TOA Distribution Systems Inc. - FORM 10-Q - November 14, 2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the fiscal Quarter ended September 30, 2012

OR

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

For the transition period from ____________ to ____________

TOA DISTRIBUTION SYSTEMS INC
(formerly Skyhigh Resources, Inc.)
(Exact Name of Registrant as Specified in its Charter)
 
      Delaware                                                             26-2746101
(State of other jurisdiction of                                                                   (I.R.S. Employer
incorporation or organization)                                                                    Identification No.)

1791 Marcy Lynn Court
San Jose, CA 95124
(Address of Principal Executive Offices) (Zip Code)
Former address
859 South Haskell, Central Point, OR 97502

408-239-4080
(Registrant's Telephone Number, including Area Code)

Securities Registered Pursuant to Section 12(B) of the Act: None

Securities Registered Pursuant to Section 12(G) of the Act:
Common Stock, par value $.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ¨  No  þ
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨  No  þ
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ  No  ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 229.405 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-Q or any amendment to this Form 10-Q.þ
 
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of " large accelerated filer," or a smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting companyþ
 
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  þ  No  ¨
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal quarter June 30, 2012 was $ $0.00 based on common shares outstanding of 47,100,060.
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
 
47,100,060 shares of Common Stock, $0.001 par value, as of November 12, 2012
 
Documents incorporated by reference - None
 
State issuer's revenues for its most recent fiscal year:  Nil
 
 
 
 

Part 1 – FINANCIAL INFORMATION

 
Item 1:  FINANCIAL STATEMENTS
F-1
  
 
Unaudited Condensed Balance Sheets as of September 30, 2012 and March 31, 2012
F-2
  
 
Unaudited Condensed Statements of Operations for the three months and six months ended September 30, 2012 and September 30, 2011
F-3
  
 
Unaudited Condensed Statements Cash Flows for the six months ended  September 30, 2012 and September 30, 2011
F-4
  
 
Notes to Unaudited Financial Statements
F-6
  
 
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
3
  
 
Item 3.  Controls And Procedures
4
  
       
 
PART II – OTHER INFROMATION
 5  
       
 
Item 1.  Legal Procedures
5
  
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
5
  
 
Item 3. Default Upon Senior Securities
5
  
 
Item 4. Submission Of Matters To A Vote Of Security Holders
5
  
 
Item 5. Other Information
5
  
 
Item 6. Exhibits
5
  
 
            Signatures
6
  
 
 
 
 
 
ITEM 1- FINACIAL STATEMENTS

TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Condensed Balance Sheets
September 30, 2012
 
 
Page
  
     
Financial Statements:
      F-1
  
     
Balance Sheet
F-2
  
     
Statement of Operations
F-3
  
     
Statement of Cash Flow
F-4
  
     
Notes to Financial Statements
F-5
  
 
 
F-1
 
 
TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Condensed Balance Sheets
 
     
At Sept
    
At March
  
     
30, 2012
    
31, 2012
  
               
ASSETS
              
Cash
  
$
638
  
$
1,812
  
Total Current Assets
    
638
    
1,812
  
               
LIABILITIES
              
Current Liabilities
              
Accrued Expenses
    
2,230
    
4,860
  
Accounts Payable
    
6,467
    
2,955
  
Loans Payable Related Parties- Principal (Note 4)
    
30,479
    
47,712
  
Loans Payable Related Parties- Accrued Interest (Note 4)
    
4,926
    
7,050
  
Total Current Liabilities
  
$
44,102
  
$
62,577
  
               
STOCKHOLDERS’ EQUITY (DEFICIT)
              
Capital Stock
              
Preferred Shares - 10,000,000 Shares Authorized, at $0.001
              
per share - Zero Issued and Outstanding
              
Common Stock - 250,000,000 authorized at $0.001 par value
              
47,100,060 Issued and Outstanding  at Sept 30, 2012 and Mar 31, 2012, respectively
    
47,100
    
47,100
  
Additional paid-in capital
    
74,650
    
49,650
  
Deficit Accumulated During the Development Stage
    
(165,214
)
  
(157,515
)
Total Stockholders’ Equity (Deficit)
  
$
(43,464
)
$
(60,765
)
               
 Total Liabilities and Stockholders’ Equity (Deficit)
  
$
638
  
$
1,812
  

The accompanying notes are an integral part of these Financial Statements
 
 
F-2
 

TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Condensed Statements of Operations
 
