Business Context and Reporting Period
Company: Deer Bay Resources Inc. (Note: Input metadata referenced "Cann American Corp.", but the filing text identifies the registrant as Deer Bay Resources Inc.)
Reporting Period: Quarterly period ended November 30, 2008 (Nine months ended November 30, 2008).
Status: Exploration stage company incorporated in Nevada with principal offices in Vancouver, British Columbia. The company is engaged in the acquisition and exploration of mineral properties in North America.
Going Concern: The filing states substantial doubt exists regarding the company's ability to continue as a going concern due to accumulated losses and dependence on future financing.
Key Financial Metrics
| Metric | Nine Months Ended Nov 30, 2008 | Nine Months Ended Nov 30, 2007 | Balance Sheet (Nov 30, 2008) |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(36,203) | $(6,619) | N/A |
| Cash and Cash Equivalents | N/A | N/A | $12,671 |
| Working Capital | N/A | N/A | $9,521 |
| Total Assets | N/A | N/A | $12,671 |
| Total Liabilities | N/A | N/A | $3,150 |
| Accumulated Deficit | N/A | N/A | $(66,279) |
| Shares Outstanding | N/A | N/A | 130,110,000 |
Cash Flow Summary (Nine Months Ended Nov 30, 2008):
- Net cash used in operating activities: $(38,053)
- Net cash provided by financing activities: $46,000 (from issuance of common shares)
- Net increase in cash: $7,947
Material Changes vs. Prior Period
- Net Loss Increase: Net loss for the nine months ended November 30, 2008, increased to $36,203 from $6,619 in the prior year period. This is primarily attributed to increased professional fees (audit and accounting) and the acquisition of a new mineral property.
- Capitalization: The company issued 122,500,000 new shares during the period (June and October 2008), raising $46,000 in cash. This significantly increased the share count from 7,610,000 to 130,110,000.
- Asset Acquisition: The company incurred $8,000 in mineral property costs to acquire the "Emmy Claim" in British Columbia. A previous claim in Ontario had expired.
- Liquidity: Cash balances increased from $4,724 at the beginning of the period to $12,671 at period end, driven entirely by equity financing.
Guidance, Outlook, and Risks
Plan of Operations: Management plans to spend approximately $49,500 over the next twelve months. This includes $20,500 for share registration and OTC Bulletin Board listing, $20,000 for Phase I exploration, and $9,000 for general and administrative expenses.
Outlook: The company anticipates no revenue generation in the next twelve months. It expects to rely on equity financing to fund operations. Management believes debt financing is not an alternative due to a lack of tangible assets.
Risks and Contingencies:
- Financing Risk: There is no assurance that the company can raise sufficient capital. Failure to secure funding will force the abandonment of mineral claims.
- Exploration Risk: No economically viable reserves have been discovered. The recoverability of exploration costs is uncertain.
- Going Concern: Auditors have expressed substantial doubt about the company's ability to continue operations without additional financing.
Investor Verification Checklist
- Capital Sufficiency: Verify if the current cash balance ($12,671) is sufficient to cover the estimated $49,500 operating budget for the next 12 months.
- Financing Status: Confirm if any new equity financing has been secured since the filing date to fund the planned exploration program.
- Property Status: Verify the current standing of the "Emmy Claim" in British Columbia and the results of the geological review mentioned in the plan of operations.
- Listing Status: Check if the company has successfully obtained a trading symbol on the OTC Bulletin Board as planned.
- Share Dilution: Note the significant increase in share count (from ~7.6M to ~130M) and the potential for further dilution if additional equity is raised.