Attached files
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| EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO RULE 13A-14. - STRAGENICS, INC. | f10q0313ex31i_allerayde.htm |
| EX-32.2 - CEO AND CFO CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT. - STRAGENICS, INC. | f10q0313ex32i_allerayde.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 333-157565
ALLERAYDE SAB, INC.
(Exact name of registrant as specified in its charter)
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Florida
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26-4065800
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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1 Meadow Road, New Balderton, Newark
Nottinghamshire, UK NG243BP
(Address of principal executive offices)
44-1636-613609
(Registrant’s telephone number)
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 o
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 o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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o
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Accelerated filer
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¨
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Non-accelerated filer
Do not check if a smaller reporting company
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o
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Smaller reporting company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 20, 2013 the registrant had 89,005,250 shares of common stock, par value $.0001 per share issued and outstanding.
ALLERAYDE SAB, INC.
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
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3
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ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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4
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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6
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ITEM 4.
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CONTROLS AND PROCEDURES
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6
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PART II. OTHER INFORMATION
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ITEM 1.
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LEGAL PROCEEDINGS
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6
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ITEM 1A.
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RISK FACTORS
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6
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ITEM 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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7
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ITEM 3.
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DEFAULTS UPON SENIOR SECURITIES
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7
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ITEM 4.
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MINE SAFETY DISCLOSURE
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7
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ITEM 5.
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OTHER INFORMATION
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7
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ITEM 6.
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EXHIBITS
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7
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Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Resource Exchange of America Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "Allerayde" refers to: (i) Allerayde SAB, Inc., a Florida corporation, and (ii) Allerayde SAB Limited, a U.K. company that is wholly-owned by Allerayde SAB, Inc.
ITEM 1. FINANCIAL STATEMENTS
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2013
3
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (unaudited)
AS OF MARCH 31, 2013 and DECEMBER 31, 2012
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March 31,
2013
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December, 31,
2012
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ASSETS
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Current Assets
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Cash and equivalents
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$ | 1,332 | $ | 16 | ||||
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Accounts receivable
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4,000 | 0 | ||||||
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Total Current Assets
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5,332 | 16 | ||||||
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TOTAL ASSETS
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$ | 5,332 | $ | 16 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Liabilities
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Current Liabilities
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Accrued expenses
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$ | 111,081 | $ | 3,096 | ||||
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Accrued interest
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150,007 | 0 | ||||||
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Convertible notes payable
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1,574,478 | 0 | ||||||
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Due to related parties
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431,061 | 0 | ||||||
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Loans payable
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30,555 | 0 | ||||||
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Derivative liabilities
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365,920 | 0 | ||||||
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Total Liabilities
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2,663,102 | 3,096 | ||||||
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Stockholders’ Deficit
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Preferred Stock Authorized: 100,000,000 preferred shares. No shares issued and outstanding at March 31, 2013 and December 31, 2011
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Common Stock, 400,000,000 shares of common stock with par value of $.0001, (2012 -unlimited shares authorized no par value, Issued 76,658,739 shares of common stock ( 2012- 10 shares issued and outstanding )
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7,666 | 15 | ||||||
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Additional paid in capital
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0 | 0 | ||||||
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Accumulated other comprehensive loss
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(89 | ) | (11 | ) | ||||
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Deficit accumulated during the development stage
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(2,665,347 | ) | (3,084 | ) | ||||
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Total Stockholders’ Deficit
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(2,657,770 | ) | (3,080 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$ | 5,332 | $ | 16 | ||||
See accompanying notes to financial statements.
F-1
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS (unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2013
FOR THE PERIOD FROM JANUARY 13, 2012 (INCEPTION) TO MARCH 31, 2012
FOR THE PERIOD FROM JANUARY 13, 2012 (INCEPTION) TO MARCH 31, 2013
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Three
months ended
March 31, 2013
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Period from
January 13,
2012
(Inception) to
March 31, 2012
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From
January 13,
2012
(Inception) to
March 31, 2013
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REVENUES
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$ | 16,289 | $ | 0 | $ | 16,289 | ||||||
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EXPENSES
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Professional fees
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4,247 | 0 | 6,747 | |||||||||
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Consulting fees
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50,000 | 0 | 50,000 | |||||||||
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Salaries and benefits
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8,184 | 0 | 8,184 | |||||||||
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Interest on convertible notes
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5,634 | 0 | 5,634 | |||||||||
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General and administrative
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7,809 | 0 | 7,809 | |||||||||
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Rent
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1,640 | 0 | 2,224 | |||||||||
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TOTAL EXPENSES
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77,514 | 0 | 75,597 | |||||||||
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LOSS FROM OPERATIONS
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(61,225 | ) | 0 | (64,309 | ) | |||||||
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PROVISION FOR INCOME TAXES
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0 | 0 | 0 | |||||||||
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NET LOSS
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$ | (61,225 | ) | $ | 0 | $ | (64,309 | ) | ||||
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NET LOSS PER SHARE: BASIC AND DILUTED
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED
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76,658,879 | 786,328 | ||||||||||
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OTHER COMPREHENSIVE LOSS
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Net loss
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$ | (61,225 | ) | $ | 0 | $ | (64,309 | ) | ||||
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Other comprehensive loss
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Foreign currency translation adjustments
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(78 | ) | 0 | (89 | ) | |||||||
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TOTAL COMPREHENSIVE LOSS
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$ | (61,303 | ) | $ | 0 | $ | (64,398 | ) | ||||
See accompanying notes to financial statements.
