U.S. Lithium Corp. - Quarter Report: 2011 June (Form 10-Q)
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 June 30, 2011
. TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 333-144944
ROSTOCK VENTURES CORP.
(Exact name of registrant as specified in its charter)
Nevada |
| 98-0514250 |
(State of incorporation) |
| (I.R.S. Employer Identification No.) |
3033 Fifth Avenue, Suite 400
San Diego, CA 92103
(Address of principal executive offices)
(619) 546-6100
(Registrant’s telephone number)
with a copy to:
Carrillo Huettel, LLP
3033 Fifth Ave. Suite 400
San Diego, CA 92103
Telephone (619) 546-6100
Facsimile (619) 546-6060
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X . No .
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes X . No .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the 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 August 11, 2011, there were 41,412,559 shares of the registrant’s $0.001 par value common stock issued and outstanding.
ROSTOCK VENTURES CORP.*
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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ITEM 1. | FINANCIAL STATEMENTS | 3 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 15 |
ITEM 4. | CONTROLS AND PROCEDURES | 15 |
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PART II. OTHER INFORMATION |
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ITEM 1. | LEGAL PROCEEDINGS | 16 |
ITEM 1A. | RISK FACTORS | 16 |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 16 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 16 |
ITEM 4. | [REMOVED AND RESERVED] | 16 |
ITEM 5. | OTHER INFORMATION | 16 |
ITEM 6. | EXHIBITS | 17 |
Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rostock Ventures Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "ROSV" refers to Rostock Ventures Corp.
PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
ROSTOCK VENTURES CORP.
(A Development Stage Company)
Financial Statements
For the Period Ended June 30, 2011 (unaudited) and December 31, 2010
Balance Sheets (unaudited) | 4 |
Statements of Operations (unaudited) | 5 |
Statements of Cash Flows (unaudited) | 6 |
Notes to the Financial Statements (unaudited) | 7 |
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Balance Sheets
(unaudited)
(The accompanying notes are an integral part of these financial statements)
4
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Statements of Operations
(unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | Accumulated from November 2, 2006 (Date of Inception) to June 30,2011 $ | ||
| 2011 $ | 2010 $ | 2011 $ | 2010 $ | |
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Revenues | – | – | – | – | – |
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Operating Expenses |
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Foreign exchange gain | – | – | – | – | (4,396) |
General and administrative | 7,201 | 11,532 | 7,473 | 19,529 | 115,608 |
Management fees | 2,000 | – | 2,000 | – | 2,000 |
Mineral exploration costs | 1,576 | 7,862 | 1,576 | 7,862 | 62,145 |
Professional fees | 10,000 | 10,000 | 20,450 | 12,500 | 79,992 |
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Total Operating Expenses | 20,777 | 29,394 | 31,499 | 39,891 | 255,349 |
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Loss Before Other Expense | (20,777) | (29,394) | (31,499) | (39,891) | (255,349) |
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Other Expense |
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Interest expense | (2,591) | (1,667) | (5,043) | (2,333) | (14,328) |
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Net Loss | (23,368) | (31,061) | (36,542) | (42,224) | (269,677) |
Net Loss per Share – Basic and Diluted | – | – | – | – |
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Weighted Average Shares Outstanding – Basic and Diluted | 41,020,094 | 40,698,273 | 40,860,073 | 40,698,273 |
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(The accompanying notes are an integral part of these financial statements)
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ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Statements of Cash Flows
(unaudited)
| For the Six Months Ended June 30, 2011 $ | For the Six Months Ended June 30, 2010 $ | Accumulated from November 2, 2006 (Date of Inception) to June 30, 2011 $ |
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Operating Activities |
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Net loss for the period | (36,542) | (42,224) | (269,677) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Impairment of mineral exploration costs | – | – | 22,025 |
Imputed interest | 1,742 | 703 | 6,012 |
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Changes in operating assets and liabilities: |
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Accounts payable and accrued liabilities | 4,801 | (5,669) | 29,267 |
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Net Cash Used In Operating Activities | (29,999) | (47,190) | (212,373) |
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Investing Activities |
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Acquisition of mineral properties | – | – | (22,025) |
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Net Cash Used In Investing Activities | – | – | (22,025) |
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Financing Activities |
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Proceeds from related parties | 1,950 | – | 17,081 |
Repayment to related parties | (3,000) | – | (18,131) |
Proceeds from note payable | 11,928 | 44,847 | 121,906 |
Proceeds from issuance of shares | 50,000 | – | 144,421 |
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Net Cash Provided By Financing Activities | 60,878 | 44,847 | 265,277 |
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Increase (Decrease) in Cash | 30,879 | (2,343) | 30,879 |
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Cash – Beginning of Period | – | 3,499 | – |
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Cash – End of Period | 30,879 | 1,156 | 30,879 |
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Supplemental Disclosures |
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Interest paid | – | – | – |
Income tax paid | – | – | – |
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(The accompanying notes are an integral part of these financial statements)
6
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
(unaudited)
1.
