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 Quarter Ended March 31, 2010





 ̈
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934





Commission File Number: 814-00783








SPRING CREEK CAPITAL CORP.


(Exact name of registrant as specified in its charter)











Nevada

98-0496750(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)120 Wall Street

Suite 2401

New York, N.Y.

10005(Address of principal executive office)

(Zip Code)





(646) 896-3050


(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 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈     No  x





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer   ̈

Accelerated filer   ̈

Non-accelerated filer  x

Smaller Reporting Company   ̈





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





The number of shares of the registrant’s Common Stock, $.001 par value, outstanding as of May 13, 2010 was 34,230,000.








1







SPRING CREEK CAPITAL CORP.





FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2010





TABLE OF CONTENTS








PART IItem 1.
Financial Statements
3Condensed Consolidated Balance Sheet at March 31,2010 (unaudited) and December 31, 2009
3Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009 and for the period from inception (May 11, 2006) to March 31, 2010 (unaudited)
4Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited)
5Condensed Consolidated Statement of Stockholders’ Equity for the period from inception (May 11, 2006) to March 31, 2010 (unaudited)
6Notes to Condensed Consolidated Financial Statements (unaudited)
7Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
11Item 3.
Quantitative and Qualitative Disclosures About Market Risk
13Item 4.
Controls and Procedures
13PART II

14Item 1.
Legal Proceedings
14Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
14Item 3.
Defaults Upon Senior Securities
14Item 4.
Submission of Matters to a Vote of Security Holders
14Item 5.
Other Information
14Item 6.
Exhibits
15EX-31.1: CERTIFICATIONEX-32: CERTIFICATION













2






SPRING CREEK CAPITAL CORP. AND SUBSIDIARY COMPANIES


(A Development Stage Company)
  CONDENSED CONSOLIDATED BALANCE SHEETS


March 31,


December 31,2010


2009(unaudited)ASSETSCURRENT ASSETSCash

$
1,391


$
4,187Prepaid expenses


8,079



12,515Total current assets


9,470



16,702Investment in and advances to affiliated companies


80,085



39,945TOTAL ASSETS

$
89,555


$
56,647LIABILITIES AND STOCKHOLDERS' DEFICIENCYCURRENT LIABILITIESAccounts payable and accrued expenses

$
154,775


$
119,013Notes payable - related party - net of discount of $85,000 and $129,000


328,685



203,232Notes payable


40,500



-Total current liabilities


523,960



322,245Liability for unissued shares


55,000STOCKHOLDERS' DEFICIENCYCommon stock, par value $.001 per share; 75,000,000shares authorized and 34,230,000 (2010) and 33,730,000(2009) issued and outstanding


34,230



33,730Additional paid-in capital


2,092,807



2,088,307Deferred compensation


(8,219
)


(9,340
)Deficit accumulated during the development stage


(2,608,223
)


(2,378,295
)Total stockholders' deficiency


(489,405
)


(265,598
)TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY

$
89,555


$
56,647




See notes to consolidated financial statements






3




SPRING CREEK CAPITAL CORP. AND SUBSIDIARY COMPANIES


(A Development Stage Company)


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)






From inceptionThree months ended


(May 11, 2006)March 31,


to March2010


2009



31, 2010ExpensesGeneral and Administrative

$
165,486


$
52,994


$
706,824Interest


21,933



800



41,130Amortization of debt discount


44,148







146,748Finance costs


-



-



1,723,000Total expenses


231,567



53,794



2,617,702Other income - related to affiliated companies


(1,639
)


-



(9,479
)Net loss

$
(229,928
)

$
(53,794
)

$
(2,608,223
)Loss per share - basic and diluted

$
(0.01
)

$
(0.00
)Weighted average shares outstanding


33,957,777



33,421,666




See notes to consolidated financial statements
 
 4
 
 SPRING CREEK CAPITAL CORP. AND SUBSIDIARY COMPANIES
 (A Development Stage Company)
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 From inceptionThree months ended


(May 11, 2006)March 31,


to March2010


2009



31, 2010Cash Flows Used in Operating ActivitiesNet Loss

$
(229,928
)

$
(53,794
)

$
(2,608,223
)Adjustments to reoncile net loss to net cashused in operating activiites:Amortization of debt discount


