orac10q930.htm

10-Q 1 orac10q930.htm FORM 10-Q orac10q930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-54472

ORACO RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Nevada		27-2300414
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

189 Brookview Drive

Rochester, NY 14617

(Address of principal executive offices)

(212) 279-6260

(Registrant’s telephone number, including area code)

Copies of Communications to:

Stoecklein Law Group

401 West A Street, Suite 1150

San Diego, CA 92101

Office (619) 704-1310 • Fax (619) 704-0556

Indicate by check mark whether the issuer (1) 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 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

The number of shares of Common Stock, $0.001 par value, outstanding on November 19, 2012 was 24,703,987 shares.

ORACO RESOURCES, INC.

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

Index to Report on Form 10-Q

		Page No.
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4T.	Controls and Procedures	19

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

	Signature	21

EXPLANATORY NOTE

Oraco Resources, Inc. (the “Company”), is filing the following Quarterly Report on Form 10-Q for the period ended September 30, 2012 containing “unreviewed” and “unaudited” consolidated financial statements based upon the impact that Hurricane Sandy had upon the Company’s ability to timely gather the information and documentation the independent registered public accountants needed to begin their review of the consolidated financial statements. Anne Thomas, who is the Secretary and Treasurer for the Company, is located in New Jersey, and maintains the majority of the Company’s documents there. On October 28, 2012, Brad Rosen, the Company’s President and CEO flew to New Jersey, in large part to meet with Ms. Thomas and finalize the documents and information needed for the independent registered public accountants’ review of the consolidated financial statements. On October 29, 2012, all power and internet access was lost in the area due to the effects of Hurricane Sandy, and was not fully restored until November 3, 2012. Some of the documents needed for the filing were to have been transmitted to Ms. Thomas from Sierra Leone during that time period. However, due to the outages, the Company was unable to receive those documents. By the time that power was restored, the Company was unable to contact many of the people in Sierra Leone who were supposed to have sent the documents. This significant delay, caused in large part by Hurricane Sandy, impacted upon the Company’s ability to provide all the documentation and information the independent registered public accountants needed to begin their review of the consolidated financial statements.

The Company intends to file an amendment to this Form 10-Q to file unaudited consolidated financial statements for the quarterly period ended September 30, 2012 reviewed in accordance with SAS 100 as required by Rule 10-01(d) by November 21, 2012, the extension due date pursuant to SEC Release 2012-226.

Because the consolidated financial statements contained in this Form 10-Q do not meet the requirements of Rule 10-01(d) of Regulation S-X, the Company may not be considered current in our filings under the Securities Exchange Act of 1934. Filing an amendment to the report, when the independent registered public accountants’ review is complete, will eliminate certain consequences of a deficient filing.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

ORACO RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(unreviewed)(unaudited)


	September 30,			December 31,
	2012			2011
ASSETS

Current assets:
Cash	$	68,665		$	10,888
Cash - restricted		-			59,256
Inventory		425,058			-
Notes receivable		200,000			-
Total current assets		693,723			70,144

Other assets:
Trademark, net		4,819			5,252
Total other assets		4,819			5,252

Total assets	$	698,542		$	75,396

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	44,578		$	25,910
Accrued payroll taxes		14,479			5,055
Line of credit - related party		-			6,799
Customer deposit		-			59,256
Total current liabilities		59,057			97,020

Total liabilities		59,057			97,020

Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, no shares issued and outstanding		-			-
Common stock, $0.001 par value, 100,000,000 shares
authorized, 24,020,760 and 23,645,360 shares issued and outstanding
as of September 30, 2012 and December 31, 2011, respectively		24,581			23,646
Additional paid-in capital		1,761,822			299,762
Common stock payable		899,994			204,971
Deficit accumulated during exploration stage		(2,046,912	)		(550,003	)
Total stockholders' equity (deficit)		639,485			(21,624	)

Total liabilities and stockholders' equity (deficit)	$	698,542		$	75,396

See Accompanying Notes to Consolidated Financial Statements.

