United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

☑	For the quarterly period ended December 31, 2011

 

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number: 000-53610

 

Tuffnell Ltd.

(Exact name of registrant as specified in its charter)

 

Nevada	000-53610	26-2463465
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

 

14001 N. 7th Street

Bldg D107, Suite 50

Phoenix, AZ 85022

(Address of principal executive offices)

_______________________________

 

 

(480) 535-4999

(Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

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 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  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 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   ¨ No x

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ☐   No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 243,873,334 shares of common stock at February 5, 2012.

 

 

 

 

TUFFNELL LTD.

 

TABLE OF CONTENTS  

 

PART I –		FINANCIAL INFORMATION		1
Item 1.		Financial Statements:		1
		Balance Sheets as of December  31, 2011 (Unaudited) and September 30, 2011		1
		Statements of Operations for the three  months ended December 31, 2011 and 2010 and for the period from July 26, 2007 (inception) through December 31, 2011 (Unaudited)		2
		Statements of Cash Flows for the three months ended December 31, 2011 and 2010 and for the period from July 26, 2007 (inception) through December 31, 2011 (Unaudited)		3
		Notes to Financial Statements (Unaudited)		4
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		8
Item 3.		Quantitative and Qualitative Disclosure About Market Risk		11
Item 4.		Controls and Procedures		11
PART II-		OTHER INFORMATION		12
Item 1.		Legal Proceedings		12
Item 1A.		Risk Factors (not applicable)		12
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		12
Item 3.		Defaults Upon Senior Securities		12
Item 4.		[Removed and Reserved]		12
Item 5.		Other Information		12
Item 6.		Exhibits		13
Signatures				14

 

PART I - FINANCIAL INFORMATION

 

ITEM 1.   FINANCIAL STATEMENTS

 

TUFFNELL LTD.

(An Exploration Stage Company)

BALANCE SHEETS

 

		December 31, 2011				September 30, 2011
		(Unaudited)
ASSETS
Current assets:
Cash		$	45,971			$	3,898
Total current assets			45,971				3,898
Capital assets:
Mineral property interests			69,261				69,261
Total assets		$	115,232			$	73,159
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	16,485			$	22,603
Total current liabilities			16,485				22,603
Total liabilities			16,485				22,603
Commitments
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 300,000,000 shares authorized, 243,873,334  shares at December 31, 2011 and 241,873,334, shares at September 30, 2011 respectively issued and outstanding			243,873				241,873
Additional paid-in capital			1,199,559				1,075,659
Deficit accumulated during the exploration stage			(1,344,685	)			(1,266,976	)
Total stockholders' equity			98,747				50,556
Total liabilities and stockholders' equity		$	115,232			$	73,159

 

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

 

TUFFNELL LTD.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

 

For the three months ended December 31, 2011 and 2010 and the period from

July 26, 2007 (inception) through December 31, 2011

(Unaudited)

 

		Three months				Three months				Inception through
		December 31, 2011				December 31, 2010				December 31, 2011
Costs and expenses:
Mineral exploration		$	7,212			$	128,153			$	679,089
General and administrative			58,285				42,108				460,867
Management fee- related party			5,327				15,000				89,700
Advertising and Marketing			6,885				—				115,029
Net loss		$	(77,709	)		$	(185,261	)		$	(1,344,685	)
Net loss per share:
Basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average shares outstanding:
Basic and diluted			243,148,567				237,440,000

 

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

 

TUFFNELL LTD.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS

 

For the three months ended December 31, 2011 and 2010 and the period from

July 26, 2007 (inception) through December 31, 2011

(Unaudited)

 

