UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended

March 31, 2012

 

 

Commission File Number 333-151085

 

CRATER MOUNTAIN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

 

Nevada                                                                                               20-8837756

(State or other jurisdiction of incorporation or organization)               (I.R.S. Employer Identification No.)

 

 

 4666 Mission Avenue, Suite 1

San Diego, CA 92116  

(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number, including area code: (619) 819-7595 

 

Former Name, Address and Fiscal Year, if Changed Since Last Report

None

 

 

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 past 90 days. Yes X    No

 

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  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_ __

 

As of April 26, 2012, there were 34,000,000 shares of our common stock issued and outstanding.

 

 

 

 

 

TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION		3
Item 1. Financial Statements		4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3. Quantitative and Qualitative Disclosures About Market Risk		13
Item 4T. Controls and Procedures		13
PART II. OTHER INFORMATION		14
Item 1. Legal Proceedings		14
Item 1A. Risk Factors		14
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds		14
Item 3. Default Upon Senior Securities		14
Item 4. Submission of  Matters to a Vote of  Security Holders		14
Item 5. Other Information		14
Item 6. Exhibits		14
SIGNATURES		15

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial statements

 

The financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the period presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report Form 10-K, filed on September 28, 2011 with the U.S. Securities and Exchange Commission (SEC) and can be found on the SEC website at www.sec.gov.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEETS

(UNAUDITED)

 

			March 31,		June 30,
			2012		2011
	ASSETS
CURRENT ASSETS
	Cash		$                   23,019		$                 108,759
	Prepaid expense		7,500
		Total current assets	30,519		108,759
	Investment, cost		60,000		-
		TOTAL ASSETS	$                   90,519		$                 108,759
	LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
		Line of credit-related party	$                             -		$                        300
		Interest payable-related party	-		983
		Total current liabilities	-		1,283
		TOTAL LIABILITIES	-		1,283
STOCKHOLDERS' EQUITY
	Common stock, $0.001 par value; 150,000,000
		shares authorized; 34,000,000 and 34,000,000 respectively shares issued and outstanding	34,000		34,000
	Additional paid-in-capital		141,000		141,000
	Deficit accumulated during the exploration stage		(84,481)		(67,524)
		Total stockholders' equity	90,519		107,476
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$                   90,519		$                 108,759

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

 

 

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

			Three months ended		Three months ended		Nine months ended		Nine months ended		From inception (April 11, 2007)
			March 31,		March 31,		March 31,		March 31,		to March 31,
			2012		2011		2012		2011		2012
REVENUES			$                  -		$                -		$               -		$                  -		$                -
EXPENSES
	Selling, general and administrative		3,820		2,435		14,450		10,132		80,991
	Professional fees-related party		2,500				2,500				2,500
		Total expenses	6,320		2,435		16,950		10,132		83,491
OTHER EXPENSE
	Interest expense		-		197		7		561		990
		Total other expense	-		197		7		561		990
NET LOSS			$         (6,320)		$       (2,632)		$    (16,957)		$      (10,693)		$     (84,481)
NET LOSS PER SHARE - BASIC			$                -		$              -		$             -		$                -
WEIGHTED AVERAGE NUMBER
	OF SHARES OUTSTANDING-BASIC		34,000,000		30,006,222		34,000,000		30,002,044

 

 

 

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

 

 

 

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

					Nine months ended		Nine months ended		From inception (April 11, 2007)
					March 31,		March 31,		to March 31,
					2012		2011		2012
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss				$        (16,957)		$   (10,693)		$       (84,481)
	Adjustments to reconcile net loss to net
	cash used from operating activities:
			Contributed capital for rent		-		2,700		15,000
		Changes in operating assets and liabilities:
		(Increase) in prepaid expenses			(7,500)				(7,500)
		Increase (decrease) in interest payable			(983)		561		-
				Net cash flows used in operating activities	(25,440)		(7,432)		(76,981)
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of investment, cost				(60,000)				(60,000)
				Net cash flows used in investing activities	(60,000)		-		(60,000)
CASH FLOWS FROM FINANCING ACTIVITIES
	Issuance of common stock				-		108,000		160,000
	Proceeds/ (repayment) of line of credit				(300)		6,500		-
				Net cash flows provided by (used in) financing activities	(300)		114,500		160,000
NET INCREASE (DECREASE) IN CASH					(85,740)		107,068		23,019
CASH
		BEGINNING OF PERIOD			108,759		1,265		-
CASH
		END OF PERIOD			$          23,019		$   108,333		$         23,019

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

 

  

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

 

NOTE 1 – ORGANIZATION AND PURPOSE

 

Nature of operations

Crater Mountain Resources, Inc. (An Exploration Stage Company) (the “Company”) was incorporated under the laws of the State of Nevada on April 11, 2007. The principal office of the corporation is 4666 Mission Avenue, Suite 1, San Diego, CA 92116.