ORACO RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unreviewed)(unaudited)

													Inception
													(August 4, 2010)
	For the three months ended						For the nine months ended						to
	September 30,						September 30,						September 30,
	2012			2011			2012			2011			2012

Revenue
Gold and diamond sales	$	-		$	-		$	-		$	-		$	30,000
Commission income		-			-			6,103			-			26,103
Total revenue		-			-			6,103			-			56,103

Cost of goods sold
Cost of goods sold		-			-			2,714			-			33,404
Cost of goods sold - related party		-			-			-			-			8,300
Total cost of goods sold		-			-			2,714			-			41,704

Gross loss		-			-			3,389			-			14,399

Operating expenses:
Depreciation and amortization		144			144			433			378			956
Executive compensation		42,307			27,118			118,724			27,118			175,977
General and administrative		131,129			1,511			163,529			1,626			167,429
Professional fees		497,367			152,743			980,683			247,882			1,410,243
Professional fees - related party		157,195			18,700			233,488			21,200			277,265
Total operating expenses		828,142			200,216			1,496,857			298,204			2,031,870

Other income (expense):
Interest income		6			-			9			-			15
Foreign currency transaction loss		(1,541	)		(425	)		(3,450	)		(425	)		(3,915	)
Total other expense		(1,535	)		(425	)		(3,441	)		(425	)		(3,900	)

Net loss	$	(829,677	)	$	(200,641	)	$	(1,496,909	)	$	(298,629	)	$	(2,021,371	)

Weighted average number of common shares		24,389,599			23,484,123			24,016,789			19,266,062
outstanding - basic

Net loss per share - basic	$	(0.03	)	$	(0.01	)	$	(0.06	)	$	(0.02	)

See Accompanying Notes to Consolidated Financial Statements.

ORACO RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unreviewed)(unaudited)

							Inception
							(August 4, 2010)
	For the nine months ended						to
	September 30,						September 30,
	2012			2011			2012

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,496,909	)	$	(298,629	)	$	(2,021,371	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Shares to be issued for consulting services		470,625			47,396			674,896
Depreciation and amortization		433			378			956
Changes in operating assets and liabilities:
Decrease in restricted cash		59,256			-			-
Decrease in prepaid expenses		-			1,500			-
Increase in inventory		(425,058	)		-			(425,058	)
Increase in due from related party		-			49,900			-
Increase in accounts payable		18,668			14,231			40,015
Increase in accrued payroll taxes		9,424			2,577			14,479
Increase in customer deposits		(59,256	)		-			-

Net cash used in operating activities		(1,422,817	)		(182,647	)		(1,716,083	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired upon merger		-			78			78
Purchase of trademark		-			(5,775	)		(5,775	)
Payments for notes receivable		(200,000	)		-			(200,000	)

Net cash used in investing activities		(200,000	)		(5,697	)		(205,697	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit - related party		1,935			6,164			8,734
Repayments for line of credit - related party		(8,734	)		(10	)		(8,734	)
Proceeds from sale of common stock, net of offering costs		1,462,955			200,030			1,737,985
Proceeds from common stock payable		224,398			27,800			252,198
Donated capital		40			210			262

Net cash provided by financing activities		1,680,594			234,194			1,990,445

NET CHANGE IN CASH		57,777			45,850			68,665

CASH AT BEGINNING OF PERIOD		10,888			-			-

CASH AT END OF PERIOD	$	68,665		$	45,850		$	68,665

SUPPLEMENTAL INFORMATION:
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

NON-CASH SUPPLEMENT:
Acquisition of Oraco Resources and JYORK Industries;
Assets acquired	$	-		$	50,000		$	50,000
Liabilities assumed	$	-		$	(4,564	)	$	(4,564	)
Common stock payable assumed	$	-		$	(50,700	)	$	(50,700	)
Total acquired, excluding cash	$	-		$	5,264		$	(5,264	)
Common stock for reverse merger	$	-		$	8,344		$	8,344
Shares to be issued for consulting services	$	470,625		$	47,396		$	654,063

See Accompanying Notes to Consolidated Financial Statements.

ORACO RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNREVIEWED)(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2011 and notes thereto included in the Company’s 10-K annual report and all amendments. The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim period are not indicative of annual results.

Principles of consolidation

For the nine months ended September 30, 2012 and 2011, the consolidated financial statements include the accounts of Oraco Resources, Inc. (Nevada Corporation), Oraco Resources, Inc. (Canada Corporation) and JYORK Industries, Inc. Ltd. All significant intercompany balances and transactions have been eliminated. Oraco Resources, Inc. (Nevada Corporation), Oraco Resources, Inc. (Canada Corporation) and JYORK Industries, Inc. Ltd. will be collectively referred herein to as the “Company”.

