U.S. Lithium Corp. - Annual Report: 2010 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X . ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2010
. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ______
ROSTOCK VENTURES CORP.
(Exact name of registrant as specified in its charter)
Nevada | 333-144944 | 98-0514250 |
(State or other jurisdiction | (Commission File Number) | (IRS Employer |
of Incorporation) |
| Identification Number) |
| 3033 Fifth Avenue, Suite 400 San Diego, CA 92103 |
|
| (Address of principal executive offices) |
|
| 619-546-6100 |
|
| (Registrant’s Telephone Number) |
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes . No X .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes . No X .
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 . No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. .
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2010 was $8,995.00 based upon the price ($0.07) at which the common stock was last sold as of the last business day of the most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws. Our common stock is traded in the over-the-counter market and quoted on the Over-The-Counter Bulletin Board under the symbol “ROSV.”
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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | . | Accelerated filer | . |
Non-accelerated filer | . (Do not check if a smaller reporting company) | 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 .
As of March 21, 2011, there were 40,698,273 shares of the registrant’s $0.001 par value common stock issued and outstanding.
Documents incorporated by reference: None
2
Table of Contents
|
| Page |
| PART I |
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|
Item 1 | Business |
|
Item 1A | Risk Factors | 6 |
Item 1B | Unresolved Staff Comments | 6 |
Item 2 | Properties | 6 |
Item 3 | Legal Proceedings | 7 |
Item 4 | [REMOVED AND RESERVED] | 7 |
|
|
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| PART II |
|
|
|
|
Item 5 | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 7 |
Item 6 | Selected Financial Data | 8 |
Item 7 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 8 |
Item 7A | Quantitative and Qualitative Disclosures about Market Risk | 9 |
Item 8 | Financial Statements | F-1 |
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 10 |
Item 9A | Controls and Procedures | 10 |
Item 9B | Other Information | 11 |
|
|
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| PART III |
|
|
|
|
Item 10 | Directors and Executive Officers and Corporate Governance | 11 |
Item 11 | Executive Compensation | 13 |
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 14 |
Item 13 | Certain Relationships and Related Transactions | 15 |
Item 14 | Principal Accountant Fees and Services | 15 |
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| PART IV |
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Item 15 | Exhibits | 16 |
3
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:
·
The availability and adequacy of our cash flow to meet our requirements;
·
Economic, competitive, demographic, business and other conditions in our local and regional markets;
·
Changes or developments in laws, regulations or taxes in our industry;
·
Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities;
·
Competition in our industry;
·
The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;
·
Changes in our business strategy, capital improvements or development plans;
·
The availability of additional capital to support capital improvements and development; and
·
Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC.
This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Term
Except as otherwise indicated by the context hereof, references in this report to “Company,” “ROSV,” “we,” “us” and “our” are references to Rostock Ventures Corp. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.
4
Description of Business
We were incorporated on November 2, 2006, under the laws of the State of Nevada. We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We entered into a purchase agreement dated December 22, 2006 with Kimberly Sinclair pursuant to which we acquired a 100% interest in the McVicar Lode Mining Claim (the “McVicar Claim”) for cash consideration of $6,000. Collin Sinclair, our former President, Secretary, Treasurer and sole Director is not related to Kimberly Sinclair. The McVicar Claim property is comprised of a single located mineral claim with a total area of approximately 20 acres, located on the Yellow Pine Mining District, Clark County, Nevada. The McVicar Claim is located within Sections 11, 12, 13 and 14, Range 57E, Township 25S, at the easternmost portion of the Yellow Pine Mining District of Clark County, Nevada. In addition to Nevada state regulations, federal regulations require a yearly maintenance fee to keep the claim in good standing. As of September 1, 2010, we have abandoned the McVicar Claim and it is no longer in good standing in Nevada due to non-payment of the yearly maintenance fee.
On September 30, 2009, we purchased 59 mining claims in the Tintina Gold Belt in Yukon Territory, Canada.
On May 10, 2010, we acquired the rights to an exploration license for approximately 300 hectares located in Hants County, Nova Scotia Canada in an area generally known as the Central Rawdon Mines from Marino Specogna in exchange for $3,000.
We are in the process of geologically evaluating and testing these claims as well as raising operating capital and further developing our business plan for future acquisitions.
Employees; Identification of Certain Significant Employees
We currently have no employees other than our sole officer and Director, Luis Carrillo. We plan to use contractors in the future if the need arises during the course of our exploration and/or development activities.
Exploration Work
All exploration work to be completed by us on our claims will be conducted by or under the supervision of our consulting geologists, Equity Exploration Consultants Ltd., with an office at 200-900 West Hastings Street, Vancouver, BC, Canada, V6C 1E5.