44,148







146,748Equity in losses of subsidiaries


30,550







75,711Amortization of deferred compensation


1,121







5,231Accrued interest payable


16,933



800



36,130Services - noncash charges


55,000







55,000Accrued  fees from affiliates


(32,190
)






(86,121
)Finance costs










1,723,000Changes in operating assets and liabilities:Prepaid expenses


4,436







(8,079
)Accounts payables and accrued expenses


23,829



15,737



151,695Net Cash Used in Operating Activities


(86,101
)


(37,257
)


(508,908
)Cash Flows Used in Investing ActivitiesLoans to affiliated companies


(38,500
)






(69,675
)Net Cash Used in Investing Activities


(38,500
)






(69,675
)Cash Flows Provided By (Used In) Financing ActivitiesLoans from related party


81,305







463,474Loans


50,000



40,000



50,000Loan - repayment


(9,500
)






(9,500
)Issuance of common stock










126,000Repayment of related party loan


-



-



(50,000
)Net Cash Provided by Financing Activities


121,805



40,000



579,974Net Increase (Decrease) in Cash


(2,796
)


2,743



1,391Cash at beginning of period


4,187



-



-Cash at end of period

$
1,391


$
2,743


$
1,391Supplemental DisclosuresNon-cash investing and financing activitiesCommon stock issued in settlement of payables

$
5,000



3,275


See notes to consolidated financial statements




5





SPRING CREEK CAPITAL CORP.


(A Development Stage Company)


CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY


DeficitAccumulatedAdditional





During


TotalCommon Stock


Paid -in


Deferred


Development


Stockholders'Shares


Amount


Capital


Compensation


Stage


DeficiencyShares issued to founders at $.01 per share


30,000,000


$
30,000



-



-



-


$
30,000Net loss



-



-



-



-


$
(30,000
)


(30,000
)Balance - December 31, 2006


30,000,000



30,000



-



-



(30,000
)


-Net loss



-



-



-



-



(23,655
)


(23,655
)Balance - December 31, 2007


30,000,000



30,000



-



-



(53,655
)


(23,655
)Shares issued at $.033 per share


2,880,000



2,880


$
93,120



-



-



96,000Net loss



-



-



-



-



(72,845
)


(72,845
)Balance - December 31, 2008


32,880,000



32,880



93,120



-



(126,500
)


(500
)Shares issued in settlement of payables


850,000



850



27,200



-



-



28,050Warrants issued inconnection with:Consulting fees


-



-



13,450


$
(13,450
)


-



-Finance Costs










1,723,000











1,723,000Indebtedness










231,537











231,537Amortization of deferred compensation


-











4,110







4,110Net loss



-



-



-



-



(2,251,795
)


(2,251,795
)Balance - December 31, 2009


33,730,000


$
33,730


$
2,088,307


$
(9,340
)

$
(2,378,295
)

$
(265,598
)Issuance of common stock upon exerciseof warrants


500,000



500



4,500











5,000Amortization of deferred compensation














1,121







1,121Net loss



-



-



-



-



(229,928
)


(229,928
)Balance - March 31, 2010


34,230,000


$
34,230


$
2,092,807


$
(8,219
)

$
(2,608,223
)

$
(489,405
)




See notes to consolidated financial statements




6





SPRING CREEK CAPITAL CORP.  AND SUBSIDIARY COMPANIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 1.  Organization and Basis of Preparation





Spring Creek Capital Corp. (“Spring Creek” or the “Company”) was a closed-end management investment company which in April 2009 elected to be treated as a business development company (BDC) under the Investment Company Act of 1940, (the “1940 Act”).  The Company was originally formed in May 2006 to be engaged in the exploration of mineral properties for copper and other metals; however, as a result of the April 2009 change in business plan to be a specialty investment company principally providing capital and other assistance to start-up and micro-cap companies in the medical, pharmaceutical and healthcare industry, the mining operations were discontinued.  The Company conducted operations as a BDC from April 23, 2009 through December 31, 2009. During this time, Spring Creek acquired or established its initial interests in healthcare affiliate companies by acquiring equity stakes in or starting development stage companies which will eventually become the Company’s platform companies as well as completed two minority equity investments in companies that we believed to be strategic to our mission.