F-2
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE PERIOD FROM JANUARY 13, 2012 (INCEPTION) TO MARCH 31, 2013
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Common stock
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Additional
paid-in
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Accumulated other comprehensive
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Deficit
accumulated
during the development
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Shares
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Amount
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capital
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loss
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stage
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Total
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Inception, January 12, 2012
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- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
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Issuance of common stock for cash
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10 | 15 | - | - | - | 15 | ||||||||||||||||||
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Net loss and other comprehensive loss for the period ended December 31, 2012
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- | - | - | (11 | ) | (3,084 | ) | (3,095 | ) | |||||||||||||||
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Balance, December 31, 2012
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10 | 15 | 0 | (11 | ) | (3,084 | ) | (3,080 | ) | |||||||||||||||
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Cancellation of shares on recapitalization
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(10 | ) | (15 | ) | 15 | - | - | 0 | ||||||||||||||||
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Issuance of shares on recapitalization
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76,658,739 | 7,666 | (15 | ) | - | (7,651 | ) | 0 | ||||||||||||||||
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Assumption of net liabilities on recapitalization
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(2,593,387 | ) | (2,593,387 | ) | ||||||||||||||||||||
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Net loss and other comprehensive loss for the three months ended March 31, 2013
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- | - | - | (78 | ) | (61,225 | ) | (61,303 | ) | |||||||||||||||
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Balance, March 31, 2013
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10 | $ | 7,666 | $ | 0 | $ | (89 | ) | $ | (2,665,347 | ) | $ | (2,657,770 | ) | ||||||||||
See accompanying notes to financial statements.
F-3
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2013
FOR THE PERIOD FROM JANUARY 13, 2012 (INCEPTION) TO MARCH 31, 2012
FOR THE PERIOD FROM JANUARY 13, 2012 (INCEPTION) TO MARCH 31, 2013
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Three
months ended
March 31, 2013
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Period from
January 13,
2012
(Inception) to
March 31, 2012
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From
January 13,
2012
(Inception) to
March 31, 2013
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss for the period
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$ | (61,225 | ) | $ | 0 | $ | (64,309 | ) | ||||
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Adjustments to reconciled net loss to net cash provided by operating activities:
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Convertible note issued for expenses
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54,000 | 0 | 54,000 | |||||||||
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Changes in assets and liabilities:
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Increase in accounts receivable
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(4,000 | ) | 0 | (4,000 | ) | |||||||
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Increase in accrued expenses
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12,619 | 0 | 15,715 | |||||||||
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Net Cash Provided by Operating Activities
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1,394 | 0 | 1,406 | |||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from issuance of common stock
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0 | 0 | 15 | |||||||||
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Net Cash Provided by Financing Activities
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0 | 0 | 15 | |||||||||
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Exchange rate effect on cash
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(78 | ) | 0 | (89 | ) | |||||||
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NET INCREASE IN CASH
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1,316 | 0 | 1,332 | |||||||||
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Cash, beginning of period
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16 | 0 | 0 | |||||||||
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Cash, end of period
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$ | 1,332 | 0 | $ | 1,332 | |||||||
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SUPPLEMENTAL CASH FLOW INFORMATION:
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Cash paid for interest
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$ | 0 | $ | 0 | ||||||||
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Cash paid for income taxes
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$ | 0 | $ | 0 | ||||||||
See accompanying notes to financial statements.
F-4
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Allerayde SAB, Inc. (the “Company”) was incorporated under the laws of the State of Florida on January 15, 2009. On February 23, 2010, the Company changed its name to Resource Exchange of America Corp. Effective April 30, 2013, the Company changed its name to Allerayde SAB, Inc. Upon completion of the acquisition of Allerayde SAB Limited pursuant to a Share Exchange Agreement on March 21, 2013 (as defined below), the Company adopted the business of Allerayde SAB Limited. The Company is now engaged in the business of developing and manufacturing an innovative anaphylaxis pen product and other consumer health care products for allergy and eczema patients.
On March 21, 2013, the Company entered into a Share Exchange Agreement with Allerayde SAB Limited. (“Allerayde”) and Michael Rhodes, the sole member of Allerayde (the “Allerayde Stockholder”) (the “Share Exchange Agreement”). This share exchange transaction constituted a reverse merger and a recapitalization of Allerayde. In conjunction with this reverse merger, the historical accounts of Allerayde become the historical accounts of the Company for accounting purposes.
Development Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development-stage companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The accompanying interim financial statements 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”). In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
Allerayde considers all highly liquid investments with maturities of three months or less to be cash equivalents. At March 31, 2013 and December 31, 2012, respectively, the Company had $1,332 and $16 of cash.