Competition
Mines have limited lives and as a result, we may seek to expand our reserves through the acquisition of new properties in the future. There is a limited supply of desirable mineral lands available in the United States, Canada and other areas where we may consider conducting exploration and/or production activities. We will face strong competition for new properties from other mining companies, most of which have greater financial resources than we do and as a result, we may be unable to acquire new mining properties on terms that we consider acceptable.
There is a global market for lead, zinc, copper, silver, gold and other precious metals. We plan to sell any precious metals we may discover, if we are successful in our exploration and mining activities, at prevailing market prices. We do not believe that any single company or other institution has sufficient market power to significantly affect the price or supply of these metals.
Patents, Trademarks and Licenses
We have no patents, trademarks or licenses. We do own the mineral rights to certain property in the State of Nevada, which are explained in detail below.
Need for Government Approval
In connection with our planned exploration activities, we may be required to comply with certain environmental laws and regulations which may require us to obtain permits issued by regulatory agencies and to file various reports and keep records of our operations affecting the environment. While we will not need any permits for Phases I through III, however, we will require a permit to conduct diamond drilling.
5
Costs and Effects of Compliance with Environmental Laws
All of our exploration, development and production activities which we may undertake in the future on our property in Nevada will be subject to regulation by governmental agencies under various environmental laws. These laws address emissions to the air, discharges to water, management of wastes, management of hazardous substances, protection of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. Additionally, depending on the results of our exploration activities, if completed, and what mining activities we may undertake in the future, funding permitting, certain regulations may also require us to obtain permits for our activities. These permits normally may be subject to public review processes resulting in public approval of the activity. While these laws and regulations may govern how we conduct many aspects of our business, we do not believe that they will have a material adverse effect on our results of operations or financial condition. We plan to evaluate our operations in light of the cost and impact of environmental regulations on those operations. We also plan to evaluate new laws and regulations as they develop to determine the impact on, and changes necessary to, our planned operations. Additionally, it is possible that future changes in these laws or regulations could have a significant impact on some portion of our business, causing us to reevaluate those activities at that time.
Regulation
Exploration activities are subject to various national, state, foreign and local laws and regulations, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations promulgated by the United States Federal Government.
Our exploration activities are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, as a general matter, are becoming more restrictive. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our exploration activities are conducted in material compliance with applicable laws and regulations. Changes to current local, state or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could render certain exploration activities uneconomic.
WHERE YOU CAN GET ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.W., Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.
In addition, certain of our SEC filings, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, can be viewed and printed from the investor information section of our website at www.rostockcorp.com, as soon as reasonably practicable after filing with the SEC. Certain materials relating to our corporate governance, including our senior financial officers’ code of ethics, are also available in the investor relations section of our website.
The information on the website listed above, is not and should not be considered part of this Report on Form 10-K and is not incorporated by reference in this document. These websites are, and are only intended to be, inactive textual references.
ITEM 1A. RISK FACTORS
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 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our property consists of office space located at 3033 Fifth Avenue, Suite 400, San Diego, CA 92103. We use such space for no charge from our President. Currently, this space is sufficient to meet our needs; however, once we expand our business to a significant degree, we will have to find a larger space. We do not own any real estate.
6
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4. [REMOVED AND RESERVED]
ITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock
Our common stock is currently quoted on the OTC Bulletin Board. Our common stock has been quoted on the OTC Bulletin Board since April 24, 2009, under the symbol “ROSV.OB.” Because we are quoted on the OTC Bulletin Board, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.
The following table sets forth the high and low bid quotations for our common stock as reported on the OTC Bulletin Board for the periods indicated.
2010 Fiscal Year |
| High Bid |
| Low Bid |
Fourth Quarter: 10/1/10 to 12/31/10 | $ | 0.09 | $ | 0.03 |
Third Quarter: 7/1/10 to 9/30/10 | $ | 0.10 | $ | 0.05 |
Second Quarter: 4/1/10 to 6/30/10 | $ | 0.36 | $ | 0.06 |
First Quarter: 1/1/10 to 3/31/10 | $ | 0.11 | $ | 0.06 |
2009 Fiscal Year |
| High Bid |
| Low Bid |
Fourth Quarter: 10/1/09 to 12/31/09 | $ | 0.28 | $ | 0.02 |
Third Quarter: 7/1/09 to 9/30/09 | $ | 0.53 | $ | 0.01 |
Second Quarter: 4/1/09 to 6/30/09 | $ | NIL | $ | NIL |
First Quarter: 1/1/09 to 3/31/09 | $ | NIL | $ | NIL |
As of December 31, 2010, an aggregate of 40,698,273 shares of our common stock were issued and outstanding and were owned by approximately 10 holders of record, based on information provided by our transfer agent.
Recent Sales of Unregistered Securities
Other than those previously reported, none.