     
3 Month Period Ending Sept  30, 2012
    
3 Month Period Ending Sept  30, 2011
    
6 month Period Ended Sept 30, 2012
    
6 month Period Ended Sept 30, 2011
    
Cumulative Amounts from Date of Incorporation April 2, 2007 to Sept 30, 2012
  
Revenue
  
$
0
  
$
0
  
 
 
         $ 0  
Expenses
                                
General and Administrative
    
2,330
    
6,104
    
6,611
    
10,391
    
88,072
  
Impairment Expense-Mining Claim
    
—
    
—
    
—
    
—
    
26,250
  
Impairment Expense-Distribution Agmt
    
—
    
—
    
—
    
—
    
42,500
  
 Total Expenses
    
2,330
    
6,104
    
6,611
    
10,391
    
156,822
  
                                 
Net Loss from Operations
    
(2,330
)
  
(6,104
)
  
(6,611
)
  
(10,391
)
  
(156,822
)
Other Income and (Expense)
                                
Foreign Exchange
    
—
    
—
    
 
           33  
Interest
    
(426
)
  
(1,043
)
  
(1,088
)
  
(1,731
)
  
(8,425
)
Provision for Income Tax
    
—
    
—
    
—
              
Net Loss For The Period
    
(2,756
)
  
(7,147
)
  
(7,699
)
  
(12,122
)
  
(165,214
)
                                 
Basic And Diluted Loss Per Common Share
  
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
  
 
  
                                 
Weighted Average Number of Common Shares Outstanding
    
47,100,060
    
47,100,060
    
47,100,060
    
47,100,060
    
 
  

The accompanying notes are an integral part of these Financial Statements
 
 
F-3
 
 
TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Condensed Statements of Cash Flows
 
 
6 month Period Ended Sept 30, 2012
  
6 month Period Ended Sept 30, 2011
  
Cumulative Amounts from Date of Incorporation April 2, 2007 to Sept 30, 2012
  
Operating Activities
            
  Net Income (Loss)
          (7,699)
  
     (12,122)
  
                    (165,214)
  
Adjustments To Reconcile Net Loss To Net Cash
            
   Provided by Operations
-
  
-
  
-
  
   Stock Issued for Company Expenses paid by Related Parties
-
  
-
  
22,000
  
   Company Expenses paid by Related Parties
4,555
  
19,995
  
34,100
  
   Impairment of mining Property
-
  
-
  
26,250
  
   Impairment -Distribution License
-
  
-
  
42,500
  
Change in Assets and Liabilities
            
   Increase (decrease) accounts payable
            3,512
  
             (19)
  
6,467
  
   Increase (decrease) in accrued expenses
          (2,630)
  
       (3,535)
  
2,230
  
   Increase (Decrease) in Accrued Interest-Related Party
            1,088
  
         1,731
  
7,574
  
   Increase (Decrease) in Loans Payable-Related Party
                    -
      
-
  
   Increase (Decrease) in Accrued Interest-Others
 -
      
564
  
Net Cash Provided (Used) by Continuing Operating Activities
          (1,174)
  
         6,050
  
                      (23,529)
  
Investing Activities
            
Net Cash Provided (Used) by Investing Activities
-
  
-
  
-
  
Financing Activities
            
  Cash provided by (Used for) Notes Payable Related Party
 -
  
-
  
13,577
  
  Cash provided by (Used for) Notes Payable- Others
-
      
4,590
  
  Stock Issued for Cash
                    -
  
-
  
6,000
  
Net Cash Provided (Used) by Financing Activities
-
  
-
  
24,167
  
Increase (Decrease) in Cash from Continuing Operations
          (1,174)
  
         6,050
  
                             638
  
Cash and Cash Equivalents at Beginning of Period
1,812
  
97
  
-
  
Cash and Cash Equivalents at End of Period
               638
  
         6,147
  
                             638
  
Supplemental Information
            
Cash Paid For:
            
Income Taxes
 -
  
-
  
-
  
Non-Cash Activities
            
Stock issued for services
-
  
-
  
3,000
  
Stock issued for Interest Payable
-
  
-
  
287
  
Stock issued for Accounts Payable
-
  
-
  
10,713
  
Stock Issued for mining claims
-
  
-
  
26,250
  
Stock Issued for Distribution Agreement
-
  
-
  
42,500
  
Contributed Capital- sale of mineral claims to Related Parties
25,000
  
-
  
25,000
  
Interest
            1,088
  
1,731
  
7,574
  
 
  