		Three months				Three months				Inception through
		December 31, 2011				December 31, 2010				December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(77,709	)		$	(185,261	)		$	(1,344,685	)
Adjustment to reconcile net loss to cash used in operating activities:
Stock-based compensation			25,900				—				25,900
Net change in:
Prepaid deposits			—				5,330				—
Accounts payable			(6,118	)			(10,287	)			16,485
CASH FLOWS USED IN OPERATING ACTIVITIES			(57,927	)			(190,218	)			(1,302,300	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mineral property interests			—				—				(69,261	)
CASH FLOWS USED IN INVESTING ACTIVITIES			—				—				(69,261	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from the sale of common stock			100,000				150,000				1,361,900
Shareholder advance, net			—				—				55,632
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			100,000				150,000				1,417,532
NET CHANGE IN CASH			42,073				(40,218	)			45,971
Cash, beginning of period			3,898				79,150				—
Cash, end of period		$	45,971			$	38,932			$	45,971
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid on interest expenses		$	—			$	—			$	—
Cash paid for income taxes		$	—			$	—			$	—
NON CASH TRANSACTION
Forgiveness of shareholder advances		$	—			$	—			$	55,632

 

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

 

TUFFNELL LTD.

(An Exploration Stage Company)

 

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2011

(UNAUDITED)

 

Note 1   Basis of Presentation

 

The accompanying unaudited interim financial statements of Tuffnell Ltd. ("Tuffnell" or 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 annual 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 our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2011, as reported in the Form 10-K annual report of the Company, have been omitted. Certain prior period amounts have been reclassified to conform to current period presentation.

 

Nature of business

 

Tuffnell Ltd. (the “Company”), was incorporated in the State of Nevada on July 26, 2007. The Company is an Exploration Stage Company as defined by Guide 7 of the Securities Exchange Commission’s Industry Guide and ASC Topic 915-10 “Development Stage Entities”, and is in the process of exploring and evaluating its mineral properties and determining whether they contain ore reserves that are economically recoverable. The recoverability of amounts shown for mineral properties is dependent upon the discovery of economically recoverable ore reserves, the ability of the Company to obtain the necessary financing to complete development, confirmation of the Company’s interest in the underlying mineral claims and upon future profitable production or proceeds from the disposition of all or part of its mineral properties.

 

Note 2.   Accounting Policies

 

Share-based payments

 

The Company issues stock options to employees, officer, director and consultants in connection with various business activities. These are accounted for in accordance with the provisions of ASC 718 “Compensation – Stock Compensation” and ASC 505 “Equity” as well as other authoritative accounting pronouncements. The Company is required to make estimates of the fair value of the related instruments based on the Black- Scholes option pricing model and recognize expenses over the period benefited, usually the vesting period.

 

Newly issued pronouncements

 

The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.

 

Note 3.   Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred a net operating loss of $1,344,685 through December 31, 2011. The Company has not commenced its operations, rather, still in the development stages, raising substantial doubt about the Company’s ability to continue as a going concern.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Note 4.   Related party transactions

 

During the three months ended December 31, 2011 and 2010, the Company was charged $5,327 and $15,000, respectively in management fees by directors of the Company.

 

Note 5.   Stockholders’ equity

 

Issued common stock

 

On November 3, 2011, the Company closed the private placement of 2,000,000 shares of common stock at .05 per share, for a total offering price of $100,000.

 

Stock Options

 

On December 1, 2011, the Company established a 2011 Stock Option Plan (the "Plan) for its directors, officers, consultants and advisors in which 35,000,000 shares of common stock were authorized for issuance under the Plan. Pursuant to the Plan, grants of shares can be made to employees, officers, directors, consultants and independent contractors of non-qualified stock options as well as stock options to employees that qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986 (“Code”). The Plan is administered by the Option Committee of the Board of Directors (the “Committee”), which has, subject to specified limitations, the full authority to grant options and establish the terms and conditions for vesting and exercise thereof. Option are generally granted with an exercise price equal to the external market price of the Entity’s stock at the date of grant; those option generally vest based on 1-4 years of continuous service and have 10-year terms from date of grant.

 

The fair value of the stock options granted was estimated using the Black-Scholes option pricing model and is amortized over the related service period of the underlying options. This model requires management to make estimates of the expected volatility of its common shares, the expected term of the option to exercise, the expected future forfeiture rate, and future interest rates. The risk free interest rate is based on the U.S. Treasury Bond rate. The Company has not paid dividends and does not expect to pay dividends in the immediate future. The expected volatility is based on the historical performance of the common shares of the Company. The expected life of the stock options was estimated to be the term of the options.