Effective as of December 31, 2009, the Board of Directors and the holders of a majority of the Company’s outstanding shares of common stocks authorized the Company’s management to withdraw the above mentioned election to be regulated as a BDC.  This decision was in part prompted by the actuality that the majority of the Company’s resources were allocated to managing the operating activities of its holdings and, in addition, management found that the Company may not have been in compliance with certain BDC provisions of the 1940 Act.  Among other things, the Company had issued rights to purchase securities and issued shares for services or property other than for cash; issued warrants in connection with debt offerings with conversion rights below the then market value and without shareholder approval; and failed to establish a majority of independent directors.  The Company also failed to obtain a fidelity bond in an amount required under the 1940 Act. The Company intends to file a Notice to withdraw its election to be regulated as a BDC by May 31, 2010 with an effective date as of December 31, 2009.





As a result of the withdrawal of the Company’s election to be treated as a BDC and becoming an operating company, the fundamental nature of the Company’s business from that of investing in a portfolio of securities, with the goal of achieving gains on appreciation and dividend income, to that of being actively engaged in the ownership and management of an holding company, with the goal of generating income from the operations of those businesses.  The withdrawal of the Company’s election as a BDC under the 1940 Act resulted in a significant change in the Company’s method of accounting. The Company formerly utilized the BDC financial statement presentation and that accounting utilized the value method of accounting used by investment companies, which allows BDCs to recognize income and value their investments at market value as opposed to historical cost.  As an operating company, the Company adopted the financial statement presentation and accounting for securities held which provides for either fair value or historical cost methods of accounting, depending on the classification of the investment and the Company’s intent with respect to the period of time it intends to hold the investment.  Change in the Company’s method of accounting could reduce the market value of its investments in privately held companies by eliminating the Company’s ability to report an increase in value of its holdings as the increase occurs.  Also, as an operating company, the Company also now consolidates its financial statements with controlled subsidiaries, thus eliminating the portfolio company reporting benefits available to BDCs.





The Company intends to distribute and market products and technologies in the healthcare sector. Spring Creek’s principal operating subsidiary is Stratis Healthcare Inc. Stratis’ primary business is to distribute products to resellers and customers worldwide either directly, through distributors or through multi-channel resources. Stratis will utilize strategic partnerships to warehouse, provide inventory control/monitoring, and distribute new Spring Creek products on a global basis.  Systems and processes will be designed to be efficient and repeatable so as to allow Spring Creek to implement cost-effective solutions for the distribution of medical products throughout its portfolio.





The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern.  This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. The Company since its formation has not generated any significant revenues. The Company has not as yet attained a level of operations which allows it to meet its current overhead and may not attain profitable operations within its first few business operating cycles, nor is there any assurance that such an operating level can ever be achieved. The Company is dependent upon obtaining additional financing adequate to fund its operations. While the Company has funded its initial operations with private placements and secured loans from a related party, there can be no assurance that adequate financing will continue to be available to the Company and, if available, on terms that are favorable to the Company.   The Company’s ability to continue as a going concern is also dependent on many events outside of its direct control, including, among other things improvement in the economic climate.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.





Interim financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X, as appropriate. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period, have been included.








7





Operating results for the interim periods presented are not necessarily indicative of the results to be expected for a full year.





The condensed consolidated balance sheet at December 31, 2009 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.





These interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes for the period ended December 31, 2009 filed with the Securities and Exchange Commission on Form 10-K on April 16, 2010.





Note 2.  Significant Accounting Policies





Consolidation





The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as of the dates and for the fiscal years indicated. All intercompany accounts and transactions have been eliminated in consolidation.





Use of Estimates





The preparation of financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Changes in the economic environment, financial markets, as well as in the healthcare industry and any other parameters used in determining these estimates could cause actual results to differ.





Concentration of Credit Risk





The Company may place its cash with various financial institutions and, at times, cash held in depository accounts at such institutions may exceed the Federal Deposit Insurance Corporation insured limit.





Equity and Cost Method Investments in Portfolio Companies





The Company uses the equity method of accounting for its investments in entities in which it has significant influence; generally, this represents an ownership interest of between 20% and 50%. The Company uses the cost method of accounting for investments in equity securities in which it has a less than 20% equity interest and virtually no influence over the investee's operations.