 
  

The accompanying notes are an integral part of these Financial Statements
 
 
F-4
 
 
TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Condensed Statements of Stockholders’ Equity (Deficit)
From Inception on April 2, 2007 through September 30, 2012
 
               Deficit      
               Accumulated      
               During the      
 
Common Stock
   Paid-In    Development    Stockholders'  
 
Shares
   Amount    Capital    Stage    Equity (Deficit)  
Balance,  April 2, 2007   (Date of Inception)
--
 $
        --
  $
             --
  $
             --
  $
                  --
  
Common Stock issued for cash at $0.0001 per share on December 13, 2007
15,000,000
  
15,000
  
     (13,500)
      
1,500
  
Common Stock issued for debt at $0.0025 per share on December 13, 2007
600,000
  
600
  
900
      
1,500
  
Common Stock issued for mining property at $0.01 per share on January 10, 2008
2,000,000
  
2,000
  
18,000
      
20,000
  
Deficit for Period from Inception on April 2, 2007 to March 31, 2008
            
          (10,472)
  
                (10,472)
  
Balance March 31, 2008
17,600,000
  
17,600
  
5,400
  
          (10,472)
  
12,528
  
Deficit for 3 months ended March 31,2009
            
          (38,246)
  
                (38,246)
  
Balance March 31, 2009
17,600,000
  
17,600
  
5,400
  
          (48,718)
  
                (25,718)
  
 
                    
Common Stock issued for Cash at $0.0025 per share on May 11, 2009
2,400,000
  
2,400
  
3,600
      
6,000
  
Common Stock issued for accounts payable - related party at $0.0025 per share on June 1, 2009
4,285,000
  
4,285
  
6,428
      
10,713
  
Common Stock issued for loans payable at $0.0025 per share on June 13, 2009
3,315,000
  
3,315
  
4,972
      
8,287
  
Common Stock issued for mining property at $0.0025 per share on June 15, 2009
2,500,060
  
2,500
  
3,750
      
6,250
  
Common Stock issued for distribution agreement at $0.0025 per share on September 2, 2009
17,000,000
  
17,000
  
25,500
      
42,500
  
Deficit for the year ended March 31, 2010
            
          (74,388)
  
                (74,388)
  
Balance March 31, 2010
47,100,060
  
47,100
  
49,650
  
        (123,106)
  
                (26,356)
  
Deficit for the year ended March 31, 2011
            
            (7,803)
  
                   (7,803)
  
Balance March 31, 2011
 47,100,060
  
   47,100
  
       49,650
  
        (130,909)
  
                (34,159)
  
Deficit for - 12 month period ended March 31, 2012
            
          (26,606)
  
                (26,606)
  
Balance March 31, 2012
47,100,060
  
   47,100
  
       49,650
  
        (157,515)
  
                (60,765)
  
Contributed Capital- Note 6
        
       25,000
      
                  25,000
  
Deficit for - 6 month period ended  Sept 30, 2012
            
            (7,699)
  
                   (7,699)
  
Balance September 30, 2012
47,100,060
  
47,100
  
74,650
  
        (165,214)
  
                 (43,464)
  
 
The accompanying notes are an integral part of these Financial Statements
 
 
F-5
 

TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Notes to Financial Statements
September 30, 2012

NOTE 1. BASIS OF PRESENTATION

In August 2009 the Company initiated a number of corporate changes, including 1), a name change to TOA Distribution Systems Inc, (formerly known as Skyhigh Resources Inc, 2) approved a 10 for 1 roll forward of its issued and outstanding common stock, 3), increased it authorized par value $0.001 common shares to 250,000,000 shares (formerly 50,000,000), and 4), authorized 10,000,000 par value $0.001 preferred shares.
The Company also resolved to change its corporate focus, moving from mining and exploration into bottled drinking water distribution.
 
On September 2, 2009 the Company entered into to a Sub-Distribution agreement with Taste of Aruba (US), Inc to distribute bottled water products produced in Aruba by Taste of Aruba-Premium Aruban Water.   The territory in which the Company can distribute these products include the United States and all its territories and insular areas in the Caribbean and Pacific such as but not limited to Puerto Rico, U.S. Virgin Islands, Marshall Islands, and Guam, and all of Canada.
 