 

A summary of changes in stock options during the period ended December 31, 2011, is as follows:

 

	Number of Stock Options	Exercise Price
Balance, September 30, 2011	-	-
Granted	6,000,000	$0.03
Exercised	-	-
Expired	-	-
Forfeited	-	-
Balance, December 31, 2011	6,000,000	$0.03
Options exercisable, end of year	600,000	$0.03

 

As at December 31, 2010, the following stock options were outstanding:

 

Date of Grant	Options Granted	Options Exercisable	Exercise Price	Expiration date
December 1, 2011	6,000,000	600,000	0.03	December 1, 2021
	6,000,000	600,000

 

The Black-Scholes Pricing Model was used to value the options issued with the following assumptions.

 

		December 31, 2011
Dividend		0.00%
Risk-free rate for term		2.11%
Volatility		156%
Maturity date		10

 

Note 6.   Commitments

 

On March 12, 2010, the Company entered into an Option Agreement (the "Agreement") with MinQuest, Inc. ("MinQuest"), an unaffiliated third party, whereby MinQuest granted the Company the sole and exclusive right and option to acquire an undivided 100% right, title and interest in and to the Little Butte property subject only to a royalty, being located in LaPaz County, Arizona (the "Property"). On March 12, 2010 the Company agreed to the terms of an option agreement for the acquisition of the Little Butte mining property in the State of Arizona by making a cash payment to MinQuest, Inc. of $39,261 (US) upon signing the Agreement, $10,000 is due on or before February 25, 2011 (paid), $20,000 (US) on or before March 12, 2011 (paid), $20,000 on or before the February 25, 2012, $30,000 on or before March 12, 2012, $30,000 on or before February 25, 2013, $40,000 on or before March 12, 2013, $40,000 on or before February 25, 2014, $50,000 on or before March 12, 2014, $175,000 on or before February 25, 2015, $60,000 on or before March 12, 2015, $60,000 on or before March 12, 2016 and $60,000 on or before March 12, 2017.

 

The Company shall also be responsible for making all necessary property payments and taxes to keep the Property in good standing. The cash payments above include payments to Jack Walker ($10,000 paid) pursuant to a property option agreement which has been assigned by MinQuest to the Company as set out in the Agreement.

 

The Company shall complete the following exploration expenditures on the Property as follows: (i) $250,000 on or before the first anniversary of the signing of the Agreement (ii) $250,000 on or before the second anniversary of the signing of the Agreement; (iii) $300,000 on or before the third anniversary of the signing of the Agreement; (iv) $300,000 on or before the fourth anniversary of the signing of the Agreement; (v) $300,000 on or before the fifth anniversary of the signing of the Agreement; (vi) $300,000 on or before the sixth anniversary of the signing of the Agreement; and (vii) $300,000 on or before the seventh anniversary of the signing of the Agreement. The Company believes it is in compliance with all aspects of the agreement as of September 30, 2011.

 

As it relates to the above payments, Jack Walker received $5,000 upon signing the Agreement, shall receive $10,000 on or before February 25, 2011, $20,000 on or before the February 25, 2012, $30,000 on or before February 25, 2013, $40,000 on or before February 25, 2014 and $175,000 on or before February 25, 2015.

 

If and when the option has been exercised, a 100% right, title and interest in and to the property shall vest in the Company free and clear of all charges except for the royalty. The Company may terminate the Agreement at any time by giving 30 days notice of such termination of the Agreement.

 

If the Company is in default of the Agreement, MinQuest may terminate the Agreement but only if:

 

(a) MinQuest has first given the Company notice of the default containing particulars of the obligations which the Company has not performed, and (b) the Company has not, within 30 days following delivery of such notice, cured such default by appropriate payment or performance

 

On April 27, 2010, MinQuest and the Company entered into an Option Amendment Agreement wherein the date of first payment was extended from March 12, 2010, as set out in the option agreement dated March 12, 2010 above, to April 30, 2010.  On April 29, 2010, the Company made the first payment of $39,261 to MinQuest in accordance with the Agreement.