Re-Purchase of Equity Securities
None.
Dividends
We implemented a forward split of the issued and outstanding common shares of the Company, whereby every one share of common stock held was exchanged for seven shares of common stock. As a result, the issued and outstanding shares of common stock were increased from 5,814,039 prior to the forward split to 40,698,273 following the forward split. The forward split was payable as a dividend to shareholders of record as of April 24, 2009.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company has not authorized any securities for issuance under an Equity Compensation Plan.
7
ITEM 6. SELECTED FINANCIAL DATA
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 7. Management's Discussion and Analysis or Plan of Operation.
The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.
Cash Requirements
There was no cash on hand as of December 31, 2010. We do not have sufficient cash on hand to pay the costs of our operations as projected to twelve (12) months or less or to fund our operations for that same period of time. We will require additional financing in order to proceed with some or all of our goals as projected over the next twelve (12) months. We presently do not have any arrangements for additional financing, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with any of our goals projected over the next twelve (12) months and beyond.
Any additional growth of the Company will require additional cash infusions. We may face expenses or other circumstances such that we will have additional financing requirements. In such event, the amount of additional capital we may need to raise will depend on a number of factors. These factors primarily include the extent to which we can achieve revenue growth, the profitability of such revenues, operating expenses, research and development expenses, and capital expenditures. Given the number of programs that we have ongoing and not complete, it is not possible to predict the extent or cost of these additional financing requirements.
Notwithstanding the numerous factors that our cash requirements depend on, and the uncertainties associated with each of the major revenue opportunities that we have, we believe that our plan of operation can build long-term value if we are able to demonstrate clear progress toward our objectives.
Progress in the development of our business plan will likely lend credibility to our plan to achieve profitability.
The Company does not anticipate any contingency upon which it would voluntarily cease filing reports with the SEC. It is in the compelling interest of this Company to report its affairs quarterly, annually and currently, as the case may be, generally to provide accessible public information to interested parties, and also specifically to maintain its eligibility for the OTCBB.
The failure to secure any necessary outside funding could have an adverse affect on our development and results therefrom and a corresponding negative impact on shareholder liquidity.
Results of Operations for the Fiscal Year Ended December 31, 2010 Compared to the Fiscal Year Ended December 31, 2009
We did not generate any revenue for the fiscal periods ended December 31, 2010 and 2009, or for the period from inception, November 2, 2006, through December 31, 2010. We do not anticipate generating revenues until we raise sufficient capital to conduct our exploration activities and locate commercial quantities of minerals, of which there can be no assurance.
We had a net loss of $65,868 for the fiscal period ended December 31, 2010, compared to a net loss of $52,399 for the fiscal period ended December 31, 2009. This resulted in an increase in net loss of $13,469 or 25.7% from the prior period.
We had total operating expenses of $58,912 for the fiscal period ended December 31, 2010, compared to total operating expenses of $50,326 for the fiscal period ended December 31, 2009. The primary reason for the increase of $8,586 in operating expenses was due to an increase in legal and professional expenses of $13,278 and other administrative expenses of $6,675 offset by a decrease of $11,367 in exploration and testing for the fiscal period ended December 31, 2010. Of the $11,367 decrease in exploration and testing, $11,025 was due to an adjustment for unproven reserves during Fiscal 2009.
8
We had a foreign exchange gain of $ - for the fiscal period ended December 31, 2010, in connection with foreign currency translation adjustments of our assets compared to of $256 for the fiscal period ended December 31, 2009, an decrease in foreign exchange income of $256.
We currently anticipate having a net loss for each quarterly and annual period moving forward until and unless we are able to discover and successfully extract minerals and generate any revenues through the sale of such minerals, of which there can be no assurance.
Liquidity and Capital Resources
We had no current assets as of December 31, 2010.
We had total liabilities, consisting solely of current liabilities, of $134,444 as of December 31, 2010. These liabilities consisted of accounts payable, accrued expenses and notes payable to a shareholder.
We had working capital deficit of $134,444 and a total deficit accumulated during the development stage of $233,135 as of December 31, 2010.
Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the ordinary course of business. Operating losses have been incurred each year since inception, resulting in an accumulated deficit of $233,135 at December 31, 2010. This condition raises substantial doubt about Rostock’s ability to continue as a going concern. Currently, management is attempting to raise further capital to fund these losses; however, no assurance can be given as to the success of these efforts.
The financial statements of Rostock do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of liabilities that might be necessary if Rostock is unable to continue as a going concern.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Contractual Obligations
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 7A. 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.
9
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Rostock Ventures Corp.
(A Development Stage Company)
December 31, 2010
Index
F-1
Report of Independent Registered Public Accounting Firm
F-2
Balance Sheet
F-3
Statement of Operations
F-4
Statement of Cash Flows
F-5
Statement of Stockholders’ Deficit
F-6
Notes to the Financial Statements
F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Rostock Ventures Corp.