 The water product is made from desalinated seawater, is filtered through coral calcium and will be further enhanced by the addition of electrolytes then bottled in Taste of Aruba’s proprietary biodegradable bottles. The products will be marketed to retail locations that currently handle bottled water such as display cases in food beverage marketer at airports, food chain store, and sublicensing to bulk dealers and will include the use of vending machines located at high traffic locations.

The Company owned two (2) mineral properties, which were acquired by issuing stock to related parties and which had been fully impaired. These claims were deemed surplus, had been held for sale for about two years and were sold in May 2012.

It is management’s opinion that all adjustments necessary for a fair statement of the results for this interim period have been made and all adjustments made are of a normal recurring nature.

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America, which contemplates continuation of the Company as a going concern.  However, the Company has no business operations to date, accumulated losses amounting to $165,214 and must secure additional financing to commence the Company’s plan of operations, which means there is substantial concern about the Company’s ability to continue as a going concern.  The Company intends to acquire additional operating capital through equity offerings to the public to fund its business plan or loans from shareholders and others. There is no assurance that the equity offerings will be successful or loans will be received to provide sufficient funds to commence operations or to assure the eventual profitability of the Company.

NOTE 3. SUB-DISTRIBUTION AGREEMENT

On September 2, 2009 the Company signed an Exclusive Sub-Distribution Agreement (“Agreement”) with Taste of Aruba (US) Inc, a State of Nevada Incorporated company, owner and master distributor of products from Taste of Aruba-Premium Aruban Water. Under the Agreement, the Company will distribute in the United States, its territories and insular areas in the Caribbean and Pacific and Canada, bottled water produced under license in Aruba by Water Energy Company-Aruba. To maintain the Agreement, the Company will be required to meet certain product sales volumes after Taste of Aruba commences production. The start of production by Taste of Aruba had been delayed due to it inability to complete funding arrangements which is now reported to be eminent although to date these funds have not been received. If Taste of Aruba receives funding as projected, the production facility is

 
F-6
 
 
TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Notes to Financial Statements
September 30, 2012

NOTE 3. SUB-DISTRIBUTION AGREEMENT (Continued)

projected to be complete by December 31, 2012. Payment for the Agreement cost of $42,500, which was fully impaired on acquisition, was paid by the issuance of 17,000,000 post dividend shares of the Company’s common restricted stock issued in accordance with ASC 505-50-30-6 at $0.025 per share.

The Company periodically reviews for impairment its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management has determined that its Distribution Agreement asset requires impairment. As no sale activities have occurred, no product is yet available for sale and funds to establish a sales and distribution operation have not been secured.


NOTE 4. LOANS PAYABLE – RELATED PARTIES

Loans payable to related parties resulted from funds provided by a director and from shareholders of the company as cash loans for payment of certain operating expenses and for services provided.

Loans payable to a director totaled $4,760, made up of principal amounting to $3,660 and accrued interest of $1,100 Loans payable to Related Parties totaled $30,645; made up of principal amounting to $26,819 and accrued interest amounting to $ 3,826. See Note 6 for additional information.

In aggregate, Loans Payable Related Parties to September 30, 2012 totaled $35,405 made up of $30,479 for principal and $4,926 for accrued interest.

During the quarter ended June 30, 2012, we sold our two mineral claims to the Related Party for $25,000. This amount was used to reduce Related Party Loans principal owing by $21,788 and reduce Related Party Accrued Interest payable by $3,212.

Up to September 30, 2009 the Related Party Loans were without defined interest or payment terms and were payable on demand. In the quarter ended September 30, 2009 Loan Agreements were entered into which clarified and confirmed the terms and conditions. Commencing October 1, 2009, the outstanding amount and subsequent amounts, were payable on demand, interest accrued at the rates of 10% per annum and if earlier demand for payment was not made, the loans are payable November 30, 2012. On May 1, 2012 the interest rate was reduced to 5% per annum and the due date was extended to November 30, 2013

NOTE 5. EQUITY

At a special shareholders meeting held August 13, 2009, the shareholders approved the change of the Company’s name to TOA Distribution Systems Inc, approved charges to the authorized capital which included creation of 10,000,000 shares of preferred stock at a par value of $0.01 per share and increased the authorized common stock to 250,000,000 with a par value of $0.001 per share. As well, the shareholders approved a 10 for 1 forward stock split of the outstanding shares. All share amounts shown in these financial statements have been adjusted retroactively to account for the forward stock split.
 
