UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x 

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2013

o

Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period _____________to______________

Commission File Number 333-181784

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.

x Yes    o 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).

x Yes    o 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

o

Accelerated filer

o

Non-accelerated filer

o

Small reporting company

x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

oYes   x No

2

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 145,500,000 shares of $0.001 par value common stock outstanding as of May 8, 2013.

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PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

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CUMBERLAND HILLS LTD.

(A Development Stage Company)

BALANCE SHEETS

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

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CUMBERLAND HILLS LTD.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

For the three months ended March 31, 2013 and 2012

and the period from January 19, 2010 (inception) through March 31, 2013

(Unaudited)

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

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CUMBERLAND HILLS LTD.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2013 and 2012

and the period from January 19, 2010 (inception) through March 31, 2013

(Unaudited)

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

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CUMBERLAND HILLS LTD.
(An Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

March 31, 2013

(UNAUDITED)

Note 1 Basis of Presentation

The accompanying unaudited interim financial statements of Cumberland Hills Ltd. (“Cumberland” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2012, as reported in the Form 10-K of the Company, have been omitted.

General

The Company is in the development stage. The Company is pursuing a business strategy whereby it will invest in raw paper products and resell them to various paper recycling companies and mills. Cumberland acquires books, cardboard and post-consumer paper and resells the raw material. During the next twelve months, the Company intends to focus on expanding its business. It will focus on solidifying its supplier arrangements in the United States and Canada and on engaging in promotional activities in an attempt to expand its customer and supplier base.

Note 2 Going Concern

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At March 31, 2013, the Company had not yet achieved profitable operations, has accumulated losses of $166,729 and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations 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 has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.

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Note 3 Related Party Transaction

The Company was charged management fees by the President of the Company of $4,000 per month on a month-to-month basis.  Total management fees are $12,000 for the periods ended March 31, 2013 and 2012, respectively.  Accounts payable – related party is the fees earned but not yet paid of $35,200 and $23,200 at March 31, 2013 and December 31, 2012, respectively.

Note 4 Major Customer

Cumberland sold recycled goods to one customer during the period ending March 31, 2013 and to two customers during the period ending March 31, 2012.

Note 5 Equity Transactions

In the three month period ending March 31, 2013, Mr. Sawatsky made a $12,200 contribution to capital. This was done in connection with the Company agreeing on October 30, 2012 to issue Mr. Sawatsky 2,000,000 shares of common stock for his contributions through the completion of a listing with the OTC Bulletin Board.  As of the date of this report, the shares have not been issued.

Effective March 21, 2013, the Company’s Board of Directors’ approved a forward stock split of its common shares at a ratio of 2 for 1 and to authorize 200,000,000 shares of common stock, $0.001 par value per share.  There were 72,750,000 common shares before the split and there were 145,500,000 common shares after the split.  The stock split is presented retroactively throughout the financial statements and footnotes.

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Item 2.

Management’s Discussion and Analysis or Plan of Operation

Caution about Forward-Looking Statements

This Form 10-Q includes “forward-looking” statements about future financial results, future business changes and other events that haven’t yet occurred. For example, statements like we “expect,” “anticipate” or “believe” are forward-looking statements.  Investors should be aware that actual results may differ materially from our expressed expectations because of risks and uncertainties about the future.  We do not undertake to update the information in this Form 10-Q if any forward looking statement later turns out to be inaccurate.

General

We are a development stage company engaged in the business of paper recycling.  Currently, our business is the acquisition and reselling of raw materials for paper recycling, with the objective of identifying and building relationships with new customers and suppliers. We acquire books, cardboard and post consumer paper and resell the raw material to paper recycling companies. We purchase our paper supply through a variety of procurement methods such as pick up programs with large companies, schools and community recycling programs. The bulk paper we supply is either sold as a commodity by the pound or at a fixed price per box.  

We currently are dependent on one customer for all our sales. We will focus on solidifying our supplier arrangements in the United States and Canada and on engaging in promotional activities in an attempt to expand our customer and supplier base.  

Plan of Operation for the Next Twelve Months

Over the next 12 months we will require at a minimum, operating capital consistent with the past twelve months to fund our purchase of bulk paper.  Revenue and profits from existing sales will continue to fund existing operations; however, the acquisition of new suppliers will require additional funding to place new deposits that secure new paper orders. This will have to be addressed on a case by case basis.

Our plan over the next 12 months is to increase our customer and supplier base. We will do this by continuing our existing model of phone and email solicitation, joining our major industry association ISRI (Institute of Scrap Recycling Industries) and attending trade shows.  We will also invest in travel to meet customers and suppliers in person (approximately $40,000 for travel, meals, accommodation over the next 12 months).