Organization and Nature of Operations
Rostock Ventures Corp. (the “Company”) was incorporated in the State of Nevada on November 2, 2006 and is a natural resource exploration and production company engaged in the exploration, acquisition, and development of mineral properties in the United States. The Company is an exploration stage company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company hold 59 mineral claims in the Tintina Gold Belt in Yukon, Canada and is in the process of exploring these claims, as well as raising additional capital for future acquisitions.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at June 30, 2011, the Company has not earned revenue, has a working capital deficit of $119,244, and an accumulated deficit of $269,677. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is December 31.
b)
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of mineral properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As of June 30, 2011 and December 31, 2010, there were no cash equivalents.
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ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
d)
Interim Financial Statements
These interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
e)
Mineral Property Costs
The Company has been in the exploration stage since its formation on November 2, 2006 and has not yet realized any revenues from its planned operations. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
f)
Asset Retirement Obligations
The Company follows the provisions of ASC 410, Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets.
g)
Basic and Diluted Net Loss per Share
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
h)
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. Foreign currency transactions are primarily undertaken in Canadian dollars. Foreign currency transactions are translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
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ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
i)
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and amounts due to related party. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
j)
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
k)
Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2011 and December 31, 2010, the Company has no items representing comprehensive income or loss.
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ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
l)
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. As at June 30, 2011 and December 31, 2010, the Company did not grant any stock options.
m)
Recent Accounting Pronouncements
In February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (ASC Topic 855) “Amendments to Certain Recognition and Disclosure Requirements” (“ASU No. 2010-09”). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The adoption did not have an impact on the Company’s financial position and results of operations.
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial statements.
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 did not have a significant impact on the Company’s financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the 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.
3.
Mineral Property
On May 10, 2010, the Company acquired the rights to an exploration licence to 300 hectares of exploration properties located in Hants County, Nova Scotia, Canada for $2,000. The costs were expensed as mineral exploration costs as a valuation of the property could not be attained.
4.
Notes Payable
As at June 30, 2011, the Company owes $121,906 (2010 - $109,978) of notes payable to a shareholder of the Company. The amounts owing are unsecured, due interest ranging from 0-10% per annum, and are due on demand. As at June 30, 2011, accrued interest of $8,315 (2010 - $5,015) has been recorded in accrued liabilities and $6,012 (2010 - $4,270) of imputed interest, calculated at 10% per annum, has been recorded in additional paid-in capital.
10
ROSTOCK VENTURES CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
(unaudited)
5.
Related Party Transactions
a)
As at June 30, 2011, the Company owes $3,950 (2010 - $5,000) to the Company’s former President for funding of general operations. The amount owing is unsecured, non-interest bearing, and due on demand.
b)
As at June 30, 2011, accounts payable includes $14,000 (2010 - $10,500) in legal fees owing to a law firm controlled by the Company’s former President. The amounts owing are unsecured, non-interest bearing, and due on demand.
c)
During the period ended June 30, 2011, the Company incurred $2,000 (2010 - $nil) of management fees to the President and Director of the Company. The Company is committed to monthly management fees of $1,000 until such time as the agreement is cancelled by the President and Director or by the Company.