The business purpose of the Company is the exploration and mining of precious metals, specifically gold, in Papua New Guinea.

A Development Stage Company

 

The accompanying financial statements have been prepared in accordance with the FASB ASC 915-10, "Development Stage Entities". A development stage enterprise is one in which planned principal operations have not commenced; or if its operations have commenced, there have been no significant revenues derived there from. As of March 31, 2012, the Company has not fully commenced nor has it received revenues from its planned principal operations.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended March 31, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2012. For further information refer to the financial statements and footnotes thereto included in our form 10-K for the year ended June 30, 2011.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Definition of Fiscal Year

 

The Company’s fiscal year is June 30.

Going Concern

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $84,481 as of March 31, 2012 and further losses are anticipated in

 

 

 

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the company cannot continue in existence.

 

Investments

 

Equity investment in other mining companies is accounted for under the cost method as the equity investments do not have readily determinable fair values. As per ASC codification 320 “Certain Investments in Debt and Equity Securities”, non marketable equity securities that do not have a readily determinable fair value are not required to be accounted for under the equity method and are typically carried at cost. From time to time the company may evaluate discretionary investments in mining operations located in various emerging market countries.

 

Income taxes

The Company follows the liability method of accounting for income taxes in accordance with FASB ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

 

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are on deposit with financial institutions without restrictions.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported period. Actual results could differ from these estimates.

 

 

CRATER MOUNTAIN RESOURCES, INC

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Earnings (Loss) Per Share Calculations

 

Basic earnings (loss) per share exclude any dilutive effects of options, warrants and convertible securities. Basic earnings (loss) per share is computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per share is computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. For all periods presented, the Company has sustained losses,

which would make use of equivalent shares antidilutive and, as such, the calculation has not been included.

 

New Accounting Pronouncements 

 

The Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.

 

NOTE 3 – STOCKHOLDERS’ DEFICIT

 

As of March 31, 2012, 150,000,000 shares of the Company’s $0.001 par value common stock had been authorized, of which 34,000,000 were issued and outstanding.

 

There were no issuances of common stock for the nine month period ended March 31, 2012.

 

NOTE 4 – EQUITY INVESTMENT

 

On November 17, 2011, the Company participated in the public offering of China Shouguan Mining Co. common stock by purchase of 298,507 shares for an investment of $60,000, representing a price per share of $0.201. The Company filed an 8-K regarding the investment on December 13, 2011. We are applying the cost method of accounting and are recording the investment at cost.

NOTE 5 – RELATED PARTY TRANSACTIONS

 

On December 14, 2009, the Company executed an unsecured line of credit in the amount of $20,000 with Magellan Global Fund, Ltd. (“Magellan”). The Magellan Global Fund, LP, is a Delaware Limited Partnership, formed in September 2006. The General Partner of the limited partnership is Orinda Advisors, LLC, a Delaware limited liability company and majority stockholder, of which Harry Orfanos and Niko Lahanas, officers, directors and principal stockholders of the Company, are Managing Partners. Messrs. Orfanos and Lahanas are also Managing Partners of the Magellan Global Fund, LP. The line of credit carried an annual interest rate of 5% and had a term of one year, at which any outstanding balance was due in full. Additionally, on December 14, 2010, Magellan extended the term of the loan one year from the original due date. As of March 31, 2012 no principal balance exists on the line of credit. Furthermore all interest has been paid in full.

 

 

CRATER MOUNTAIN RESOURCES,INC

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

 

 

NOTE 5 – RELATED PARTY TRANSACTIONS (continued)

On January 5, 2012, the Company executed a one year exclusive consulting agreement with Orinda Advisors. LLC. Orinda Advisors, LLC, is a Delaware limited liability company, of which Harry Orfanos and Niko Lahanas, officers, directors and principal stockholders of the Company, are Managing Partners

Under the agreement Orinda Advisors will source and introduce to the Company potential acquisition targets in the Gold Mining Industry.

In consideration of the services rendered by Orinda under this Agreement, the Company agrees to pay Orinda Advisors the following fees and other compensation

(i)

A non-refundable cash fee of $10,000 (paid)

(ii)

A royalty fee of up to 2% of the net sales of any merger that was directly introduced to the Company by Orinda for a period of five (5) years.