We will incur salary expenses for Mr. Isaacs of $48,000 per year. If we cannot afford to pay this salary, the salary will be accrued. In addition, we anticipate spending an additional $102,000 on administrative fees, legal and accounting fees, including fees payable in connection with complying with future SEC reporting obligations. We estimate that total expenditures over the next 12 months is therefore expected to be approximately $190,000.

We anticipate that we will meet our ongoing cash requirements of approximately $190,000 through equity or debt financing or cash advances and loans. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.

We intend to meet our cash requirements for the short term by generating limited revenue over the next twelve months through a combination of debt financing and equity financing by way of bank loans, private loans and private placements. We currently do not have any arrangements or commitments in

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place to complete any bank loans, private loans or private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.

If we are not able to raise the full $190,000 for the operating plan as anticipated, we will scale our business development in line with available capital. Our primary priority will be to retain our reporting status with the SEC which means that we will first ensure that we have sufficient capital to cover our legal and accounting expenses. Once these costs are accounted for, in accordance with how much financing we are able to secure, we will focus on marketing and acquiring trucks to pick up and deliver the bulk paper products. We will likely not expend funds on the remainder of our planned activities unless we have the required capital.

Results of Operations

Results of Operations for the three months ended March 31, 2013 and 2012.

For the three months ended March 31, 2013 we had revenues of $3,901 from one customer, compared with revenues of $18,429 for the three months ended March 31, 2012.  The reduction in revenues of $14,528 was the result of the loss of a major customer.

Operating expenses for the three months ended March 31, 2013 were $23,654 as compared to $20,850 for the three months ended March 31, 2012. Operating expenses increased by $2,804 due to an increase in legal and accounting costs associated with the filing of the Company’s Form 10-K and general and administration cost relating to the increase in sales activity.

Net loss for the three months ended March 31, 2013 was $23,696 compared to $13,090 for the same comparable period in 2012. The loss decreased by $10,606 primarily due to an increase in general and administrative expenses and reduction in gross profit.

Net cash used in operating activities for the three months ended March 31, 2013 and 2012 was $10,959 and $28,818, respectively.

Net cash provided by financing activities for the three months ended March 31, 2013 was $12,200 for additional paid-in capital, compared to $40,600 for the three months ended March 31, 2012 for proceeds from notes payable.

Liquidity and Capital Resources

Since our inception, we have financed our cash requirements from cash generated from the sale of common stock, revenues from our business and by unsecured loans from our president and our company consultants.  Mr. Isaacs has advanced the company $29,600, which amount was forgiven and cancelled.

Our principal sources of liquidity as of March 31, 2013 consisted of $3,342 in cash. Since inception through to and including March 31, 2013, we raised $34,500 through a private placement of our common stock.

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

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Off-Balance Sheet Arrangements

We have not engaged in any off-balance sheet arrangements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

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

Item 4:

Controls and Procedures

Evaluation of Disclosure Controls

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our management, with participation of our Chief Executive Officer and Chief Financial Officer as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting.

As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) under the Securities Exchange Act of 1934.  Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based on our evaluation under the framework, management has concluded that our internal control over financial reporting was not effective as of March 31, 2013.

Certain internal control weaknesses became evident that, in the aggregate, represent material weaknesses, including:  (i) lack of segregation of incompatible duties; and (ii) insufficient Board of Directors representation.

There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

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PART II- OTHER INFORMATION

Item 1.

Legal Proceedings

We are not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments.

Item 1A.    Risk Factors

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

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

We did not issue any securities during the quarter ended March 31, 2013.

Item 3. 

Defaults Upon Senior Securities

None.

Item 4. 

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6. 

Exhibits and Report on Form 8-K

(a)

Exhibit(s)

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(1)

Filed as an exhibit to our registration statement on Form S-1 filed May 31, 2012 and incorporated herein by this reference.

(2)

Filed as an exhibit to our registration statement on Form S-1/A filed July 25, 2012 and incorporated herein by this reference.

(3)

Filed as an exhibit to our registration statement on Form S-1/A filed August 29, 2012 and incorporated herein by this reference.

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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.

DATED:   May 14, 2013

CUMBERLAND HILLS LTD.

/s/ Joseph Isaacs
--------------------------------------------------

Joseph Isaacs,

CEO, President, Secretary/Treasurer, and Director

(Principal Executive Officer, Principal Financial Officer

and Principal Accounting Officer)