Application of the cost method requires the Company to periodically review this investment in order to determine whether to maintain the current carrying value or to write off some or all of the investment. While the Company uses some objective measurements in its review, the review process involves a number of judgments on the part of the Company's management. These judgments include assessments of the likelihood of the investments to obtain additional financing, to achieve future milestones, make sales and to compete effectively in its markets. In making these judgments the Company must also attempt to anticipate trends in the industries as well as in the general economy. There can be no guarantee that the Company will be accurate in its assessments and judgments. To the extent that the Company is not correct in its conclusion it may decide to write down all or part of the investment.





Income Taxes





The Company accounts for income taxes using a method that requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company’s assets and liabilities (commonly known as the asset and liability method). In assessing the ability to realize deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.





The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are ‘‘more-likely-than-not’’ of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as an expense in the applicable year.   The Company does not have a liability for any unrecognized tax benefits. Management’s evaluation of uncertain tax positions may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof






8







As of December 31, 2009, the Company has approximately $2.3 million of net operating loss carry-forwards available to affect future taxable income and has established a valuation allowance equal to the tax benefit of the net operating loss carry- forwards and temporary differences as realization of the asset is not assured.





Revenue Recognition





Upon initiation of active operations, the Company will recognize revenues when persuasive evidence of an arrangement exists, product has been delivered or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue will be recognized net of estimated sales returns and allowances.





Per Share Information





Basic earnings per share are calculated using the weighted average number of common shares outstanding for the period presented. Diluted loss per share is the same as basic loss per share, as the effect of potentially dilutive securities (warrants to acquire 2,990,000 shares of common stock at March 31, 2010) are anti-dilutive.





Note 3.  Due from Affiliate Companies





In June 2009, the Company entered into an agreement with BioCube, Inc., an early-stage life sciences company that specializes in developing commercial applications for electro-chemical activation (ECA) technology to provide (i) management consulting for $5,000 per month payable $2,500 in cash and $2,500 in common stock and (ii) arrange financing up to $600,000 over an 18 month period. In connection with the agreement, the Company was issued 1 million shares of the common stock of BioCube, representing 20 percent of its then outstanding stock..  As of March 31, 2010, the Company had invested $55,000 in BioCube in the form of loans and receivables for consulting fees.  The Company accounts for this investment under the equity method, and, accordingly has charged to expense $55,000 representing its share of BioCube’s aggregate losses ($10,000 during the three months ended March 31, 2010.)





In September, 2009, Eco-Blends, Inc., a then wholly-own subsidiary of the Company, entered into an agreement to acquire all of the business and intellectual property of Lewey’s Eco-Blends, Inc. in exchange for 700,000 shares of stock of Eco-Blends’ common stock (representing a 70% equity interest).  Eco-Blends manufactures and distributes DEET-free insecticide and insect repellant products which are designed to meet the ever increasing environmental concerns of consumers who are turning to homeopathic alternatives as well as stricter environmental guidelines which narrow the range of solutions to control pests and pathogens for agricultural needs. The Company also agreed to provide management consulting services for $5,000 per month ($2,500 per month deferred) and to provide financing up to $250,000. As of March 31, 2010, the Company had invested $68,000 in Eco-Blends in the form of loans and receivables for consulting fees.  The Company accounts for this investment under the equity method, and, accordingly has charged to expense $18,000 representing its share of Eco-Blend’s aggregate losses ($21,000 during the three months ended March 31, 2010.)





Note 4.  Notes payable - related party





During the year ended December 31, 2009, the Company borrowed an aggregate of $382,169 from LeadDog Capital LP through issuances of notes payable for periods of 6 to 27 months with interest payable at 16% per year.  In connection with the issuance of notes with a face value of $280,000, the Company granted the lender warrants to purchase 1,327,500 shares of the Company’s common stock at $.001.  In addition, the Company issued warrants to purchase 1,162,500 shares of the Company’s common stock at $.001 to LeadDog Capital Markets LLC (the general partner) for due diligence services. LeadDog Capital LP and its affiliates are shareholders and warrant holders however the group is restricted from becoming a beneficial owner (as such term is defined under Section 13(d) and Rule 13d-3 of the Securities Exchange Act of 1934, as amended, (the 1934 Act)), of the Company’s common stock which would exceed 9.5% of the number of shares of common stock outstanding.