Nature of operations

The Company is in the mineral and natural resource exploration and trading business, and has not yet commenced operations to locate commercially exploitable mineral and natural resources. The Company has been in the exploration stage since its formation and has not realized any revenues from its planned operations.

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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Inventory

Inventory consists of raw materials and is valued at the lower of cost or market. Cost is determined using historical cost.

Trademarks

ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of ASC 350. This standard also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. As of September 30, 2012, the Company believes there is no impairment of its intangible assets.

ORACO RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNREVIEWED)(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Trademarks (continued)

The Company's intangible assets consist of the costs of filing and acquiring various trademarks. The trademarks are recorded at cost. The Company determined that the trademarks have an estimated useful life of 10 years and will be reviewed annually for impairment. Amortization will be recorded over the estimated useful life of the assets using the straight-line method for financial statement purposes. The Company will commence amortization once the economic benefits of the assets begin to be consumed and they plan to record amortization once production begins and the related revenues are recorded.

Mineral claim payments and exploration expenditures

The Company expenses all costs related to the acquisition, maintenance and exploration of its unproven mineral properties to which it has secured exploration rights. If and when proven and probable reserves are determined for a property and a feasibility study prepared with respect to the property, then subsequent development costs of the property will be capitalized. To date the Company has not established the commercial feasibility of its exploration prospects, therefore all costs have been expensed. The Company also considers the provisions of ASC 360 which concludes that mineral rights are tangible assets. Accordingly, the Company capitalizes certain costs related to the acquisition of mineral rights where proven or probable reserves are present or when the Company intends to carry out an exploration program and has the funds to do so.

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Major customers

During the three and nine months ended September 30, 2012, the Company generated its revenue from one customer.

Earnings per share

The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Recent pronouncements

The Company has evaluated all the recent accounting pronouncements through November 2012 and believes that none of them will have a material effect on the Company’s consolidated financial statements.

ORACO RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNREVIEWED)(UNAUDITED)

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability and/or acquisition and sale of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (August 4, 2010) through the period ended September 30, 2012 of ($2,021,371). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – TRADEMARK

Trademarks consisted of the following as of:

	September 30,			December 31,
	2012			2011
Trademarks	$	5,775		$	5,775
Accumulated amortization		(956	)		(523	)
	$	4,819		$	5,252

During the three months ended September 30, 2012 and 2011, the Company recorded amortization expense of $144 and $144, respectively. During the nine months ended September 30, 2012 and 2011, the Company recorded amortization expense of $433 and $378, respectively.

NOTE 4 – NOTES RECEIVABLE

Notes receivable consisted of the following as of:

	September 30,		December 31,
	2012		2011
	$ 200,000		$ -

	$ 200,000		$ -

ORACO RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNREVIEWED)(UNAUDITED)

NOTE 5 – LINE OF CREDIT – RELATED PARTY

Line of credit consists of the following at:

	September 30, 2012		December 31, 2011
Revolving credit line due to shareholder of the Company, unsecured, 0% interest, due upon demand	$	-	$	6,799

	$	-	$	6,799

On January 1, 2011, the Company executed a line of credit in the amount of $10,000 with Summit Capital USA, Inc. The line of credit carries an annual interest rate of 0% and is due upon demand.

During the three months ended September 30, 2012 and 2011, interest expense was $0 and $0, respectively. During the nine months ended September 30, 2012 and 2011, interest expense was $0 and $0, respectively.

NOTE 6 – CUSTOMER DEPOSIT

During the year ended December 31, 2011, the Company received $200,000 from a customer and utilized $120,744 to facilitate the purchase and sale of products and the Company earned commission income of $20,000. As of December 31, 2011, the Company had a balance of $59,256 in customer deposit.

During the three months ended March 31, 2012, the Company received an additional $61,028 from the customer to facilitate additional purchases and sales of products and the Company earned commission income of $6,103. Due to additional fees and expenses directly related to the commission, the Company reduced $2,714 against the commission income. As of September 30, 2012, the Company had a balance of $0 in customer deposit.

NOTE 7 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of its $0.001 par value preferred stock.