(An Exploration Stage Company)
We have audited the accompanying balance sheet of Rostock Ventures Corp. (an exploration stage company) as of December 31, 2010 and 2009 and the related statements of operations, changes in stockholders' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements for the period from November 2, 2006 (inception) through December 31, 2008 were audited by other auditors whose report expressed an unqualified opinion on those statements.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rostock Ventures Corp. as of December 31, 2010 and 2009, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has insufficient working capital, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
March 28, 2011
F-2
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Balance Sheets
|
| December 31, | ||
|
| 2010 |
| 2009 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents | $ | - | $ | 3,499 |
|
|
|
|
|
Total assets | $ | - | $ | 3,499 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses | $ | 24,466 | $ | 9,403 |
Notes payable, shareholder |
| 109,978 |
| 65,131 |
|
|
|
|
|
Total liabilities |
| 134,444 |
| 74,534 |
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 100,000,000 shares authorized, 0 shares issued and outstanding |
| - |
| - |
Common stock, $0.001 par value; 100,000,000 shares authorized, 40,698,273 shares issued and outstanding |
| 40,698 |
| 40,698 |
Additional paid-in capital |
| 57,993 |
| 55,534 |
Deficit accumulated during the exploration stage |
| (233,135) |
| (167,267) |
Total stockholders’ deficit |
| (134,444) |
| (71,035) |
|
|
|
|
|
Total liabilities and stockholders’ deficit | $ | - | $ | 3,499 |
See accompanying notes to these financial statements.
F-3
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Statements of Operations
|
|
|
|
|
| November 2, 2006 (Inception) to December 31, 2010 |
|
| Years Ended December 31, |
| |||
| 2010 |
| 2009 |
| ||
|
|
|
|
|
| (Unaudited) |
Operating expenses: |
|
|
|
|
|
|
Exploration and testing | $ | 10,101 | $ | 21,468 | $ | 60,569 |
Legal and professional expenses |
| 23,000 |
| 9,722 |
| 59,542 |
Other selling, general and administrative |
| 25,811 |
| 19,136 |
| 108,135 |
|
|
|
|
|
|
|
Total Operating Expenses |
| 58,912 |
| 50,326 |
| 228,246 |
|
|
|
|
|
|
|
Loss from Operations |
| (58,912) |
| (50,326) |
| (228,246) |
|
|
|
|
|
|
|
Other gain (expense): |
|
|
|
|
|
|
Interest expense |
| (6,956) |
| (2,329) |
| (9,285) |
Foreign currency exchange gain |
| - |
| 256 |
| 4,396 |
|
|
|
|
|
|
|
Total Other Expense |
| (6,956) |
| (2,073) |
| (4,889) |
Net loss | $ | (65,868) | $ | (52,399) | $ | (233,135) |
|
|
|
|
|
|
|
Basic and diluted net loss per common share | $ | (0.00) | $ | (0.00) |
| N/A |
|
|
|
|
|
|
|
Weighted average common shares outstanding |
| 40,698,273 |
| 40,698,273 |
| N/A |
|
|
|
|
|
|
|
See accompanying notes to these financial statements. | ||||||
F-4
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Statements of Cash Flows
|
| Years Ended December 31, |
| November 2, 2006 (Inception) to December 31, 2010 | ||
|
| 2010 |
| 2009 |
| |
|
|
|
|
|
| (Unaudited) |
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss | $ | (65,868) | $ | (52,399) | $ | (233,135) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Write-off of mining claim costs |
| 3,000 |
| 11,025 |
| 22,025 |
Imputed interest |
| 2,459 |
| 1,811 |
| 4,270 |
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts payable and accrued expenses |
| 15,063 |
| 8,906 |
| 24,466 |
Foreign currency (gain) loss |
| - |
| (256) |
| 4,396 |
Net cash used in operating activities |
| (45,346) |
| (30,913) |
| (177,978) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchase of mining claim |
| (3,000) |
| (11,025) |
| (22,025) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Cash received for stock issued |
| - |
| - |
| 43,734 |
Cash received for stock not issued |
| - |
| - |
| 50,687 |
Borrowings on debt |
| 44,847 |
| 45,131 |
| 109,978 |
Advances from shareholder |
| - |
| 14,600 |
| 15,131 |
Assignment of shareholder advances |
| - |
| (15,131) |
| (15,131) |
Net cash provided by financing activities |
| 44,847 |
| 44,600 |
| 204,399 |
|
|
|
|
|
|
|
Foreign exchange effect on cash |
| - |
| 256 |
| (4,396) |
Net increase (decrease) in cash and cash equivalents |
| (3,499) |
| 2,918 |
| - |
Cash and cash equivalents at beginning of period |
| 3,499 |
| 581 |
| - |
|
|
|
|
|
|
|
Cash and cash equivalents at end of period | $ | - | $ | 3,499 | $ | - |
|
|
|
|
|
|
|
Supplemental information: |
|
|
|
|
|
|
Cash paid for interest | $ | - | $ | - | $ | - |
Cash paid for income taxes | $ | - | $ | - | $ | - |
See accompanying notes to these financial statements.