6.
Common Shares
On June 6, 2011, the Company issued 714,286 common shares at $0.07 per share for proceeds of $50,000.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
| June 30, | December 31, |
| 2011 $ | 2010 $ |
Current Assets | 30,879 | - |
Current Liabilities | 150,123 | 134,444 |
Working Capital (Deficit) | (119,244) | (134,444) |
Cash Flows
| June 30, 2011 $ | June 30, 2010 $ |
Cash Flows from (used in) Operating Activities | (29,999) | (47,190) |
Cash Flows from (used in) Financing Activities | 60,878 | 44,847 |
Net Increase (decrease) in Cash During Period | 30,879 | (2,343) |
Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
Operating expenses for the three months ended June 30, 2011 were $20,777 compared with $29,394 for the three months ended June 30, 2010. The decrease in operating expense is attributed to the fact that the Company incurred operating costs of $7,862 on mineral property costs in the prior year whereas the Company did not incur any mineral exploration costs in the current year as the Company did not intend to continue exploration of its mineral property as at December 31, 2010. There was an increase in professional fees of $3,450 relating to additional legal fees for the Company’s SEC filings and $2,000 in management fees. The increases were offset by a decrease in general and administrative expense of $5,155 as the Company had lower operating costs due to the fact that the Company did not have any mineral exploration activity.
Operating expenses for the six months ended June 30, 2011 was $31,499 compared with $39,891 for the six months ended June 30, 2010. The decrease in operating expense is attributed to the fact that the Company incurred operating costs of $7,862 on mineral property costs in the prior year whereas the Company did not incur any mineral exploration costs in the current year as the Company did not intend to continue exploration of its mineral property as at December 31, 2010. There was an increase in professional fees of $11,400 relating to additional legal fees for the Company’s SEC filings and $2,000 in management fees. The increases were offset by a decrease in general and administrative expense of $12,943 as the Company had lower operating costs due to the fact that the Company did not have any mineral exploration activity and did not incur due diligence and travel costs as part of the acquisition of the Hants County property in fiscal 2010.
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During the six months ended June 30, 2011, the Company recorded a net loss of $36,542 compared with a net loss of $42,224 for the six months ended June 30, 2010. In addition to the above, the Company incurred $5,043 of interest expense compared to $2,333 of interest expense in the prior period relating to amounts owing to Tucker Investments (“Tucker”) that are due at interest rates between 0-10% per annum. All amounts owing to Tucker that are non-interest bearing have been imputed interest at 10% per annum.
Liquidity and Capital Resources
As at June 30, 2011, the Company’s cash balance and total assets were $30,879 compared to $nil as at December 31, 2010. The increase in total assets is attributed to the fact that the Company received $50,000 of proceeds from issuance of 714,286 common shares, $11,928 from the issuance of a note payable, and repayment of $3,000 to the former President and Director of the Company, but only incurred cash operating costs of $28,049.
As at June 30, 2011, the Company had total liabilities of $150,123 compared with total liabilities of $134,444 as at December 31, 2010. The increase in total liabilities is attributed to increases in accounts payable and accrued liabilities of $8,033 due to timing differences between the payment terms of various operating expenditures and $11,928 of additional notes payable that were issued during the period.
As at June 30, 2011, the Company has a working capital deficit of $119,244 compared with $134,444 at December 31, 2010 and the decrease in the working capital deficit is attributed to the receipt of proceeds from equity financing that has not been used.
Cashflow from Operating Activities
During the six months ended June 30, 2011, the Company used $29,999 of cash for operating activities compared to the use of $47,190 of cash for operating activities during the period ended June 30, 2010. The decrease in the use of cash for operating activities was attributed to the fact that the Company received $50,000 from the issuance of common shares, of which approximately $30,879 remains unspent as at the balance sheet date.