On February 23, 2011, the Company affected an 8-for-1 forward stock split of its $0.001 par value common stock.

All shares and per share amounts have been retroactively restated to reflect the split discussed above.

Common Stock

On July 18, 2011, the Company executed a one year consulting agreement with an entity in exchange for 127,500 shares of common stock and 127,500 warrants (the “units”). The units are non-forfeitable and fully vested. The units were valued using the fair value of similar units sold for cash on the agreement date. As of March 31, 2012, the Company owed 127,500 units valued at $127,500. During the three months ended September 30, 2012, the Company recorded consulting expense of $31,875. During the nine months ended September 30, 2012, the Company recorded consulting expense of $63,750. As of September 30, 2012, the shares were unissued and a total of $122,188 was recorded to common stock payable.

ORACO RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNREVIEWED)(UNAUDITED)

NOTE 7 – STOCKHOLDERS’ EQUITY (CONTINUED)

Common stock (continued)

On September 14, 2011, the Company executed a two year consulting agreement with an entity in exchange for a total of 1,000,000 shares of common stock. The shares are earned equally over the two year period subject to the Company’s unfettered right to cancel the agreement at any time without issuing the consultant any further stock. The shares were valued according to the fair value of the common stock based on the agreement date. As of September 30, 2012, the Company owed 520,833 shares of restricted common stock valued at $520,833. During the three months ended September 30, 2012, the Company recorded consulting expense of $125,000. During the nine months ended September 30, 2012, the Company recorded consulting expense of $375,000. As of September 30, 2012, the shares were unissued and a total of $520,833 was recorded to common stock payable.

During the three months ended March 31, 2012, the Company sold 315,000 units consisting of 315,000 shares of its common stock and 315,000 warrants at a price of $1 per unit for cash of $315,000 to several investors. During the three months ended March 31, 2012, the Company issued a total of 80,000 shares of common stock. As of March 31, 2012, the remaining 235,000 shares were not issued and are recorded into common stock payable. During April 2012, the Company issued the remaining 235,000 shares.

During the three months ended March 31, 2012, the Company received donated capital of $40 from a former officer, director and shareholder of the Company.

During the three months ended June 30, 2012, the Company sold 97,900 units consisting of 97,900 shares of its common stock and 97,900 warrants at a price of $1 per unit for cash of $97,900 to several investors. During the three months ended June 30, 2012, the Company issued a total of 52,900 shares of common stock. As of June 30, 2012, the remaining 45,000 shares were not issued and are recorded into common stock payable.

During the three months ended June 30, 2012, the Company sold 15,000 shares of common stock for cash totaling $30,000 to several investors. During the three months ended June 30, 2012, the Company issued a total of 7,500 shares of common stock. As of June 30, 2012, the remaining 7,500 shares were not issued and are recorded into common stock payable.

During the three months ended September 30, 2012, the Company sold 622,227 shares of common stock for cash totaling $1,244,454 to several investors. During the three months ended June 30, 2012, the Company issued a total of 512,528 shares of common stock. As of September 30, 2012, the remaining 109,699 shares were not issued and are recorded into common stock payable.

During the six months ended September 30, 2012, there have been no other issuances of common stock.

NOTE 8 – WARRANTS AND OPTIONS

During the three months ended March 31, 2012, the Company issued a total of 315,000 warrants to several investors related to the sale of units. A unit consisted of one share of common stock and one warrant. See Note 5.

During the three months ended June 30, 2012, the Company issued a total of 97,900 warrants to several investors related to the sale of units. A unit consisted of one share of common stock and one warrant. See Note 5.

ORACO RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNREVIEWED)(UNAUDITED)

NOTE 8 – WARRANTS AND OPTIONS (CONTINUED)

The following is a summary of the status of all of the Company’s stock warrants as of September 30, 2012 and changes during the nine months ended on that date:

	Number of Warrants		Weighted-Average Exercise Price
Outstanding at January 1, 2012		358,268	$	2.00
Granted		476,650	$	2.00
Exercised		-	$	0.00
Cancelled		-	$	0.00
Outstanding at September 30, 2012		834,918	$	2.00
Warrants exercisable at September 30, 2012		834,918	$	2.00
Warrants exercisable at September 30, 2011		-	$	0.00

The following table summarizes information about stock warrants outstanding and exercisable at September 30, 2012:

