UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] | QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2009 | |
OR | |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 333-154709
PEPPER ROCK RESOURCES CORP.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
One Lincoln Centre
18 West 140 Butterfield Road, 15th Floor
Oakbrook Terrace, IL 60181
(Address of principal executive offices, including zip code.)
630-613-7487
(telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated Filer [ ] Smaller Reporting Company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 11,560,000 as of June 1, 2009.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Pepper Rock Resources Corp.
(An Exploration Stage Company)
April 30, 2009
Index
Balance Sheets (Unaudited) ........................................................................................................F–1
Statements of Expenses (Unaudited) .........................................................................................F–2
Statements of Cash Flows (Unaudited) .....................................................................................F–3
Notes to the Financial Statements (Unaudited) ........................................................................F–4
-2-
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Balance Sheets
(Unaudited)
April 30, 2009 | July 31, 2008 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 377 | $ | 32,793 | ||||
Prepaid expenses | 350 | 128 | ||||||
Total Assets | $ | 727 | $ | 32,921 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Bank overdraft | $ | 46 | $ | – | ||||
Accounts payable | 1,261 | – | ||||||
Due to related party (Note 3(b)) | 184 | 125 | ||||||
Total Liabilities | 1,491 | 125 | ||||||
Stockholders’ Equity | ||||||||
Preferred stock, 100,000,000 shares authorized, $0.00001 par value; No shares issued and outstanding | – | – | ||||||
Common stock, 100,000,000 shares authorized, $0.00001 par value; 11,560,000 shares issued and outstanding | 116 | 116 | ||||||
Additional paid-in capital | 61,384 | 57,784 | ||||||
Deficit accumulated during the Exploration Stage | (62,264 | ) | (25,104 | ) | ||||
Total Stockholders’ Equity | 764 | 32,796 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 727 | $ | 32,921 | ||||
(The Accompanying Notes are an Integral Part of These Unaudited Financial Statements)
F-1
-3-
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Statements of Expenses
(Unaudited)
For the | For the | From | ||||||||||
Three months | Nine months | May 29, 2008 | ||||||||||
Ended | Ended | (Date of Inception) | ||||||||||
April 30, | April 30, | to April 30, | ||||||||||
2009 | 2009 | 2009 | ||||||||||
Expenses | ||||||||||||
General and administrative | $ | 1,083 | $ | 4,892 | $ | 6,196 | ||||||
Management services | 1,200 | 3,600 | 4,400 | |||||||||
Professional fees | 3,358 | 28,373 | 43,373 | |||||||||
Impairment of mineral properties | – | – | 5,000 | |||||||||
Exploration costs | – | 295 | 3,295 | |||||||||
Total Expenses | $ | 5,641 | $ | 37,160 | $ | 62,264 | ||||||
Net Loss for the Period | $ | (5,641 | ) | $ | (37,160 | ) | $ | (62,264 | ) | |||
Net Loss Per Share – Basic and Diluted | $ | 0.00 | $ | 0.00 | n/a | |||||||
Weighted Average Common Shares Outstanding | 11,560,000 | 11,560,000 | n/a |
(The Accompanying Notes are an Integral Part of These Unaudited Financial Statements)
F-2
-4-
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Statements of Cash Flows
(Unaudited)
For the Nine months Ended April 30, 2009 | From May 29, 2008 (Date of Inception) To April 30, 2009 | |||||||
Operating Activities | ||||||||
Net loss for the period | $ | (37,160 | ) | $ | (60,294 | ) | ||
Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
Donated services | 3,600 | 4,400 | ||||||
Foreign currency transaction loss | 208 | 584 | ||||||
Impairment of mineral properties | – | 5,000 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable | 1,261 | 1,261 | ||||||
Prepaid expenses | (222 | ) | (2,320 | ) | ||||
Net Cash Used in Operating Activities | (32,313 | ) | (51,369 | ) | ||||
Investing Activities | ||||||||
Mineral property costs | – | (5,000 | ) | |||||
Net Cash Used in Investing Activities | – | (5,000 | ) | |||||
Financing Activities | ||||||||
Bank overdraft | 46 | 46 | ||||||
Due to related parties | 59 | 184 | ||||||
Proceeds from issuance of common stock | – | 56,764 | ||||||
Net Cash Provided by Financing Activities | 105 | 56,994 | ||||||
Effect of exchange rate fluctuations on cash | (208 | ) | (248 | ) | ||||
Increase (Decrease) in Cash | (32,416 | ) | 377 | |||||
Cash - Beginning of Period | 32,793 | – | ||||||
Cash - End of Period | $ | 377 | $ | 377 | ||||
Supplemental Disclosures | ||||||||
Interest paid | $ | – | $ | – | ||||
Income taxes paid | $ | – | $ | – | ||||
(The Accompanying Notes are an Integral Part of These Unaudited Financial Statements)
F-3
-5-
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
April 30, 2009
(Unaudited)
1. Basis of Presentation
The accompanying unaudited interim financial statements of Pepper Rock Resources Corp. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s July 31, 2008 report filed with the SEC on Form S-1. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end July 31, 2008 as reported on Form S-1, have been omitted.
2. Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at April 30, 2009, the Company has accumulated losses since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
3. Related Party Transactions
a) | During the nine month period ended April 30, 2009, the Company recognized $3,600 for donated services at $400 per month provided by the President of the Company. |
b) | As at April 30, 2009, the Company is indebted to the President of the Company for $184 (July 31, 2008 - $125) for expenses paid on behalf of the Company. This amount is non-interest bearing, unsecured and due on demand. |
4. Commitments
The Company is obligated to make monthly payments of $175 to a service provider for twelve months beginning August 1, 2008.
F-4
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
This section of the report includes a number of forward- looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Plan of Operation
We are a start-up, exploration stage corporation and have not yet generated or realized any revenues from our business activities.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. Accordingly, we must raise cash from sources other than the sale of minerals found on the property. Our only other sources for cash at this time are loans from related parties and additional sales of common stock. Our success or failure will be determined by what additional financing we obtain and what we find under the ground.
We raised money from our private placement however we have spent all of it. We have to raise additional money to complete exploring our property. If we find mineralized material and it is economically feasible to remove the mineralized material, we will attempt to raise even more money through a subsequent private placement, public offering or through loans. If we do not have enough money to complete our exploration of the property, we will have to find alternative sources, like a public offering, an additional private placement of securities, or loans from our officers or others.
Our sole officer and director is unwilling to make any commitment at this time to loan us money. At the present time, we have not made any arrangements to raise additional cash. If we need additional cash and can't raise it, we will either have to suspend activities until we do raise the cash, seek additional opportunities, or cease activities entirely. Other than as described in this paragraph, we have no other financing plans.
We have the right to conduct exploration activities on one property. Even if we complete our current exploration program and it is successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit, a reserve.
We will be conducting research in the form of exploration of the property. Our exploration program is explained in as much detail as possible in the business section of this our Form S-1 registration statement. We are not going to buy or sell any plant or significant equipment during the next twelve months. We will not buy any equipment until we have located a reserve and we have determined it is economical to extract the minerals from the land.
-7-
We do not intend to involve other companies in the property if we find mineralized materials. We intend to try to develop the reserves ourselves.
If we can’t or don’t raise more money, we will either cease activities or look for other opportunities. If we cease activities, we don’t know what we will do and we don’t have any plans to do anything.
We do not intend to hire additional employees at this time. All of the work on the property will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.
Milestones
The milestones are as follows:
The milestones are as follows:
1. Raise additional capital.
2. Retain our consultant to manage the exploration of the property. - Maximum cost of $5,000. Time of retention 0-90 days.
3. Trenching. Trenching will cost approximately $14,000 and will be conducted by unrelated subcontractors. Trenching includes grid installation, metal detection, sample collecting and shipping the samples for testing.
4. Have an independent third party analyze the samples. We estimate that it will cost $2,000 to analyze the samples and will take 30 days.
We have nominal cash at the present time and cannot operate until we raise additional capital.
Limited Operating History; Need for Additional Capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from activities. We cannot guarantee we will be successful in our business activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we conduct research and exploration of our properties before we start production of any minerals we may find. We will be seeking equity financing to provide for the capital required to implement our research and exploration phases.
-8-
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Liquidity and Capital Resources
Since inception, we have issued 11,560,000 shares of our common stock and received $57,100.
As of the date of this report, we have conducted limited operations and therefore have not generated any revenues.
In May 29, 2008, we issued 6,500,000 shares of common stock to our sole officer and director, Curtis C. Daye, pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933. The purchase price of the shares was $6,500. This was accounted for as an acquisition of shares. Curtis C. Daye covered some of our initial expenses by paying $125.00 for incorporation documents, administrative costs, and courier costs. The amount owed to Mr. Daye is non-interest bearing, unsecured and due on demand. Further, the agreement with Mr. Daye is oral and there is no written document evidencing the agreement.
On July 8, 2008, we issued 5,060,000 shares of common stock to 46 individuals in consideration of $50,600.
As of April 30, 2009, our total assets were $727 and our total liabilities were $1,491.
-9-
Recent accounting pronouncements
In March 2008, the FASB issued FASB Statement No. 161 ("SFAS 161"), "Disclosures about Derivative Instruments and Hedging Activities". SFAS 161 requires companies with derivative instruments to disclose information that should enable financial-statement users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" and how derivative instruments and related hedged items affect a company's financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of this statement is not expected to have a material effect on the Company's future financial position or results of operations.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. | CONTROLS AND PROCEDURES. |
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective due to adjustments found by independent auditor during their review of our interim financial statements.
-10-
PART II. OTHER INFORMATION
ITEM 6. | EXHIBITS. |
The following documents are included herein:
Exhibit No. | Document Description |
31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
-11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 15th day of June, 2009.
PEPPER ROCK RESOURCES CORP. | ||
BY: | CURTIS C. DAYE | |
Curtis C. Daye, President, Chief Executive Officer, Secretary, Treasurer, Principal Financial Officer, Principal Accounting Officer, and sole member of the Board of Directors. |
-12-
EXHIBIT INDEX
Exhibit No. | Document Description |
31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
-13-