The cash fees paid to Orinda Advisors, LLC under the agreement were recorded as prepaid expense and are amortized over the period of twelve (12) months.

 

 

 

 

 

 

 

FORWARD LOOKING STATEMENTS

 

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Results of Operations

 

The following discussion should be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K filed on September 28, 2011 with the U.S. Securities and Exchange Commission (SEC) and can be found on the SEC website at www.sec.gov.

 

We are an exploration stage company formed for the purpose of exploration and mining of precious metals, specifically gold, in Papua New Guinea. We are a start up, exploration stage mining company and have not yet generated any revenues from operations since inception. From inception on April 11, 2007 to March 31, 2012, our total accumulated deficit is $84,481.

The following table provides selected financial data about the Company as of March 31, 2012.  For detailed financial information, see the financial statements included in this Form 10-Q.

Balance Sheet Data:		3/31/2012
Cash		$	23,019
Prepaid expense		$	7,500
Other assets		$	60,000
Total assets		$	90,519
Total liabilities		$	-
Stockholders' equity		$	90,519

 

We have conducted minimal operations since our inception and do not have any present operations. During the nine months ended March 31, 2012 and 2011, we generated no revenues. Accordingly, a comparative analysis and discussion of our results of operations is not meaningful and will not be presented herein.

 

 

 

Limited Operating History

There is little to no historical financial information about our Company upon which to base an evaluation of our performance or to make a decision regarding an investment in the shares. We are still in the exploration stages and have not yet generated or realized any revenues from operations. We cannot guarantee we will be successful in our business operations or will achieve significant levels of market acceptance for our proposed business. Our business could be subject to any or all of the problems, expenses, delays and risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration and/or development of our properties, possible cost overruns due to price and cost increases in services we require and the absence of an operating history. Therefore, we cannot guarantee we will be able to achieve or maintain profitable operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4T. CONTROLS AND PROCEDURES

 

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 ("Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and Principal Financial Officer (the "Certifying Officer”) is responsible for maintaining our disclosure controls and procedures. Prior to the filing of this report, our Certifying Officer evaluated the effectiveness of our disclosure controls and procedures for the period covered by this report. Based on the evaluation, our Certifying Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that (a) information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and (b) that the information is accumulated and communicated to our management, including the Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure. We have conducted a review of the effectiveness of our internal controls over financial reporting as disclosed herein.

 

We also maintain a system of internal controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management's general and specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with the United States generally accepted accounting principles and to maintain accountability for assets; (ii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. We believe that our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles. Since our most recent evaluation, there have been no changes in our internal controls, or in other factors that could significantly affect our internal controls, nor were any corrective actions required with regard to significant deficiencies and material weaknesses. Because of its inherent limitations, internal control over financial reporting may not prevent or detect every misstatement and/or instance of fraud. Controls are susceptible to manipulation, especially in instances of fraud caused by the collusion of two or more people, including our senior management. Also, 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.

 

Under the supervision and with the participation of our Certifying Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

 

 

ITEM 4T. CONTROLS AND PROCEDURES (continued)

 

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2012. Since our most recent evaluation, there have been no changes in our

internal control of financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not currently a party to any pending legal proceeding and none are threatened that we are aware of.

 

ITEM 1A. RISK FACTORS

 

Our securities are highly speculative and involve a high degree of risk, including among other items the risk factors described in 10K filed with SEC on September 28, 2011. You should carefully consider the risk factors and other information in the latest 10-K before deciding to invest in our securities. We are unaware of any material changes in or additional risk factors since the filing of our 10K for the period ended June 30, 2011.

 

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

 

We had no sales of unregistered equity securities during the period ended March 31, 2012.

 

ITEM 3.  DEFAULT UPON SENIOR SECURITIES

 

None.

 

 

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

 

None.

 

 

ITEM 5. OTHER INFORMATION - SUBSEQUENT EVENTS

 

None.

 

 

ITEM 6. EXHIBITS

 

A) The following exhibits marked with an asterisk and required to be filed herein are incorporated by reference and can be found in their entirety in our original Form S-1 registration statement, filed on May 22, 2008, on the SEC website at www.sec.gov:

 

Exhibit No.      Description

 

* 3(i)                Articles of Incorporation

* 3(ii)               Bylaws

31                     Sec. 302 Certification

32                     Sec. 906 Certification

 

 

 

 

 

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

CRATER MOUNTAIN RESOURCES, INC. a Nevada corporation (Registrant)

 

Dated:    May 15, 2012

 

 

 /s/  Roger Renken                

By: Roger Renken, President, Secretary,

Treasurer, Principal Accounting Officer and Director