Cashflow from Financing Activities
During the six months ended June 30, 2011, the Company received proceeds of $60,878 from financing activities compared to $44,847 during the period ended June 30, 2010. The increase in proceeds from financing activities was due to the fact that the Company received $50,000 from the issuance of 714,286 common shares in June 2011, but offset by the fact that the Company only received $11,928 from issuance of notes payable compared to $44,847 of proceeds from notes payable in the prior year. In addition, the Company repaid $3,000 of amounts owing to the former President and Director of the Company during the current year.
Quarterly Developments
On May 10, 2011, Luis Carrillo (“Mr. Carrillo”) resigned as the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and sole Director. Mr. Carrillo’s resignation did not involve any disagreement with the Company.
On May 10, 2011, Gregory Rotelli (“Mr. Rotelli”) was appointed as the Company’s President, and Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and sole Director. On May 10, 2011, Mr. Rotelli accepted the appointment.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
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.
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 our operations and other activities.
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Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
In March 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-11 (“ASU No. 2010-11”), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update. The Company’s adoption of provisions of ASU No. 2010-11 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In February 2010, the FASB issued ASU 2010-10 (“ASU No. 2010-10”), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions of ASU No. 2010-10 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In February 2010, the FASB issued ASU 2010-09 (“ASU No. 2010-09”), “Subsequent Events (ASC Topic 855): Amendments to Certain Recognition and Disclosure Requirements.” ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The Company’s adoption of provisions of ASU No. 2010-09 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued ASU 2010-06 (“ASU No. 2010-06”), “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The Company’s adoption of provisions of ASU No. 2010-06 did not 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 Topic 505, “Equity”, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The Company’s adoption of the amendment to ASC Topic 505 did not 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 Topic 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 Company’s adoption of the amendment to ASC Topic 820 did not have a material effect on the financial position, results of operations or cash flows of the Company.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the 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.
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ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2011, due to the material weaknesses resulting from the Board of Directors not currently having 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, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on March 29, 2011, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1.
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 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 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
1. Quarterly Issuances:
On May 20, 2011, the Company accepted, per the terms of that certain Subscription Agreement (the “Subscription Agreement”), $50,000 from Enavest Internacional S.A. in exchange for 714,286 shares of the Company’s restricted common stock priced at $0.07 per share, par value $0.001. As of June 6, 2011, the Company had received the full amount due per the Subscription Agreement.
2. Subsequent Issuances:
Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
[REMOVED AND RESERVED]
ITEM 5.
OTHER INFORMATION
None.
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ITEM 6.
EXHIBITS
Exhibit Number | Description of Exhibit | Filing |
3.01 | 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 mining claims in the Yukon Province dated July 14, 2009 | Filed with the SEC on November 12, 2009 as part of our Current Report on Form 8-K. |
10.02 | Assignment Agreement between the Company and Marino Specogna dated May 10, 2010 | Filed with the SEC on May 13, 2010 as part of our Current Report on Form 8-K. |
10.03 | Promissory Note with Tucker Investments dated February 23, 2011 | Filed with the SEC on May 20, 2011 as part of our Quarterly Report on Form 10-Q. |
10.04 | Subscription Agreement between the Company and Enavest Internacional S.A. dated May 20, 2011. | Filed with the SEC on June 15, 2011 as part of our Current Report on Form 8-K. |
14.01 | Code of Ethics | Filed with the SEC on March 29, 2011, as part of our Annual Report on Form 10-K. |
16.01 | Letter from Former Accountant 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. |
31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | Filed herewith. |
32.01 | CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith. |
101.INS* | XBRL Instance Document | Filed herewith. |
101.SCH* | XBRL Taxonomy Extension Schema Document | Filed herewith. |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. |
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | Filed herewith. |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. |
*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| ROSTOCK VENTURES CORP. | |
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Dated: August 22, 2011 |
| By: /s/ Gregory Rotelli | |
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| By: Gregory Rotelli | |
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| Its: Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer | |
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In accordance with the Exchange Act, 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: August 22, 2011
| /s/ Gregory Rotelli |
| By: Gregory Rotelli Its: Director |
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