F-5
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Statements of Changes in Stockholders' Equity (Deficit)
For the Period From November 2, 2006 (Inception) to December 31, 2010
| Common Shares* |
| Stock Amount |
| Additional Paid In Capital |
| Subscriptions Received |
| Deficit Accumulated During the Development Stage |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
Balance November 6, 2006 | - | $ | - | $ | - | $ | - | $ | - | $ | - |
Issuance of common stock for cash to founder | 28,000,000 |
| 28,000 |
| 12,000 |
| - |
| - |
| 40,000 |
Cash received for stock subscribed |
|
| - |
| - |
| 50,687 |
| - |
| 50,687 |
Net loss |
|
| - |
| - |
| - |
| (8,499) |
| (8,499) |
Balance December 31, 2006 | 28,000,000 |
| 28,000 |
| 12,000 |
| 50,687 |
| (8,499) |
| 82,188 |
Shares issued for cash | 12,698,273 |
| 12,698 |
| 41,723 |
| (50,687) |
| - |
| 3,734 |
Net loss |
|
| - |
| - |
| - |
| (54,673) |
| (54,673) |
Balance December 31, 2007 | 40,698,273 |
| 40,698 |
| 53,723 |
| - |
| (63,172) |
| 31,249 |
Net loss |
|
| - |
| - |
| - |
| (51,696) |
| (51,696) |
Balance December 31, 2008 | 40,698,273 |
| 40,698 |
| 53,723 |
| - |
| (114,868) |
| (20,447) |
Imputed interest |
|
|
|
| 1,811 |
|
|
|
|
| 1,811 |
Net loss | - |
| - |
| - |
| - |
| (52,399) |
| (52,399) |
Balance December 31, 2009 | 40,698,273 |
| 40,698 |
| 55,534 |
| - |
| (167,267) |
| (71,035) |
Imputed interest |
|
|
|
| 2,459 |
|
|
|
|
| 2,459 |
Net loss | - |
| - |
| - |
| - |
| (65,868) |
| (65,868) |
Balance December 31, 2010 | 40,698,273 | $ | 40,698 | $ | 57,993 | $ | - | $ | (233,135) | $ | (134,444) |
* All share amounts have been retroactively recast to show the effect of a forward 7 to 1 stock split
F-6
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
1.
Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Rostock Ventures, Corp. (“Rostock”) was incorporated November 2, 2006 in Nevada and is a development stage company. Rostock was formed to seek business opportunities in mineral exploration. At December 31, 2010, Rostock had purchased 59 mining claims in the Tintina Gold Belt in Yukon Territory, Canada and is in the process of geologically evaluating and testing these claims as well as raising operating capital and further developing its business plan for future acquisitions.
Basis of Presentation
The accompanying financial statements of Rostock Ventures, Corp. 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. 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 periods presented have been reflected herein.
Recent Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.
In October 2009, FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.
F-7
In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations
Use of Estimates
In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the statement of expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, Rostock considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2010 or 2009.
Income Taxes
Rostock recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Rostock provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Basic and Diluted Net Loss per Share
Basic and diluted net loss per share calculations are presented in accordance with FASB guidelines, and are calculated on the basis of the weighted average number of common shares outstanding during the year. They include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share are the same due to the absence of common stock equivalents.
Development Stage Company
The Company complies with Accounting Codification Standard 915-10 for its characterization of the Company as development stage.
Fair Value of Financial Instruments
Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of December 31, 2010. The Company has no financial instruments. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.
Foreign Currency
Rostock has the U.S. dollar designated as their functional currency because most transactions, including all operating costs, are conducted in U.S. dollars. Transactions conducted in the local currency, mainly the Canadian dollar, are re-measured to U.S. dollars using current rates of exchange for assets and liabilities. At each balance sheet date, assets and liabilities denominated in a currency other than the functional currency of the recording entity must be adjusted to reflect the current exchange rate on that date. Transaction gains and losses resulting from adjusting assets and liabilities denominated in a currency other than the functional currency of the reporting entity or from settling such items generally must be included in income as they arise.
F-8
2.
Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the ordinary course of business. Operating losses have been incurred each year since inception, resulting in an accumulated deficit of $233,135 at December 31, 2010. This condition raises substantial doubt about Rostock’s ability to continue as a going concern. Currently, management is attempting to raise further capital to fund these losses; however, no assurance can be given as to the success of these efforts.