		STOCK WARRANTS OUTSTANDING AND EXERCISABLE
Exercise Price		Number of Warrants Outstanding		Weighted-Average Remaining Contractual Life in Years		Weighted- Average Exercise Price
$	2.00		834,918		0.73	$	2.00

NOTE 9 – RELATED PARTY TRANSACTIONS

During the three months ended September 30, 2012, the Company paid $157,195 to a shareholder of the Company for consulting fees. During the nine months ended September 30, 2012, the Company paid $233,488 to a shareholder of the Company for consulting fees. During the three months ended September 30, 2011, the Company paid $18,700 to a shareholder of the Company for consulting fees. During the nine months ended September 30, 2011, the Company paid $21,200 to a shareholder of the Company for consulting fees.

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

This Quarterly Report on Form 10-Q contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects. These statements include, among other things, statements regarding:

o	our ability to diversify our operations;

o	our ability to attract key personnel;

o	our ability to operate profitably;

o	our ability to efficiently and effectively finance our operations;

o	inability to achieve future sales levels or other operating results;

o	inability to raise additional financing for working capital;

o	inability to efficiently manage our operations;

o	the inability of management to effectively implement our strategies and business plans;

o	the unavailability of funds for capital expenditures and/or general working capital;

o	the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

o	deterioration in general or regional economic conditions;

o	changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

o	adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, if any and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

References in the following discussion and throughout this quarterly report to “we”, “our”, “us”, “Oraco”, “the Company”, and similar terms refer to Oraco Resources, Inc. and its subsidiaries, unless otherwise expressly stated or the context otherwise requires.

AVAILABLE INFORMATION

We file annual, quarterly and other reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www.oracoresourcesinc.com. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Oraco Resources, Inc., 189 Brookview Drive, Rochester, NY 14617.

Overview

Oraco is an exploration stage and exporting company engaged in the discovery, acquisition, development, production, and market of gold, diamonds, and other natural resources. Our products primarily consist of: metal concentrates, which we sell to custom smelters; unrefined bullion bars (doré), which may be sold as doré or further refined before sale to precious metals traders; unfinished diamonds; and some gem quality diamonds that we have cut and polished before marketing.

On June 3, 2011, we entered into an Acquisition, Distribution and Marketing Agreement with Ozuro Jewelry, a New York corporation (“Ozuro”), wherein we agreed to offer to Ozuro the right to purchase our diamonds and gold (the “Product”) before offering to sell the Product to any other third party, and Ozuro agreed to consider purchasing our Product, in accordance with the terms and conditions set forth in the agreement. The term of the agreement began on June 3, 2011 and will terminate on June 3, 2014. The price of the gold shall initially be set at 90% of the London PM fix as reported as of the date of the sale and diamonds pricing shall be initially set at 95% of the Rapaport Diamond Price Index as reported as of the date of sale.

In October 2011 we strengthened our holdings by reviving contractual rights for the disposition of diamonds, gold, and any other minerals recovered in an approximately 10 acre area of mineral rich Boroma, Sierra Leone. These rights had been acquired by JYORK in 2008 before becoming our wholly-owned subsidiary. The holding is located northwest of the city of Koidu in the Kono District, Sierra Leone.

Under the revived form of the agreement, net revenues generated from the activities at the Boroma site will be divided evenly between JYORK and the Boroma Gbense Chiefdom. (“Net Revenue” is defined as the gross value of the recovery, as determined by governmental agencies, less any and all costs incurred in connection with the recovery and evaluation of the product).

Subject to adequate financing we plan to begin mining in Boroma within the next 90 days. Findings will be released shortly after excavation.

Also in October 2011, we further increased our holdings by fulfilling a condition precedent to the effectuation of an agreement that had been entered into on or about April 20, 2011 between JYORK and the authorities representing the Nimikoro Chiefdom in Sierra Leone, which granted to JYORK the rights to recover all precious minerals and natural resources located above and below ground in the area located in the Nimikoro Chiefdom known as Nimini Hills. The contract called for JYORK to provide all funding necessary to mine the area known as Nimini Hills, and all net profits earned from the recovery and sale of any precious minerals or other natural resources are to be divided 69% to JYORK and 31% to the Chiefdom (1% of which the Chiefdom is to apply to local development). The agreement applied to an area that was believed to be approximately 500 acres. However, since the specific metes and bounds of the area were indeterminate, the effectuation of the agreement was subject to JYORK having a complete survey done to establish these boundaries.

