CRATER MOUNTAIN RESOURCES, INC. - FORM 10-Q

Attached files

file	filename
EX-31 - SECTION 302 CERTIFICATION - CRATER MOUNTAIN RESOURCES, INC.	crater-ex31.htm
EX-32 - SECTION 906 CERTIFICATION - CRATER MOUNTAIN RESOURCES, INC.	crater-ex32.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

March 31, 2011

Commission File Number 333-151085

CRATER MOUNTAIN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Nevada 20-8837756

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

4666 Mission Avenue, Suite 1

San Diego, CA 92116

(Address of principal executive offices) (Zip Code)

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

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

None

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer Smaller reporting company X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

As of March 31, 2011 there were 33,323,077 shares of our common stock issued and outstanding.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		3

Item 1. Financial Statements		3

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		11

Item 3. Quantitative and Qualitative Disclosures About Market Risk		12

Item 4T. Controls and Procedures		12

PART II . OTHER INFORMATION		12

Item 1. Legal Proceedings		12

Item 1A. Risk Factors		12

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds		12

Item 3. Default Upon Senior Securities		12

Item 4. Submission of Matters to a Vote of Security Holders		12

Item 5. Other Information		12

Item 6. Exhibits		13

SIGNATURES		13

PART I - FINANCIAL INFORMATION

Item 1. Financial statements

The financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the period presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Registration Statement on Form S-1/A, filed on September 30, 2010 with the U.S. Securities and Exchange Commission (SEC) and can be found on the SEC website at www.sec.gov.

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEETS

			March 31,	June 30,
			2011	2010
			(unaudited)	(audited)

	ASSETS

CURRENT ASSETS
	Cash		$ 108,333	$ 1,265

		Total current assets	108,333	1,265

		TOTAL ASSETS	$ 108,333	$ 1,265



	LIABILITIES AND STOCKHOLDERS'(DEFICIT)

CURRENT LIABILITIES
		Line of credit	$ 16,300	$ 9,800
		Interest payable	828	267

		Total current liabilities	17,128	10,067

		TOTAL LIABILITIES	17,128	10,067

STOCKHOLDERS' EQUITY(DEFICIT)
	Common stock, $0.001 par value; 150,000,000
		shares authorized; 33,323,077 and 30,000,000 respectively shares issued and outstanding	33,323	30,000
	Additional paid-in-capital		118,777	11,400
	Deficit accumulated during the exploration stage		(60,895)	(50,202)

		Total stockholders' equity (deficit)	91,205	(8,802)

		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)	$ 108,333	$ 1,265

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

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS

(UNAUDITED)


			Three months ended	Three months ended	Nine months ended	Nine months ended	From inception (April 11, 2007)	From inception (April 11, 2007)
			March 31,	March 31,	March 31,	March 31,	to March 31,	to December 31,
			2011	2010	2011	2010	2011	2010

REVENUES			$ -	$ -	$ -	$ -	$ -	$ -

EXPENSES
	Selling, general and administrative		2,435	5,663	10,132	10,527	60,067	57,632
		Total expenses	2,435	5,663	10,132	10,527	60,067	57,632

OTHER EXPENSE
	Interest expense		197	-	561	-	828	631
		Total other expense	197	-	561	-	828	631

NET LOSS			$ (2,632)	$ (5,663)	$ (10,693)	$ (10,527)	$ (60,895)	$ (58,263)

NET LOSS PER SHARE - BASIC			$ -	$ -	$ -	$ -


SHARES OUTSTANDING - BASIC			30,006,222	30,000,000	30,002,044	30,000,000

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

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF STOCKHOLDERS‘ EQUITY (DEFICIT)

(UNAUDITED)

					Deficit
					accumulated
		Common stock		Additional	during the	Total
		Number of		paid-in	development	stockholders'
		shares	Amount	capital	stage	equity/(deficit)

Balance April 11, 2007		-	$ -	$ -	$ -	$ -

Common stock issued for
	cash, May 8, 2007
	at $0.001 per share	30,000,000	30,000	-	-	30,000


Net loss		-	-	-	(3,010)	(3,010)