 

Effective February 26, 2010, Mr. Dory was appointed President, Treasurer, Secretary and Director of the Company. On August 29, 2011 Mr. George T. Dory resigned as President, Treasurer, Secretary and Director of Tuffnell Ltd. (“the Company”). From February 26, 2010 to August 29, 2011, Mr. Dory was paid $4,000 per month for his services to the Company.

 

On August 29, 2011, Mr. Robert D. Coale was appointed President, Treasurer, Secretary and Director of the Company. Mr. Coale is paid on an hourly basis for his services to the Company.

 

Effective April 12, 2010 Mr. Jared Beebe was appointed a Director of the Company which has agreed to pay Mr. Beebe $500 per month for his services.

 

Effective April 1, 2010, Mr. Richard Kehmeier was appointed a Director of the Company which has agreed to pay Mr. Kehmeier $500 per month for his services.

 

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

 

Caution Regarding Forward-Looking Statements

 

The following information may contain certain forward-looking statements that are not historical facts. These statements represent our expectations or beliefs, including but not limited to, statements concerning future acquisitions, future operating results, statements concerning industry performance, capital expenditures, financings, as well as assumptions related to the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “shall,” “will,” “could,” “expect,” “estimate,” “anticipate,” “predict,” “should,” “continue” or similar terms, variations of those terms or the negative of those terms. Forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or view expressed herein. Our financial performance and the forward-looking statements contained in this report are further qualified by other risks including those set forth from time to time in documents filed by us with the U.S. Securities and Exchange Commission (“SEC”).

 

The following information has not been audited.  You should read this information in conjunction with the unaudited financial statements and related notes to the financial statements included in this report.

 

Plan of Operations

 

Overview

 

We are a natural resource exploration company with an objective of acquiring, exploring, and if warranted and feasible, exploiting natural resource properties. Our primary focus in the natural resource sector is gold.

 

We do not anticipate going into production ourselves but instead anticipate optioning or selling any ore bodies that we may discover to a major mining company. Most major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies such as the Company. Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine. By optioning or selling a deposit found by us to these major mining companies, it would provide an immediate return to our shareholders without the long time frame and cost of putting a mine into operation ourselves, and it would also provide future capital for the Company to continue operations.

 

The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the properties we have contain commercially exploitable reserves.  Exploration for natural resource reserves is a speculative venture involving substantial risks. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected geological formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan and any money spent on exploration would be lost.

 

Natural resource exploration and development requires significant capital and our assets and resources are very limited. Therefore, we anticipate participating in the natural resource industry through the purchase or option of early stage properties. To date, we have one property under option and own another property.

 

Mineral Exploration Property - Little Butte

 

On March 12, 2010, the Company entered into an Option Agreement (the "Agreement") with MinQuest, Inc. ("MinQuest"), an unaffiliated third party, whereby MinQuest granted the Company the sole and exclusive right and option to acquire an undivided 100% right, title and interest in and to the Little Butte property subject only to a royalty, being located in LaPaz County, Arizona (the "Property").

 

Under the terms of the Agreement, MinQuest has granted the Company the sole and exclusive option to acquire a 100% undivided interest in and to the Property by making a cash payment to MinQuest of $39,261 (US) upon signing the Agreement, $10,000 due on or before February 25, 2011 (paid), $20,000 (US) on or before March 12, 2011 (paid), $20,000 on or before the February 25, 2012, $30,000 on or before March 12, 2012, $30,000 on or before February 25, 2013, $40,000 on or before March 12, 2013, $40,000 on or before February 25, 2014, $50,000 on or before March 12, 2014, $175,000 on or before February 25, 2015, $60,000 on or before March 12, 2015, $60,000 on or before March 12, 2016, and $60,000 on or before March 12, 2017.