On October 12, 2011, a surveyor was retained. By March 28, 2012, the survey of the Nimini Hills boundaries was completed. It was discovered by the results of the survey that the local Chieftains had misunderstood the conversion of the area to acres. The contract covered an area that is actually 50 square kilometers in size, rather than the 500 acres.

In connection with the completion of the survey of Nimini Hills, a 50 acre area within the concession was mapped out by the surveyors in which the Company believes that it should be able to commence alluvial mining by late 2012 or early 2013. The site is located around Gondama and Keoma, in the Kono District.

The Company’s wholly-owned subsidiary, JYORK, is in the process of obtaining an Exploratory License and a Small Scale Mechanized Mining License to enable the Company to commence mechanized mining and to determine the locations in the Nimini Hills concessions in which the mining should occur.

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company is in the development stage and, accordingly, has generated minimal revenues from operations. As shown on the accompanying financial statements, the Company has incurred a net loss of $2,021,371 for the period from inception (August 4, 2010) to September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The future of the Company is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues.

RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended September 30, 2012 and September 30, 2011

Revenues. In the three months ended September 30, 2012 and September 30, 2011 we did not generate any revenues.

While the Company shall begin artisanal mining shortly, we do not anticipate that these efforts will generate substantial returns while in the nascent stage. We will also be in the exploration stage of our business for an extended period of time and as a result do not anticipate earning revenues from our properties via any mechanized mining (which generates greater returns than artisanal mining) until we have explored the properties and conducted geophysical studies as well.

Depreciation and Amortization. Depreciation and amortization totaled $144 during the three months ended September 30, 2012 and $144 during the three months ended September 30, 2011.

Executive Compensation. Executive compensation totaled $42,307 during the three months ended September 30, 2012 and $27,118 during the three months ended September 30, 2011.

General and Administrative. General and administrative totaled $131,129 during the three months ended September 30, 2012 and $1,511 during the three months ended September 30, 2011.

Professional Fees. Professional fees totaled $497,367 during the three months ended September 30, 2012 and $152,743 during the three months ended September 30, 2011. Professional fees consisted mainly of legal fees, accounting fees, EDGAR filing fees, consulting fees and transfer agent fees.

Professional Fees – Related Party. Professional fees – related party totaled $157,195 during the three months ended September 30, 2012 and $18,700 during the three months ended September 30, 2011.

Results of Operations for the Nine Months Ended September 30, 2012 and September 30, 2011

Revenues. In the nine months ended September 30, 2012, we generated $6,103 in revenue and during the nine months ended September 30, 2011 we did not generate any revenue. The increase in revenue for the period ended September 30, 2012 was attributable to some preliminary work on the buy/sell program.

Depreciation and Amortization. Depreciation and amortization totaled $433 during the nine months ended September 30, 2012 and $378 during the nine months ended September 30, 2011.

Executive Compensation. Executive compensation totaled $118,724 during the nine months ended September 30, 2012 and $27,118 during the nine months ended September 30, 2011.

General and Administrative. General and administrative totaled $163,529 during the nine months ended September 30, 2012 and $1,626 during the nine months ended September 30, 2011.

Professional Fees. Professional fees totaled $980,683 during the nine months ended September 30, 2012 and $247,882 during the nine months ended September 30, 2011. Professional fees consisted mainly of legal fees, accounting fees, EDGAR filing fees, consulting fees and transfer agent fees.

Professional Fees – Related Party. Professional fees – related party totaled $233,488 during the nine months ended September 30, 2012 and $21,200 during the nine months ended September 30, 2011.

Liquidity and Capital Resources

As of September 30, 2012, we had $68,665 in cash, $425,058 in inventory and $200,000 in notes receivable. The following table provides detailed information about our net cash flow for all financial statement periods presented in this Quarterly Report. To date, we have financed our operations primarily through the issuance of stock and borrowings.