The proceeds from issuance of the promissory notes were allocated to the notes and the warrants based upon their relative fair values. This allocation resulted in allocating $48,463 to the notes and $231,537 to the warrants. The warrants issued for services were expensed as financing fees of $1,723,000 in 2009.  During the three months ended March 31, 2010, the Company recorded $44,000 as expense related to the amortization of the debt discount.  The fair value of the warrants was determined using the Black-Scholes option pricing model using the following weighted-average assumptions: volatility of 116% and 141%; risk-free interest rate of 1.4% to 1.6%; expected life of 3 years and estimated dividend yield of 0%





During the quarter ended March 31, 2010, the Company and its subsidiaries borrowed $81,000 from LeadDog Capital LP with interest payable at 16% per year for periods ranging from 3 months to a year.






9





Note 5.  Note Payable





In February 2010, the Company borrowed $50,000 through the issuance of a note payable due in ninety days from the date of the loan with interest at 20%.  In March 2010, the Company prepaid $9,500 and paid $5,000 to settle all interest due on the note.





NOTE 6: Fair Value Measurements




Accounting principles generally accepted in the United States define fair value as 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 at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:




Level 1 — Quoted prices in active markets for identical assets or liabilities.




Level 2 — Observable inputs other than quoted prices included in Level 1. We value assets and liabilities included in this level using dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.




Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.




Recurring Fair Value Measurements




In accordance with accounting principles generally accepted in the United States, certain assets and liabilities are required to be recorded at fair value on a recurring basis. For our Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are derivative instruments which the Company values using Level 2 inputs (see Note 4).




Note 7.  Other Matters





In February 2010, the Company entered into a letter of engagement with investor relations firm to develop and implement a financial communications program designed to increase investor awareness of the Company in the investment community. The initial term of the agreement is ninety days and may be terminated by either party upon thirty days notice.Pursuant to the agreement, the Company will issue up to 660,000 shares of our common stock in monthly installments of 55,000 during the first year of the agreement unless the agreement is terminated before the completion of the first year of the contract causing the monthly installments to end as of the termination date.  The Company recorded a non-cash charge of $55,000 during the three month period ended March 31, 2009 for the first monthly installment of common stock which it must issue under the agreement




Note 8. Subsequent Events.





Subsequent to March 31, 2010, the Company borrowed $29,000 from LeadDog Capital LP with interest payable at 16% per year.











10






Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.





You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this quarterly report on Form 10-Q. This discussion and analysis 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, including, but not limited to, those set forth under ‘Risk Factors’ in our annual report on Form 10-K, filed with SEC April 16, 2010.




OVERVIEW





Spring Creek was a closed-end management investment company which in April 2009 elected to be treated as a business development company (BDC) under the Investment Company Act of 1940, (the “1940 Act”).  The Company was originally formed in May 2006 to be engaged in the exploration of mineral properties for copper and other metals; however, as a result of the April 2009 change in business plan to be a specialty investment company principally providing capital and other assistance to start-up and micro-cap companies in the medical, pharmaceutical and healthcare industry, in 2009, the mining operations were discontinued.  The Company conducted operations as a BDC from April 23, 2009 through December 31, 2009. During this time, Spring Creek acquired or established its initial interests in healthcare affiliate companies by acquiring equity stakes in or starting development stage companies which will eventually become the Company’s platform companies as well as completed two minority equity investments in companies that we believed to be strategic to our mission.





As of December 31, 2009, the Board of Directors and a majority of the Company’s shareholders authorized the Company’s management to withdraw the above mentioned election to be regulated as a BDC.  This decision was in part prompted by the actuality that the majority of our resources were allocated to managing the operating activities of its holdings and, in addition, management found that the Company may not have been in compliance with certain BDC provisions of the 1940 Act.  The Company intends to file a Notice to withdraw its election to be regulated as a BDC by May 31, 2010 with an effective date as of December 31, 2009.





As a result of the withdrawal of our election to be treated as a BDC and becoming an operating company, the fundamental nature of our business  from that of investing in a portfolio of securities, with the goal of achieving gains on appreciation and dividend income, to that of being actively engaged in the ownership and management of an holding company, with the goal of generating income from the operations of those businesses.  The withdrawal of our election as a BDC under the 1940 Act results in a significant change in the Company’s method of accounting. BDC financial statement presentation and accounting utilizes the value method of accounting used by investment companies, which allows BDCs to recognize income and value their investments at market value as opposed to historical cost.  As an operating company, the required financial statement presentation and accounting for securities held will be either fair value or historical cost methods of accounting, depending on the classification of the investment and the Company’s intent with respect to the period of time it intends to hold the investment.  Change in the Company’s method of accounting could reduce the market value of its investments in privately held companies by eliminating the Company’s ability to report an increase in value of its holdings as the increase occurs.  Also, as an operating company, the Company has to consolidate its financial statements with controlled subsidiaries, thus eliminating the portfolio company reporting benefits available to BDCs.