Balance June 30, 2007		30,000,000	30,000	-	(3,010)	26,990


Contributed capital		-	-	4,200	-	4,200


Net loss		-	-	-	(19,220)	(19,220)

Balance June 30, 2008		30,000,000	30,000	4,200	(22,230)	11,970


Contributed capital		-	-	3,600	-	3,600

Net loss		-	-	-	(15,030)	(15,030)

Balance June 30, 2009		30,000,000	30,000	7,800	(37,260)	540


Contributed capital		-	-	3,600	-	3,600

Net loss		-	-	-	(12,942)	(12,942)

Balance June 30, 2010		30,000,000	30,000.00	11,400.00	(50,202.00)	(8,802.00)

Common stock issued for
	cash
	at $0.0325 per share	3,323,077	3,323	104,677		108,000

Contributed capital				2,700	-	2,700

Net loss		-	-	-	(10,693)	(10,693)

Balance March 31, 2011, (unaudited)		33,323,077	$ 33,323	$ 118,777	$ (60,895)	$ 91,205

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

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

							From Inception
					Nine months ended	Nine months ended (April 11, 2007)
					March 31,	March 31,	to March 31,
					2011	2010	2011

CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss				$ (10,693)	$ (10,527)	$ (60,895)
	Adjustments to reconcile
		net loss to net cash used
		from operating activities:
			Contributed capital for rent		2,700	2,700	14,100
	Changes in operating assets and liabilities:
		Increase in interest payable			561	277	828

				Net cash flows used in operating activities	(7,432)	(7,550)	(45,967)

CASH FLOWS FROM FINANCING ACTIVITIES
	Issuance of common stock				108,000	-	138,000
	Increase in line of credit				6,500	9,800	16,300

				Net cash flows provided from financing activities	114,500	9,800	154,300

NET INCREASE IN CASH					107,068	2,250	108,333

CASH
		BEGINNING OF PERIOD			1,265	540	-

CASH
		END OF PERIOD			$ 108,333	$ 2,790	$ 108,333

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

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – ORGANIZATION AND PURPOSE

Nature of operations

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

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

A Development Stage Company

The accompanying financial statements have been prepared in accordance with the FASB ASC 915-10, "Development Stage Entities". A development stage enterprise is one in which planned principal operations have not commenced; or if its operations have commenced, there have been no significant revenues derived there from. As of March 31, 2011, the Company has not fully commenced nor has it received significant revenues from its planned principal operations.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the nine months period ended March 31, 2011, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2011. For further information refer to the financial statements and footnotes thereto included in our form 10-K for the year ended June 30, 2010.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Definition of Fiscal Year

The Company’s fiscal year is June 30.

Going Concern

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $60,895 as of March 31, 2011 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance.

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern

operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock. The financials statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the company cannot continue in existence.

Income taxes

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

Cash and Cash Equivalents

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

Use of Estimates

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

Earnings (Loss) Per Share Calculations:

Basic earnings (loss) per share exclude any dilutive effects of options, warrants and convertible securities. Basic earnings (loss) per share is computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per share is computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. For all periods presented, the Company has sustained losses, which would make use of equivalent shares antidilutive and, as such, the calculation has not been included.

CRATER MOUNTAIN RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Pronouncements

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

NOTE 3 – STOCKHOLDERS’ DEFICIT

As of December 31, 2010, 150,000,000 shares of the Company’s $0.001 par value common stock had been authorized, of which 33,323,077 were issued and outstanding. Of the total shares outstanding, 30,000,000 were issued to the founding shareholders for cash of $30,000 or $0.001 per share.

As of March 31, 2011 3,323,077 shares of Company’s common stock were issued at $0.0325 per share. These shares were registered and deemed effective on February 19, 2010.

There are no other issuances of common stock for the nine months period ended March 31, 2011.

NOTE 4 – RELATED PARTY TRANSACTIONS

On or about April 14, 2009, The Magellan Global Fund, Ltd. (“Magellan”) entered into a rescission agreement with all of the share holders of Crater Mountain Resources that Magellan gave or sold shares. As a result, Magellan became the sole shareholder of the Company. The Magellan Global Fund, LP, a Delaware Limited Partnership, was formed in September 2006. Messrs. Harry Orfanos and Niko Lahanas, who are Officers and Directors of the Company, are the Managing Partners of The Magellan Global Fund, LP. The General Partner of the limited partnership is Orinda Advisors, LLC, a Delaware limited liability company. Harry Orfanos and Niko Lahanas are also the owners, officers and directors of Orinda Advisors, LLC. This transaction has had no effect on the financial condition of the Company.