The following table sets forth a summary of our cash flows for the periods indicated:

	Nine Months Ended September 30,
	2012			2011
Net cash used in operating activities	$	(1,422,817	)	$	(182,647	)
Net cash used in investing activities	$	(200,000	)	$	(5,697	)
Net cash provided by financing activities	$	1,680,594		$	234,194
Net change in cash	$	57,777		$	48,850
Cash, beginning of period	$	10,888		$	-
Cash, end of period	$	68,665		$	45,850

Operating activities

Net cash used in operating activities was $1,422,817 for the nine months ended September 30, 2012, as compared to $182,647 used in operating activities for the same period in 2011. The increase in net cash used in operating activities consisted primarily of professional fees.

Investing activities

Net cash used in investing activities was $200,000 for the nine months ended September 30, 2012, as compared to $5,697 used in investing activities for the same period in 2011.

Financing activities

Net cash provided by financing activities for the nine months ended September 30, 2012 was $1,680,594, as compared to $234,194 for the same period of 2011. The increase in net cash provided by financing activities was mainly attributable to proceeds from sale of common stock.

Since inception, we have financed our cash flow requirements through the issuance of common stock and related party notes payable. Without significant cash flow from operations we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions, implementation of our strategy to successfully expand and continue current gold and diamond buy/sell transactions, or acquisitions we may decide to pursue.

If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.

We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, raise sufficient capital to retain the services of well seasoned professionals to increase our probability of success. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Off-Balance Sheet Arrangements

We do not have any 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 is material to investors.

Operation Plan

Our current business plan is to expand and continue current gold and diamond buy/sell transactions that provide current revenues for the Company. Additionally, we plan to engage SRK Worldwide, or another service provider of equal repute, to provide geological and geophysical analysis of our assets in Sierra Leone so as to prepare a feasibility and technical report with respect to the proposed mining operations on certain of our concessions. These studies will commence immediately after the Exploration Licenses have been issued.

While the geophysical reports are being undertaken on our assets, we will expand our gold and diamond buy/sell program to deliver sufficient cash-flow to fund the costs associated with exploration and related geophysical examinations of our mining concessions. Once the feasibility reports are completed, we anticipate capital expenditures on equipment, labor, housing, fuel, travel and other essential items to prepare the concessions for recovery and resource extraction operations.

Available Information

Our website is located at www.oracoresourcesinc.com. We provide a link to the section of the SEC’s website at www.sec.gov that has all of our public filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, our Proxy Statements, and other ownership related filings. Further, a copy of this Quarterly Report on Form 10-Q is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

The contents of our websites are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

This item is not applicable as we are currently considered a smaller reporting company.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Principal Financial Officer, Bradley Rosen, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on that evaluation and assessment, Mr. Rosen concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

Item 1A. Risk Factors

Our significant business risks are described in Item 1A. to Part I of Form 10-K for the year ended December 31, 2011 (filed on April 16, 2012) to which reference is made herein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended September 30, 2012, we sold 622,227 shares of common stock for cash totaling $1,244,454 to several accredited investors, all of which was paid in cash. Of the 622,227 shares, 512,528 shares were issued during the three months ended September 30, 2012 and the remaining 109,699 shares were issued subsequent to the period ended September 30, 2012.

We believe that the issuance and sale of the above securities were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2), Regulation D and/or Regulation S. The securities were issued directly by us and did not involve a public offering or general solicitation. The recipient of the securities was afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make her investment decision, including our financial statements and 34 Act reports. We reasonably believed that the recipient, immediately prior to issuing the securities, had such knowledge and experience in our financial and business matters that she was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our management on several occasions prior to her investment decision. There were no commissions paid on the issuance and sale of the shares.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities from the time of our inception on August 4, 2010 through the period ended September 30, 2012.

Item 3. Defaults on Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit		Incorporated by reference herein
Number	Description	Form	Date

31.1*	Certification of pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	Certifications of r pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**	XBRL Instance Document

101.SCH**	XBRL Taxonomy Extension Schema

101.CAL**	XBRL Taxonomy Extension Calculation Linkbase

101.DEF**	XBRL Taxonomy Extension Definition Linkbase

101.LAB**	XBRL Taxonomy Extension Label Linkbase

101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

*	Filed herewith.

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ORACO RESOURCES, INC.


Date: November 19, 2012	By:	/S/ Bradley Rosen
		Bradley Rosen, Chief Executive Officer
		(Principal Financial Officer and duly authorized signatory)