 

The Company shall also be responsible for making all necessary property payments and taxes to keep the Property in good standing. The cash payments above include payments to Jack Walker pursuant to a property option agreement which has been assigned by MinQuest to the Company as set out in the Agreement.

 

As it relates to the above payments, Jack Walker received $5,000 upon signing the Agreement, received $10,000 on or before February 25, 2011, $20,000 on or before the February 25, 2012, $30,000 on or before February 25 2013, $40,000 on or before February 25, 2014 and $175,000 on or before February 25, 2015.

 

The Company shall complete the following exploration expenditures on the Property as follows: (i) $250,000 on or before the first anniversary of the signing of the Agreement (ii) $250,000 on or before the second anniversary of the signing of the Agreement; (iii) $300,000 on or before the third anniversary of the signing of the Agreement; (iv) $300,000 on or before the fourth anniversary of the signing of the Agreement (v)$300,000 on or before the fifth anniversary of the signing of the Agreement; (vi) $300,000 on or before the sixth anniversary of the signing of the Agreement; and (vii) $300,000 on or before the seventh anniversary of the signing of the Agreement .

 

If and when the option has been exercised, a 100% right, title and interest in and to the property shall vest in the Company free and clear of all charges except for the royalty. The Company may terminate the Agreement at any time by giving 30 days notice of such termination of the Agreement.

 

If the Company is in default of the Agreement, MinQuest may terminate the Agreement but only if:

 

(a) MinQuest has first given the Company notice of the default containing particulars of the obligations which the Company has not performed, and (b) the Company has not, within 30 days following delivery of such notice, cured such default by appropriate payment or performance

 

On April 27, 2010, MinQuest and the Company entered into an Option Amendment Agreement wherein the date of first payment was extended from March 12, 2010, as set out in the option agreement dated March 12, 2010 above, to April 30, 2010.  On April 29, 2010, the Company made the first payment of $39,261 to MinQuest in accordance with the Agreement. In February and March 2011, $30,000 was paid.

 

Results of Operations for the Three Months Ended December 31, 2011 and 2010

 

We have not earned any revenues since our incorporation on July 26, 2007, through December 31, 2011.  We do not anticipate producing revenues unless we enter into commercial production on the Little Butte mining claim, which is doubtful.  We can provide no assurance that we will discover economic mineralization on the Little Butte claim, or if such minerals are discovered, that we will enter into commercial production.

 

Mineral Exploration: During the three months ended December 31, 2011, the Company incurred $7,212 in mineral exploration costs compared to $128,153 during the three month period December 31, 2010, a decrease of $120,941. These mineral exploration costs were comprised of mining exploration testing and evaluation of its claims.

 

General and Administrative Expenses: During the three month period ended December 31, 2011, the Company incurred $58,285 of general and administrative expenses compared to $42,108 during the three month period ended December 31, 2010, an increase of $16,177. The general and administrative costs were comprised of accounting fees, legal fees, filing of SEC reports, and other administrative expenses.

 

Management Fee – Related-Party: During the three months ended December 31, 2011, the Company incurred management fee from a related party of $5,327, compared to $15,000 during the three months ended December 31, 2010, a decrease of $9,673.

Advertising and Marketing Expenses: During the three months ended December 31, 2011, the Company incurred advertising and marketing expenses of $6,885, compared to $-0- during the three months ended December 31, 2010, a increase of $6,885.

 

Net Loss: The Company incurred a net loss of $77,709 during the three month period ended December 31, 2011, compared to a net loss of $185,261 during the three month period ended December 31, 2010, a decrease of $107,552.

 

Liquidity and Capital Resources

 

Since inception, we have financed our cash requirements from cash generated from the sale of common stock and advances from shareholders and/or management.

 

Since inception through to and including December 31, 2011, we have raised $1,361,900 through private placements of our common stock and received $55,632 in cash advances from shareholders.