The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
3.
Debt
Notes payable consist of proceeds from three loan agreements with one shareholder.
The first loan of $20,000 is from funds advanced on October 29, 2009. The loan is payable on demand, is non interest bearing and is unsecured. On January 18, 2010 the holder of the note executed an assignment agreement and general release to transfer the obligation to the shareholder effective as of the date the funds were advanced. Imputed interest through December 31, 2010, in the amount of $2,597 is included in additional paid in capital.
The second loan of $15,131 is from net funds advanced by a former shareholder. On January 18, 2010 the former shareholder assigned and transferred his rights to these funds to the current shareholder. The assignment was effective as of the dates funds were advanced. The funds advanced bear no interest and are unsecured. Imputed interest through December 31, 2010, in the amount of $1,673 is included in additional paid in capital.
The third loan is dated September 17, 2009, in the amount of $30,000 and bears interest at 6%. The loan matured September 18, 2010, along with unpaid interest. The loan has not been extended and continues to accrue interest at 6% payable on demand. Additional funds of $14,928 were advanced by this lender on March 12, 2010 bringing the total loan balance to $44,928. Interest of $3,039 has been accrued on this note as of December 31, 2010. The loan is unsecured. On May 4, 2010 the lender advanced an additional $29,918 in funds payable on demand and bearing interest at 10%. Interest of $1,975 has been accrued on this note as of December 31, 2010. The loan is unsecured.
4.
Equity
On January 14, 2009, Rostock approved a 7:1 forward stock split on its issued and outstanding shares of common stock to the holders of record as of that date. As a result of the split, each holder of record automatically received six additional shares of Rostock’s common stock. After the split, the number of shares of common stock issued and outstanding are 40,698,273 shares for both December 31, 2010 and December 31, 2009. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split retroactively.
Preferred stock may be divided into and issued into one or more series by the Board of Directors. The Board is authorized to determine rights, preferences, limitations and terms of preferred shares. There were no preferred shares outstanding at December 31, 2010.
From inception (November 2, 2006) through December 31, 2010, Rostock sold 40,698,273 (post forward split) shares of common stock for proceeds totaling $94,421. 28,000,000 (post forward split) of these shares were issued to the founder at $0.01 per share for proceeds of $40,000.
5.
Exploration and Testing
Advertisement fees in the amount of $2,000 were incurred and included within the Exploration and testing line item of operating expenses.
On May 10, 2010, the Company acquired the rights to an exploration license for approximately 300 hectares located in Hants County, Nova Scotia Canada in an area generally known as the Central Rawdon Mines in exchange for $3,000.
F-9
6.
Income Taxes
Rostock uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. The Company has no uncertain tax positions. During fiscal 2010, Rostock incurred a loss and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $231,571 at December 31, 2010, and $165,703 at December 31, 2009, and will expire through 2030.
At December 31, deferred tax assets consisted of the following:
|
| 2010 |
| 2009 |
Deferred Tax Asset | $ | 78,734 | $ | 55,723 |
Valuation Allowance | $ | (78,734) | $ | (55,723) |
Net Deferred Tax Asset | $ | — | $ | — |
7.
FAIR VALUE ACCOUNTING
Fair Value Measurements
On January 1, 2008, the Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3
Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.)
The following presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2010 and 2009:
Level 1: None
Level 2: None
Level 3: None
Total Gain (Losses): None
F-10
8.
SUBSEQUENT EVENTS
An unsecured promisory note in the amount of $11,928 from the shareholder (See Note 3 above) was approved on February 4, 2011 and executed on February 23, 2011. The note bears interest at 10% and is payable on demand.
F-11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On March 5, 2010, M&K CPAS, PLLC (“MKC”) was appointed as the registered independent public accountant for the Company. On March 5, 2010, Malone & Bailey, LLP (“MB”), was dismissed as the registered independent public accountant for the Company. The decisions to appoint MKC and dismiss MB were approved by the Board of Directors of the Company on March 5, 2010.
During the fiscal years ended December 31, 2008 and 2007 and the subsequent interim period up through the date of dismissal, there were no disagreements with MB on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of MB, would have caused MB to make reference thereto in its report on the Company’s financial statements for such years. Further, there were no reportable events as described in Item 304(a)(1)(iv)(B) of Regulation S-B occurring within the Company's two most recent fiscal years and the subsequent interim period up through the date of dismissal.
The audit report of MB for the financial statements of the Company as of December 31, 2008, which audit report also includes the financial statements as of December 31, 2007, contained a separate paragraph stating:
"The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the ordinary course of business. Operating losses have been incurred each year since inception, resulting in an accumulated deficit of $114,868 at December 31, 2008. This condition raises substantial doubt about Rostock’s ability to continue as a going concern. Currently, management is attempting to raise further capital to fund these losses; however, no assurance can be given as to the success of these efforts."