During this current period, we sold our two mineral claims for $25,000. As the sale was made to a related party, the sale amount was recorded to Additional Paid In Capital and not treated as a gain.

At June 30, 2012 we had zero preferred stock issued and outstanding and had 47,100,060 common shares issued and outstanding, which were issued on the dates and purposes listed below.

-  15,000,000 common shares issued to a director for cash at $0.0001 on December 13, 2007
-  600,000 common shares issued for services at $0.0025 on December 13, 2007
-  2,000,000 common shares issued for a mining property at $0.01 on January10, 2007
-  2,400,000 common shares issued for cash on May 11, 2009
-  4,285,000 common shares issued for accounts payable on June 1, 2009
-  3,315,000 common shares issued to a related party for loan payable on June 13, 2009
 
 
F-7
 
 
TOA Distribution Systems Inc
(formerly known as Skyhigh Resources Inc)
A Development Stage Company
Notes to Financial Statements
September 30, 2012
 
NOTE 5. EQUITY (Continued)

- 2,500,060 common shares issued for a mining property on June 15, 2009
- 17,000,000 common shares issued for a sub-distribution agreement on Sept 2, 2009
 
NOTE 6. CONTRIBUTED SURPLUS
 
The Company owned two (2) mineral claims that had been deemed surplus and fully impaired. On to May 1, 2012 these claims were sold to a related party to whom the Company had loans payable. The terms of the sale was a reduction of the loans payable and proportionate accrued interest in aggregate amounting to Twenty-Five Thousand Dollar, ($25,000.00), an extension on the due date of the loan to November 13, 2013, a reduction of the rate of interest payable to 5% and the issuance by the purchaser of shares in two private companies. These shares were valued at $0 therefore there was no impact on the financial statements. These shares were distributed equally to each of the shareholders of the Company.
 
NOTE 7. SUBSEQUENT EVENTS
 
The Company has evaluated subsequent events through the date that the financial statements were issued. There were no significant subsequent events that need to be disclosed.
 
 
F-8
 
 
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

PLAN OF OPERATION

In an effort to make available the facilities of the public market to our funding requirements, the Company intends to make application to FINRA for the Company's shares to be quoted on the OTCBB. The Company's application to FINRA will consist of current corporate information, financial statements and other documents as required by Rule 15c211 of the Securities Exchange Act of 1934.

Subject to receiving adequate funding and the water product being available from Taste of Aruba products, we will selectively target various distribution outlets / locations such as airports, trade shows, exhibitions and other public activities which attract large gatherings of people.
 
RESULTS OF OPERATIONS

Interim Period: For the three month period ended September 30, 2012 and comparable three month period in 2011

No sales or income was recorded for the year

Operating Costs and Expenses

The net loss incurred for the three-month period July 1, 2012 to September 30, 2012 amounted to $2,756 compared to $7,147 for the comparable period in 2011. Total expenses incurred during the three-month period ended July 1, 2012 to September 30 were $2,330 compared to $6,104 for the same period in 2011. The amount of $2,330 was made up of audit expenses $1,750, and Edgar filing fees of $480 whereas in the comparable 2011 period expenses consisted of audit expenses in the amount $1,750, mineral claims filing fees amounting to $1,349, Edgar filing fees of $1,054 and miscellaneous fees totalling $134. Interest expense amounted to $426 for the three month period ended September 30, 2012, compared to $ 1,043 for the comparable period ended September 30, 2011.

The net loss incurred for the six-month period ended September 30, 2012 amounted to $7,699 compared to $12,122 for the comparable period in 2011. Total expenses incurred during the six-month period ended September 30, 2012 were $6,611 compared to $10,391 for the same period in 2011. The amount of $6,611 was made up of audit expenses of $3,500, $2,002 for stock transfer fees, bank service charges of $149 and Edgar filing fees of $960 whereas in the comparable 2011 period expenses consisted of audit expenses in the amount $3,500, mineral claims filing fees amounting to $5,143, Edgar filing fees of $1,054, bank services charges of $137 and miscellaneous fees totalling $107. Lower cost of mineral claims fees in the current period were as a result of the Company’s sale of its two claims in the period ended June 30, 2012.  Interest expense amounted to $1,088 for the six-month period ended September 30, 2012, compared to $ 1,731 for the comparable period ended September 30, 2011.