The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions.





Business Plan





Spring Creek intends to distribute and market products and technologies in the healthcare sector.  Our principal operating subsidiary is Stratis Healthcare Inc. (“Stratis”).  Stratis’ primary business is to distribute products to resellers and customers worldwide either directly, through distributors or through multi-channel resources. Stratis will utilize strategic partnerships to warehouse, provide inventory control/monitoring, and distribute new Spring Creek products on a global basis.  Systems and processes will be designed to be efficient and repeatable so as to allow Spring Creek to implement cost-effective solutions for the distribution of medical products throughout its portfolio.





We have very limited funds and we may not be able to execute our current business plan and fund business operations long enough to achieve profitability. Our ultimate success may depend upon our ability to raise additional capital. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.





Current Economic Environment





The U.S. economy is currently in a recession, which could be long-term. Consumer confidence continued to deteriorate and unemployment figures continued to increase during the first half of 2009.  However, in recent months, certain economic indicators have shown modest improvements. The generally deteriorating economic situation, together with the limited availability of debt and equity capital, including through bank financing, will likely have a disproportionate impact on the micro-cap companies we intend to target for investment.  As a result, we may experience a reduction in attractive investment opportunities in prospective portfolio companies that fit our investment criteria.  In addition, micro-cap companies in which we ultimately invest may be unable to pay us the interest or dividends on their convertible securities or repay their debt obligations to us, and the common stock which we may receive upon conversion of the convertible securities may have little or no value, resulting in the loss of all or substantially all of our investment in such micro-cap companies.









11




Going Concern





The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern.  This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. The Company since its formation has not generated any significant revenues. The report of our auditors on our financial statements includes a reference to going concern risks. The Company has not as yet attained a level of operations which allows it to meet its current overhead and may not attain profitable operations within its first few business operating cycles, nor is there any assurance that such an operating level can ever be achieved. The Company is dependent upon obtaining additional financing adequate to fund its operations. While the Company has funded its initial operations with private placements and secured loans from a related party, there can be no assurance that adequate financing will continue to be available to the Company and, if available, on terms that are favorable to the Company.   The Company’s ability to continue as a going concern is also dependent on many events outside of its direct control, including, among other things improvement in the economic climate.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.





Results of Operations





Three months ended March 31, 2010 versus three months ended March 31, 2009





Expenses during the three months ended March 31, 2010 aggregated $231,600 versus $53,800 in the prior year period.  The 2010 period included non-cash charges of $100,000 related to amortization of debt discount and for shares to be issued in connection with a service agreement.  The debt discount amortization results from the fair value accounting for warrants issued in connection with debt issuances.  Our primary operating expenses include the payment of: (i) consulting fees under arrangements to fund costs related to personnel, advisors as well as other administrative; (ii) interest on borrowings; and (ii) professional services including legal, accounting and transfer agent.





Other income during the 2010 period principally relates to fees earned from affiliate companies for consulting fees and interest net of the Company’s equity in the affiliates’ operating losses for the period.  There was no other income in the 2009 three month period.





LIQUIDITY AND CAPITAL RESOURCES





As of March 31, 2010, the Company had a negative working capital of $514,000 and a stockholders’ deficiency of $489,000. Since inception, we generated net cash proceeds of $126,000 from equity placements and borrowed $454,000 principally from a related party (net of repayments). The Company has not as yet attained a level of operations which allows it to meet its current overhead and may not attain profitable operations within next few business operating cycles, nor is there any assurance that such an operating level can ever be achieved. The Company is dependent upon obtaining additional financing adequate to fund its commitments to its affiliate companies. The report of our auditors on our financial statements for the year ended December 31, 2009 includes a reference to going concern risks.  While the Company has funded its initial operations with private placements, became a publicly owned entity and secured loans from a related party, there can be no assurance that adequate financing will continue to be available to the Company and, if available, on terms that are favorable to the Company.   Our ability to continue as a going concern is also dependent on many events outside of our direct control, including, among other things, our ability to achieve our business goals and objectives, as well as improvement in the economic climate.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.