"The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern."
During the Company's two most recent fiscal years and the subsequent interim period up through the date of engagement of MKC, neither the Company nor anyone on its behalf consulted MKC regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial statements. Further, MKC has not provided written or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issues.
The Company provided a copy of the foregoing disclosures to MB prior to the date of the filing of this report and requested that MB furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agrees with the statements in this Report. A copy of the letter furnished in response to that request is filed with the SEC on March 9, 2010 as part of our Current Report on Form 8-K and is incorporated herein by reference.
ITEM 9A.
CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
10
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses.
1.
As of December 31, 2010, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
2.
As of December 31, 2010, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2010, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.
Change In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS.
Identification of Directors and Executive Officers
Our current directors and executive officers are as follows:
Name and Age | Position(s) Held | Tenure | Other Public Company Directorships |
Luis Carrillo: 37 | Director, President, and Chief Executive Officer, Chief Financial Officer, Secretary, and Treasurer | Since October 23, 2009 | None |
Background and Business Experience
The business experience during the past five years of each of the persons presently listed above as an Officer or Director of the Company is as follows:
Luis Carrillo has been the President, Chief Executive Officer and a director of Rostock Ventures Corporation since October 2009. From 2000 to 2001, Mr. Carrillo served as a Judicial Clerk in the Superior Court of New Jersey, Middlesex County. From 2001 to 2004, Luis focused his practice primarily in civil litigation, where he handled complex commercial and tort litigation spanning a wide spectrum of subject matters including corporate and partnership disputes, complex contract disputes, complex insurance coverage issues, land use matters, tort liability defense and premises liability matters. During this period, Luis also gained extensive appellate experience, while regularly appearing in court for motions, conferences and arbitrations. As a lawyer, and since 2004, Mr. Carrillo has focused his practice in the areas of corporation finance, corporate and business law, corporate governance, business transactions, and securities. He has significant experience representing buyers and sellers in the structuring and negotiation of complex mergers and acquisitions of both public and privately-held companies. In light of Mr. Carrillo’s strong educational background and extensive experience in corporate law and business transactions, the Company’s Board of Directors concluded that it was in the Company’s best interest for him to serve as sole officer and director.
11
Significant Employees
Other than Luis Carrillo, we do not expect any other individuals to make a significant contribution to our business.
Family Relationships
There are no family relationships among our officers, directors or persons nominated for such positions.
Involvement in certain legal proceedings.
During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:
(1)
A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2)
Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3)
Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i.
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii.
Engaging in any type of business practice; or
iii.
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4)
Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5)
Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6)
Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7)
Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i.
Any Federal or State securities or commodities law or regulation; or
ii.
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii.
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
12
Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Audit Committee and Audit Committee Financial Expert
The Company does not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.
The Company intends to establish an audit committee of the board of directors, which will consist of independent directors. The audit committee’s duties will be to recommend to the Company’s board of directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.
Code of Ethics
We have adopted a Code of Ethics (the “Code”) that applies to our directors, officers and employees, including our principal executive officer and principal financial and accounting officer, respectively. A written copy of the Code is available on written request to the Company.
Compliance with Section 16(a) of the Exchange Act
We do not yet have a class of equity securities registered under the Securities Exchange Act of 1934, as amended. Hence, compliance with Section 16(a) thereof by our officers and directors is not required.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our executive officers during the years ending December 31, 2010 and 2009.
SUMMARY COMPENSATION TABLE | |||||||||
Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
Luis Carrillo President, CEO, CFO, Secretary, Treasurer, and Director (1) | 2010 | nil | nil | nil | nil | nil | nil | nil | nil |
2009 | nil | nil | nil | nil | nil | nil | nil | nil | |
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Collin Sinclair Former President, CEO, CFO, Secretary, Treasurer, and Director (2) | 2010 | nil | nil | nil | nil | nil | nil | nil | nil |
2009 | nil | nil | nil | nil | nil | nil | nil | nil | |
(1)
Mr. Carrillo was appointed as our Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director on October 23, 2009. Mr. Carrillo does not have an employment agreement with us and has received no salary from us to date.
(2)
Mr. Sinclair resigned on October 23, 2009, as filed with the SEC on Form 8-K on October 29, 2009.
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Outstanding Equity Awards at Fiscal Year-End
No named Executive Officer received any equity awards, or holds exercisable or unexercisable options, as of the years ended December 31, 2010 and 2009.
Compensation of Directors
Our directors receive no extra compensation for their service on our board of directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 21, 2011 by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.
As of March 21, 2011, there were 40,698,273 common shares issued and outstanding.