SELECTED FINANCIAL INFORMATION
 
 
   September 30, 2012  
Current Assets
   $ 638  
Total Assets
   $ 638  
Current Liabilities
   $ (44,102 )
Stockholders' Equity
   $ (43,464 )

LIQUIDITY AND CAPITAL RESOURCES

Our cash balance is $638 June 30, 2012. During this six-month period ended $September 30, 2012 we received loans from related parties amounting to $1,845. These loans and a commitment for any additional funds required through December 31, 2012 will be sufficient to fund our limited levels of operations. We are a development stage company and have generated no revenue to date. We sold 1,000,000 shares of common stock in June 2009 for $25,000 for cash amounting to $6,000, and for debt reduction amounting to $19,000. The debt reduction in the amount of $19,000 consisted of loans payable amounting to $8,287 and accounts payable amounting to $10,713.
 
 
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We have loans payable including interest amounting to $35,405 due December 2013, accrued expenses of $2,230 made up of audit fees and Edgar fees, and $6,467 for accounts payable. These accruals and accounts payable exceed our cash available by $7,959. We have commitments from related parties and shareholders for additional funds to pay outstanding payables and expenses for our minimum level of operations through December 31, 2012.

Our auditor has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated revenues and no revenues are anticipated until we begin receiving and selling water products. There is no assurance we will ever reach that stage.

OFF-BALANCE SHEET ARRANGEMENTS

We have no 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.

ITEM 3. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us 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 Security and Exchange Commission's rules and forms.

There has been no change in our internal control over financial reporting during the current quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

EVALUATION OF AND REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control  over  financial  reporting  for  the  company.  Internal  control  over financial reporting is to provide reasonable assurance regarding the reliability of our  financial  reporting  purposes  accordance  with  accounting  principles generally  accepted in the United  States of  America.  Internal  control  over financial  reporting  includes  maintaining  records that in  reasonable  detail accurately and fairly reflect our transaction;  providing  reasonable  assurance that  transactions  are recorded as necessary for  preparations of our financial statements;  providing  reasonable assurance that receipts and  expenditures of company  assets  are  made in  accordance  with  management  authorization;  and providing   reasonable   assurance  that  unauthorized   acquisitions,   use  or disposition of company assets that could have a material effect on our financial statements would be prevented or detected.
 
Management  conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway Commission.  Based on this  evaluation  management  concluded that the Company's internal control over financial reporting was ineffective as of September 30, 2012. There where no changes in our internal controls over financial reporting during the  period  ended  September 30, 2012 that have  materially  affected,  or are reasonable  likely to materially  affect,  or are reasonably  likely to material affect, our internal control over financial reporting.

 
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PART II - OTHER INFORMATION

ITEM 1.   LEGAL MATTERS

None

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

On March 25, 2009 our Registration Statement on Form S-1, commission file number 333-153863, became effective and qualified under Rule 144 for the sale of 10,000,000 shares of the Company’s common sold in accordance with the requirements of Section 4(2) offering under the Securities Act of 1933, as amended and Rule 506 promulgated thereunder.  The offering was fully subscribed by June 25, 2009 raising a total of $25,000.  There were no underwriters for this offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None

ITEM 5.  OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS

The following exhibits are included herein, except for the exhibits marked with a footnote, which are incorporated herein by reference and can be found in the appropriate document referenced.


3.1
  
Articles and By-Laws as filed with the Delaware Secretary of State April 02, 2007*
   
Amendment to By-Laws dated August 13, 2009*
99.2
  
Geologist Report*
31.1
  
Rule 13a-14(a)/15d-14(a) Certification by the Principal Executive Officer**
     
31.2
  
Rule 13a-14(a)/15d-14(a) Certification by the Principal Financial Officer**
     
32.1
  
Section 1350 Certification by the Principal Executive Officer**
     
32.2
  
Section 1350 Certification by the Principal Financial Officer**

*     Incorporated by reference to the Registrant's Registration Statement on Form S-1, filed on October 6, 2008.
**  Filed herewith

 
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SIGNATURES

In accordance with Section 13 or 15 (d) 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.

In accordance with the requirements of the Securities Act, this 10-Q has been signed by the following persons in the capacities and on the dates stated.

SIGNATURE
  
TITLE
  
DATE
 TOA DISTRIBUTION SYSTEMS INC.
        
/s/ Trevor Blank
  
Chief Executive Officer, Chief Financial Officer, Secretary, Director
  
November 14, 2012
Trevor Blank
  
(Principal Executive Officer)
    

 
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TOA Distribution Systems Inc. Reports