 

On April 26, 2010, the Company closed a private placement of 2,000,000 units at $0.25 per unit for a total offering price of $500,000.  The units were offered by the Company pursuant to an exemption from registration under Regulation S under the Securities Act of 1933, as amended.  Each unit consists of one common share of the common stock of the Company and one non-transferable share purchase warrant.  The warrants are exercisable at a price of $.375 per share commencing April 26, 2010, and expire on April 26, 2012.  The private placement was fully subscribed to by a non-U.S. corporation.

 

In the first quarter of fiscal 2011, the Company closed a private placement of 1,000,000 units at $0.15 per unit for a total offering price of $150,000.  The shares were offered by the Company pursuant to an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended.  Each unit consists of one share of common stock of the Company and one non-transferable share purchase warrant.  The warrants are exercisable at a price of $.25 per share and expire on November 5, 2012.  The private placement was fully subscribed to by a non-U.S. corporation and the shares were issued on January 14, 2011.

 

On February 9, 2011, the Company closed a private placement of 1,066,668 common shares at $.1875 per share for a total offering price of $200,000.  The shares were offered by the Company pursuant to an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended.  The private placement was fully subscribed to by a non-U.S. corporation.

 

On April 8, 2011, the Company closed a private placement of 1,500,000 units at $.20 per unit for a total offering price of $300,000.  The shares were offered by the Company pursuant to an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended.  Each unit consists of one share of common stock of the Company and one non-transferable share purchase warrant.  The warrants are exercisable at a price of $.25 per share and expire on April 15, 2013.  The private placement was fully subscribed to by a non-U.S. corporation and the shares were issued on May 11, 2011.

 

 On September 19, 2011, the Company closed a private placement of 866,666 units at $.09 per unit for a total offering price of $78,000. The units were offered by the Company pursuant to an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of common stock of the Company and one non-transferable share purchase warrant. The warrants are exercisable at a price of $.11 per share and expire on September 12, 2012. The private placement was fully subscribed to by a non-U.S. corporation. The private placement was fully subscribed to by a non-U.S. corporation.

 

On November 3, 2011, the Company closed a private placement of 2,000,000 shares of common stock at $.05 per share for a total offering price of $100,000. The shares were offered by the Company pursuant to an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended.

 

There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue the plan of operations, then we will not be able to continue our exploration of our mineral claims and our venture will fail.

 

Off-Balance Sheet Arrangements

 

We do not maintain any off-balance sheet transactions, arrangements, or obligations that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, or capital resources.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 under the Securities Exchange Act of 1934, and are not required to provide the information required under this item.

 

Item 4.   Controls and Procedures

 

Management’s Report On Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

 

	–	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
	–	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and
	–	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

Our management evaluated the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting as of the end of December 31, 2011.  This evaluation was conducted by Robert Coale, our Chief Executive Officer and President.

 

Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclose in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported.

 

Limitations on the Effectiveness of Controls

 

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met.

 

Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs.  These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control.  A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected

 

 

This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this quarterly report.

 

Conclusion

 

Based upon his evaluation of our controls, our Chief Executive Officer and President has concluded that, subject to the limitations noted above, the disclosure controls and financial reporting controls are effective providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared.  There were no changes in our internal controls and internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

 

PART II

 

OTHER INFORMATION

 

ITEM 1.   LEGAL PROCEEDINGS

 

None

 

ITEM 1A.   RISK FACTORS

 

N/A

 

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On November 3, 2011, the Company closed a private placement of 2,000,000 units at $.05 per share for a total offering price of $100,000. The units were offered by the Company pursuant to an exemption from registration pursuant to Regulation S under the Securities Act of 1933, as amended. The private placement was fully subscribed by a non-U.S. corporation.

 

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None

 

ITEM 5.   OTHER INFORMATION

 

None

 

 

ITEM 6.   EXHIBITS

 

INDEX TO EXHIBITS

 

Exhibit No.		Description
31.1		Certification of Robert Coale
32.1		Certification of Robert Coale

 

 

 

SIGNATURES

 

Pursuant to the requirements 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.

 

 

February ___, 2012	TUFFNELL LTD.
	By:	/s/  Robert Coale
		Robert Coale
		Director, President, Treasurer and Secretary