Name and Address of Beneficial Owner | Title of Class | Amount and Nature of Beneficial Ownership (1) (#) | Percent of Class (2) (%) |
658111 BC Ltd 164 87th Steet Osoyoos, BC V0H 1V2 Canada | Common | 4,000,000 | 9.83% |
HB International Ltd Suite 13 1st Floor, Oliaji Trade Center Francis Rachel St.Victoria Mah Republic Of Seychelles | Common | 4,000,000 | 9.83% |
Highlight Holdings Ltd. Henville Bldg Prince Charles Charlestown Nevis W I | Common | 4,000,000 | 9.83% |
Paradisus Investment Corp. 7 Magnolia Pl Osoyoos, BC V0H 1V1 Canada | Common | 4,000,000 | 9.83% |
Takam International Ltd Akara Bldg 24 De Castro St. Wickhams Cay I Road Town Tortolla, BVI | Common | 4,000,000 | 9.83% |
Tucker Investment Corp 35 New Road Belize City, Belize | Common | 4,000,000 | 9.83% |
Zander Investment Ltd. Henville Bldg Prince Charles Charlestown Nevis W I | Common | 4,000,000 | 9.83% |
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All Officers and Directors as a Group (3) | Common | 0 | 0% |
(1)
The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose.
Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.
(2)
Based on 40,698,273 issued and outstanding shares of common stock as of March 21, 2011 plus shares issuable upon exercise of options and warrants.
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(3)
Luis Carrillo, our sole officer and director, does not own any shares of our common stock.
Changes in Control.
There are no present arrangements or pledges of the Company’s securities which may result in a change in control of the Company.
ITEM 13.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Related Party Transactions
There have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Regulation S-K, except as reported elsewhere in this Report.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:
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disclosing such transactions in reports where required;
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disclosing in any and all filings with the SEC, where required;
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obtaining disinterested directors consent; and
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obtaining shareholder consent where required.
Director Independence
The OTC Bulletin Board on which our common stock is listed on does not have any director independence requirements.
We also do not currently have a definition of independence as the sole director is also employed in management positions as our executive officer. Once we engage further directors and officers, we intend to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.
Review, Approval or Ratification of Transactions with Related Persons
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 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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| Year Ended December 31, 2010 |
| Year Ended December 31, 2009 |
Audit fees | $ | 10,450 | $ | 8,014 |
Audit-related fees |
| 4,050 |
| 3,695 |
Tax fees |
| - |
| - |
All other fees |
| - |
| - |
Total | $ | 14,500 | $ | 11,709 |
Audit Fees
We incurred approximately $14,500 and $11,709 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for fiscal years ended December 31, 2010 and 2009, respectively.
Audit-Related Fees
The aggregate fees billed during the fiscal years ended December 31, 2010 and 2009 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A) was $0 and $0, respectively.
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Tax Fees
The aggregate fees billed during the fiscal year ended December 31, 2010 and 2009 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning was $0.00 and $0.00, respectively.
All Other Fees
The aggregate fees billed during the fiscal year ended December 31, 2010 and 2009 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A was $0 and $0, respectively.
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit Number | Description of Exhibit | Filing |
3.01 | Articles of Incorporation | Filed with the SEC on July 30, 2007 as part of our Registration Statement on Form SB-2. |
3.02 | Bylaws | Filed with the SEC on July 30, 2007 as part of our Registration Statement on Form SB-2. |
10.01 | Invoice from Coureur Des Bois for the purchase of 59 claims. | Filed with the SEC on November 12, 2009 as part of our Current Report on Form 8-K. |
10.02 | Assignment Agreement dated May 10, 2010 | Filed with the SEC on May 13, 2010 as part of our Current Report on Form 8-K. |
14.01 | Code of Ethics | Filed herewith |
16.01 | Letter from Malone & Bailey, LLP dated March 9, 2010 | Filed with the SEC on March 9, 2010 as part of our Current Report on Form 8-K. |
31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | Filed herewith. |
32.01 | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ROSTOCK VENTURES CORP.
Dated: March 28, 2011
/s/ Luis Carrillo
By: Luis Carrillo
Its: President, CEO, CFO, Secretary, and Treasurer
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:
Dated: March 28, 2011
/s/ Luis Carrillo
Luis Carrillo, Director
PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS
1. | No annual report to security holders covering the company’s last fiscal year has been sent as of the date of this report. |
2. | No proxy statement, form of proxy, or other proxy soliciting material relating to the company’s last fiscal year has been sent to any of the company’s security holders with respect to any annual or other meeting of security holders. |
3. | If such report or proxy material is furnished to security holders subsequent to the filing of this Annual Report on Form 10-K, the company will furnish copies of such material to the Commission at the time it is sent to security holders. |
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