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 JANUARY 31, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 000-53847
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: 57,800,000 as of March 15, 2010.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Pepper Rock Resources Corp.
(An Exploration Stage Company)
January 31, 2010
Index
-----
Balance Sheets (Unaudited).............................................. 3
Statements of Expenses (Unaudited)...................................... 4
Statements of Cash Flows (Unaudited).................................... 5
Notes to Unaudited Financial Statements ................................ 6
2
F-3
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Balance Sheets
(Unaudited)
January 31, July 31,
2010 2009
-------- --------
ASSETS
Current Assets
Cash $ 386 $ 590
Prepaid expenses 350 350
-------- --------
Total Assets $ 736 $ 940
-------- --------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities 4,450 7,257
Loan payable 24,340 1,000
Due to related party 184 184
-------- --------
Total Liabilities $ 28,974 $ 8,441
-------- --------
Stockholders' Deficit
Preferred Stock, 100,000,000 shares authorized, $0.00001 par value;
No shares issued and outstanding as of January 31, 2010 & July 31, 2009 -- --
Common Stock, 500,000,000 shares authorized, $0.00001 par value;
57,800,000 shares issued and outstanding as of January 31, 2010 & July 31, 2009 578 578
Additional Paid-in Capital 64,522 62,122
Deficit Accumulated During the Exploration Stage (93,338) (70,201)
-------- --------
Total Stockholders' Deficit (28,238) (7,501)
-------- --------
Total Liabilities and Stockholders' Deficit $ 736 $ 940
======== ========
(The Accompanying Notes are an Integral Part of
These Unaudited Financial Statements)
3
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Statements of Expenses
(Unaudited)
For the For the For the For the From
Three months Three months Six months Six months May 29, 2008
Ended Ended Ended Ended (Date of Inception) to
January 31, January 31, January 31, January 31, January 31,
2010 2009 2010 2009 2010
------------ ------------ ------------ ------------ ------------
Expenses
Other general and administrative $ 1,220 $ 1,480 $ 2,091 $ 3,809 $ 9,287
Management services 1,200 1,200 2,400 2,400 8,000
Professional fees 4,646 16,495 18,506 25,015 67,616
Impairment of mineral properties -- -- -- -- 5,000
Exploration costs -- -- 140 295 3,435
------------ ------------ ------------ ------------ ------------
Total Expenses $ 7,066 $ 19,175 $ 23,137 $ 31,519 $ 93,338
------------ ------------ ------------ ------------ ------------
Net Loss for the Period $ (7,066) $ (19,175) $ (23,137) $ (31,519) $ (93,338)
============ ============ ============ ============ ============
Net Loss Per Common Share -
Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Weighted Average Common Shares
Outstanding 57,800,000 57,800,000 57,800,000 57,800,000
============ ============ ============ ============
(The Accompanying Notes are an Integral Part of
These Unaudited Financial Statements)
4
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Statements of Cash Flows
(Unaudited)
For the For the From
Six months Six months May 29, 2008
Ended Ended (Date of Inception) to
January 31, January 31, January 31,
2010 2009 2010
-------- -------- --------
Operating Activities
Net loss for the period $(23,137) $(31,519) $(93,338)
Adjustment to reconcile net loss to net
cash used in operating activities:
Donated services 2,400 2,400 8,000
Impairment of mineral properties -- -- 5,000
Changes in operating assets and liabilities:
Prepaid expenses -- (411) (350)
Accounts payable and accrued liabilities (2,807) 4,036 4,450
-------- -------- --------
Net Cash Used in Operating Activities (23,544) (25,494) (76,238)
-------- -------- --------
Investing Activities
Mineral property costs -- -- (5,000)
-------- -------- --------
Net Cash Used in Investing Activities -- -- (5,000)
-------- -------- --------
Financing Activities
Loan payable 23,340 -- 24,340
Due to related parties -- 59 184
Proceeds from issuance of common stock -- -- 57,100
-------- -------- --------
Net Cash Provided by Financing Activities 23,340 59 81,624
-------- -------- --------
Increase (Decrease) in Cash (204) (25,435) 386
Cash - Beginning of Period 590 32,793 --
-------- -------- --------
Cash - End of Period $ 386 $ 7,358 $ 386
======== ======== ========
Supplemental Disclosures
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
======== ======== ========
(The Accompanying Notes are an Integral Part of
These Unaudited Financial Statements)
5
Pepper Rock Resources Corp.
(An Exploration Stage Company)
Notes to the Financial Statements
January 31, 2010
(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, 2009 report filed with the SEC on Form 10-K. 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, 2009 as reported on Form 10-K, have been omitted.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period's financial
statements to conform to the current period's presentation.
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. At January 31, 2010, 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) For the fiscal period ended January 31, 2010, the Company recognized $2,400
for donated services at $400 per month provided by the President of the
Company.
b) As at January 31, 2010, the Company is indebted to the President of the
Company for $184 for expenses paid on behalf of the Company. This amount is
non-interest bearing, unsecured and due on demand.
4. Loan Payable
During the six months ended January 31, 2010, the Company received $23,340 (July
31, 2009 - $1,000) in loans from an unrelated third party. This amount was used
for corporate expenses and is unsecured, non-interest bearing and has no terms
of repayment.
5. Common Stock
On October 15, 2009, the Company effected a 5:1 forward stock split of the
authorized, issued and outstanding common stock. As a result, the authorized
share capital increased from 100,000,000 shares of common stock to 600,000,000
shares of common stock with no change in par value. All share amounts have been
retroactively adjusted for all periods presented.
6. Subsequent Events
a) Pursuant to FASB ASC 855-10, we have evaluated all events or transactions
that occurred through the date of issuance of these unaudited financial
statements. During this period, the Company did not have any material
recognizable subsequent events, except as noted below.
b) On February 10, 2010, the Company entered into a Joint Venture Agreement
("the Agreement") with Oxalis Energy Group ("Oxalis") of Katy, Texas.
The Company has agreed to invest $5,300,000 as working capital in the Adam's
Ranch Development with set tranche amounts and due dates. Oxalis shall give the
Company the exclusive right to participate in the Adam's Ranch Development as
long as the Company meets its funding obligations as determined by the Company
and in a reasonable time frame to fund the amounts indicated that is acceptable
to Oxalis.
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.
RESULTS OF OPERATIONS / PLAN OF OPERATION
We are a start-up, exploration stage corporation, and have not yet
generated or realized any revenues from our business activities.
We have not generated any revenue and have incurred losses since inception.
In addition, we have a working capital deficit at January 31, 2010. These
factors raise substantial doubt regarding the Company's ability to continue as a
going concern 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.
Funds raised from our private placement were used to pay administrative and
other expenses, 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 officer 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 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 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.
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.
7
MILESTONES
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 for a retention period of 90 days or less.
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.
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 57,800,000 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 32,500,000 shares of common stock to our former
officer and director, Curtis C. Daye. 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 $184 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 25,300,000 shares of common stock to 46
individuals in consideration of $50,600.
As of January 31, 2010, our total assets were $736 and our total
liabilities were $28,974.
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.
8
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 the interim periods.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial
reporting that occurred during the six months ended January 31, 2010 that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.
9
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.
10
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 15 day of March, 2010.
PEPPER ROCK RESOURCES CORP.
BY: /s/ Phil Kueber
--------------------------------------------------
Phil Kueber, President, Chief Executive Officer,
Secretary, Treasurer, Principal Financial Officer,
Principal Accounting Officer, and sole member of
the Board of Directors.
11
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.