On December 14, 2009, the Company executed an unsecured line of credit in the amount of $20,000 with Magellan Global Fund, Ltd. (“Magellan”). The line of credit carries an annual interest rate of 5% and has a term of one year, at which any outstanding balance is due in full. Additionally, on December 14, 2010, Magellan extended the term of the loan one year from the original due date. As of March 31, 2011, an amount of $16,300 had been used for general corporate purposes.

We are currently operating out of the offices paid for by our President, Roger Renken on a rent-free basis. There is no written agreement or other material terms or arrangements relating to said arrangement. This agreement has been reflected as an increase in rent expense (SG&A) and contributed capital by the Company’s Officer totaling $2,700, and $14,100 for the nine months ended March 31, 2011 and from inception (April 20, 2007) to March 31, 2011.

FORWARD LOOKING STATEMENTS

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

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

Results of Operations

The following discussion should be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K filed on September 21, 2010 with the U.S. Securities and Exchange Commission (SEC) and can be found on the SEC website at www.sec.gov.

We are an exploration stage company formed for the purpose of exploration and mining of precious metals, specifically gold, in Papua New Guinea. We are a start up, development stage mining company and have not yet generated any revenues from operations since inception. From inception on April 11, 2007 to March 31, 2011, our total net loss is $60,895.

The following table provides selected financial data about the Company as of March 31, 2011. For detailed financial information, see the financial statements included in this Form 10-Q.

Balance Sheet Data:	03/31/2011
Cash	$	108,333
Total assets	$	108,333
Total liabilities	$	17,128
Stockholders' equity	$	91,205

We have conducted minimal operations since our inception and do not have any present operations. During the nine months ended March 31, 2011 and 2010, we generated no revenues. Accordingly, a comparative analysis and discussion of our results of operations is not meaningful and will not be presented herein.

Limited Operating History

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

Registration Statement

On February 19, 2010, our Form S-1 registration statement was declared effective by the SEC, allowing us to sell a total of 4,000,000 shares of our common stock and raise a total of $2,000,000, which we intend to use to implement our business operations As of May 11, 2011 we closed the offering after having raised a total of $130,000. On a per share basis, the offering represented a 93% discount to the original offering price. This offering was the initial public offering of common stock of Crater Mountain Resources, Inc., no public market currently exists for our securities or the shares being offered. .

Further, there is no assurance that we will not encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated. Upon successful completion of our initial offering, we intend to pursue our exploration activities to determine if viable mineralization exists on our property that warrants further exploration or development. We are totally dependent on receiving the proceeds from the offering to implement our proposed business plans.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4T. CONTROLS AND PROCEDURES

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

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

Under the supervision and with the participation of our Certifying Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2010. Since our most recent evaluation, there have been no changes in our internal control of financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

Our securities are highly speculative and involve a high degree of risk, including among other items the risk factors described in our amended Registration Statement on Form S-1/A, filed on September 30, 2010. You should carefully consider those risk factors and other information in our Registration Statement on Form S-1 and this quarterly report before deciding to invest in our securities. We are unaware of any material changes in or additional risk factors since the filing of our S-1/A Registration Statement.

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

We had no sales of unregistered equity securities during the period ended December 31, 2010.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION - SUBSEQUENT EVENTS

None.

ITEM 6. EXHIBITS

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

Exhibit No. Description

* 3(i) Articles of Incorporation

* 3(ii) Bylaws

31 Sec. 302 Certification

32 Sec. 906 Certification

SIGNATURES

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

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

Dated: May 17, 2011

/s/ Roger Renken

By: Roger Renken, President, Secretary,

Treasurer, Principal Accounting Officer and Director

CRATER MOUNTAIN RESOURCES, INC. - FORM 10-Q - May 19, 2011

Attached files

CRATER MOUNTAIN RESOURCES, INC. Reports