would not be prevented or detected on a timely basis.  In connection with our overall assessment of internal control over financial reporting, we have evaluated the effectiveness of our internal controls as of December 31, 2009 and have concluded that the material weaknesses first reported in our Annual Report on Form 10-KSB/A for the year ended March 31, 2008 and again in our Annual Report on Form 10-K for the year ended March 31, 2009, and further described in this paragraph, were not remediated as December 1, 2009.  

Except for the material weaknesses in internal control over financial reporting as referenced in our Annual Report on Form 10-K for the fiscal year ended March 31, 2009 (and further described above), no other material weaknesses were identified in our evaluation of internal controls as of December 1, 2009.

 

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ITEM 4.   Controls and Procedures (continued).

In light of the foregoing, once we have the adequate funds, management plans to develop the following additional procedures to help address these material weaknesses:

The Company has created and refined a structure in which critical accounting policies and estimates are identified, and together with other complex areas, is subject to multiple reviews by accounting personnel. In addition, we plan to enhance and test our month-end and year-end financial close process. Additionally, management will increase its review of our disclosure controls and procedures. We also intend to develop and implement policies and procedures for the financial close and reporting process, such as identifying the roles, responsibilities, methodologies, and review/approval process.

Hire a qualified accounting staff to manage, review, and verify the day-to-day accounting and the financial statements.

We believe these actions will remediate the material weaknesses by focusing additional attention and resources in our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Remediation plans established and initiated by management during the fiscal year ended March 31, 2009 continue to be implemented.  There were no other changes in our internal controls over financial reporting during the quarter ended December 31, 2009 that have materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.

While we have implemented or continue to implement our remediation activities, we believe it will take multiple quarters of effective application of the control activities, including adequate testing of such control activities, in order for us to revise our conclusion regarding the effectiveness of our internal controls over financial reporting.

  PART II    -   OTHER INFORMATION

ITEM 1. Legal Proceedings.

Other than as set forth herein, we are not aware of any pending or threatened litigation against us that we expect will have a material adverse effect on our business, financial condition, liquidity, or operating results. However, legal claims are inherently uncertain and we cannot assure you that we will not be adversely affected in the future by legal proceedings.

ITEM 1A.   Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

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

There were no sales or unregistered securities during the period covered by this report.

ITEM 3.   Defaults Upon Senior Securities.

There were no defaults upon senior securities during the period covered by this report.

 

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

There were no matters submitted to a vote of security holders during the period covered by this report.

ITEM 5.   Other Information.

None

ITEM 6.   Exhibits

(a)  Exhibits.

 

The following exhibits are filed with this report:

 

3.1	Articles of Incorporation of M45 Mining Resources Inc., as filed with the Nevada Secretary of State on July 16, 1990.

3.2	Bylaws of M45 Mining Resources Inc. 14.1 Code of Ethics (incorporated by reference to Exhibit 14.1 of the Company's Quarterly Report on Form 10-QSB for the period ended March 31, 2004 and filed with the Securities and Exchange Commission on May 17, 2004).

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)

31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 (b) Reports on Form 8-K.

There were no Form 8-K filings made during the period covered by this report.

 

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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.

 

Dated: February, 25, 2010	By:	/s/ Barry Somervail
		Barry Somervail, CEO and Director
Dated: February, 25, 2010	By:	/s/ Gilles Ouellette
		Gilles Ouellette, Principal Financial Officer

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

	M45 MINING RESOURCES INC.
Dated: February, 25, 2010	By:	/s/ Barry Somervail
		Barry Somervail, CEO and Director
Dated: February, 25, 2010	By:	/s/ Michel Yamani
		Michel Yamani, Secretary/Treasurer

 

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