Cash Flows





The Company cash on hand at March 31, 2010 and 2009 was $1,400 and $2,700, respectively.





Operating cash flows:We had no operating sources of cash in the 2010 and 2009 periods. Net cash used in operating activities for the three months ended March 31, 2010 was $86,000 as compared to $37,000 in the prior year period. The increase in the cash used in operating activities was the result of the increase in operating expenses in 2010 versus the prior year period.






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Investing cash flows:The Company used cash of $39,000 in connection with its affiliated companies in 2009 and had no similar expenditures in the 2009 period.





Financing cash flows:Net cash generated from financing of $122,000 in 2010 consists of net proceeds from loans principally from a related party net of a repayment of $9,500.  Net cash provided by financing activities for the prior year was $40,000 which represents proceeds from a loan from a related party.





Off-Balance Sheet Arrangements





As of March 31, 2010, we have no off-balance sheet arrangements.





Related Parties





Information concerning related party transactions is included in the financial statements and related notes, appearing elsewhere in this quarterly report on Form 10-Q.





Critical Accounting Policies





The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.





Federal Income Taxes





Because federal income tax regulations differ from accounting principles generally accepted in the United States, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.




Item 3.
Quantitative and Qualitative Disclosures about Market Risk.





We are subject to financial market risks, including changes in interest rates. During the three months ended March 31, 2010, we did not engage in interest rate hedging.





Item 4.                    CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





The Company is in the process of implementing disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’), that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our Chief Executive Officer to allow timely decisions regarding required disclosure.





As of March 31, 2010, the Chief Executive Officer and Chief Financial Officer carried out an assessment, of the effectiveness of the design and operation of our disclosure controls and procedure and concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2010, because of the material weakness described below.





A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.





The material weakness identified during management's assessment was the lack of sufficient resources with SEC, generally accepted accounting principles (GAAP) and tax accounting expertise. This control deficiency did not result in adjustments to the Company’s interim financial statements. However, this control deficiency could result in a material misstatement of significant accounts or disclosures that would result in a material misstatement to the Company’s interim or annual financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.






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The Chief Executive Officer and Chief Financial Officer performed additional accounting and financial analyses and other post-closing procedures including detailed validation work with regard to balance sheet account balances, additional analysis on income statement amounts and managerial review of all significant account balances and disclosures in the Quarterly Report on Form 10-Q, to ensure that the Company’s Quarterly Report and the financial statements forming part thereof are in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements included in this Quarterly Report fairly present, in all material respects, the Company’s financial condition, results of operations, and cash flows for the periods presented.





Changes in Internal Control over Financial Reporting





During the three months ended March 31, 2010 there were no changes in our system of internal controls over financial reporting.




PART II. OTHER INFORMATION





Item 1.
Legal Proceedings





We are not currently subject to any material pending legal proceedings.





Item 1A.
Risk Factors





In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.





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





None.





Item 3.
Defaults Upon Senior Securities





None.





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





On February 5, 2010 the Company filed an Information Statement with the SEC providing notice of shareholder action in lieu of an Meeting of Shareholders, taken pursuant to the written consent of certain shareholders, referred to as the consenting shareholders. Specifically, the consenting shareholders approved the decision of the Audit Committee of the Board of Directors of the Company to appoint Rosenberg Rich Baker Berman & Co. as the independent auditors for the Company for the year ended December 31, 2009.  The consenting shareholders held shares of common stock and are entitled to cast a number of votes equal to 53.0 % of the total voting capital stock on all matters submitted to the shareholders for approval.





Item 5.
Other Information





None.








14




Item 6.
Exhibits





(a) Exhibits


31.1

Certification of Chief Executive Officer31.2

Certification of Chief Financial Officer32.1

Section 1350 Certification of Chief Executive Officer and Chief Financial Officer








15








SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 17, 2010.






Spring Creek Capital Corp.By:
/s/ Kelly T. HickelKelly T. HickelChief Executive Officer


By:
/s/ Jan E. ChasonJan E. ChasonChief Financial Officer