F-5
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accrued expenses, and notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Foreign Currency
The operations of the Company are located in England and Wales. Allerayde maintains a Great Britain Pounds bank account. The functional currency is the U.S. Dollar. Transactions in foreign currencies other than the functional currency, if any, are re-measured into the functional currency at the rate in effect at the time of the transaction. Monetary assets and liabilities denominated in Great Britain Pounds are translated into U.S. Dollars at the rate in effect at the balance sheet date. Revenue and expenses denominated in Great Britain Pounds Dollars are translated at the average exchange rate.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of March 31, 2013.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Recent Accounting Pronouncements
Allerayde does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
F-6
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 2 – GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $2,657,696 as of March 31, 2013, has a working capital deficit, and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock.
NOTE 3 – CONVERTIBLE NOTES PAYABLE
a) On February 22, 2010, the Company issued a $250,000 promissory note to the former President of the Company. The note bears interest at 10% per annum, is unsecured, and was due on December 31, 2011. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date.
The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversions feature of $175,081 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of March 31, 2013 is $250,000. During the year ended December 31, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $150,981 and as of March 31, 2013, the fair value of the conversion option derivative liability was $nil.
(b) On April 13, 2010, the Company entered into a $250,000 draw down promissory note agreement with a non-related party. Amounts drawn on this credit facility bear interest at 8% per annum, are unsecured, and were due on April 13, 2011. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the thirty trading days immediately preceding the conversion date. On October 14, 2010, the conversion price was changed to be fixed at $0.45 per share.
As of March 31, 2013, the outstanding balance is $250,000. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $147,140 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of March 31, 2013 is $250,000. As of March 31, 2013 and December 31, 2012, the fair value of the conversion option derivative liability was $nil.
F-7
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 3 – CONVERTIBLE NOTES PAYABLE (CONTINUED)
(c) Effective January 31, 2005, the former President of the Company entered into a line of credit agreement with a financial institution allowing for borrowings of up to $800,000 with annual interest at prime to be used to fund the operations of the Company. The line of credit is secured by the principal residence of the former President of the Company. Monthly interest-only payments are required. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal and interest outstanding at any time on the line of credit. The President of the Company may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date. The maturity date was December 31, 2011.
As of March 31, 2013, the outstanding balance is $788,469 (December 31, 2012 - $788,469). The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $592,991 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. During the year ended December 31, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $402,315 and as of December 31, 2012, the fair value of the conversion option derivative liability was $nil.
On August 18, 2011 the Company defaulted on the payments owed to the financial institution. As a result, UTP Holdings LLC was obligated to make the monthly bank payments on behalf of the company. UTP Holdings LLC notified the company of the default and the payments. The company is recording the additional amounts due to UTP holdings as a current liability.
(d) Effective March 18, 2010, the Company entered into a line of credit agreement with a company owned by the former President of the Company allowing for borrowings of up to $150,000 bearing interest at 8% per annum. The line of credit is unsecured and all borrowings plus interest are due on demand. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal outstanding at any time on the line of credit. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date.
The balance on the line of credit as of March 31, 2013 is $50,300. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $11,523 with an equivalent discount on the convertible debt. During the year ended December 31, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $27,752 and as of March 31, 2013 the fair value of the conversion option derivative liability was $nil.
F-8
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 3 – CONVERTIBLE NOTES PAYABLE (CONTINUED)
(e) On February 23, 2011, the Company issued an 8% convertible note for proceeds of $37,500 which matured on November 28, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.
The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $37,500 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of March 31, 2013 is $37,500. During the year ended December 31, 2012, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $101,928 and as of March 31, 2013, the fair value of the conversion option derivative liability was $149,417.
(f) On March 24, 2011, the Company issued an 8% convertible note for proceeds of $27,500 which matured on December 28, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average
of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.
The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $27,500 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of March 31, 2013 is $27,500. During the year ended December 31, 2012, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $74,323 and as of March 31, 2013, the fair value of the conversion option derivative liability was $108,928.
g) On May 25, 2011 the Company issued an 8% convertible note for proceeds of $27,500 which matured on February 27, 2012. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.
The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $27,500 with an equivalent discount on the convertible debt. During the year ended December 31, 2012, $3,208 has been accreted increasing the carrying value of the convertible debt to $27,500. During the year ended December 31, 2012, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $73,424 and as of March 31, 2013, the fair value of the conversion option derivative liability was $107,575.
F-9
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 3 – CONVERTIBLE NOTES PAYABLE (CONTINUED)
(h) On August 31, 2012 the Company issued a 6% convertible note for proceeds of $20,000 which matures on August 30, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days.
(i) On November 16, 2012 the Company issued a 6% convertible note for proceeds of $66,709 which matures on November 16, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days.
In May 2012, the Company increased the authorized shares to 500,000,000 consisting of two classes to be designated as common stock and preferred stock. The total number of common stock shares authorized was increased to 400,000,000 and preferred stock shares totaling 100,000,000 were authorize
The Company entered in to a consultancy agreement with DeBondo Capital on January 7, 2013 to pay a sum of $50,000 to DeBondo for services to be provided during the first 4-5 months of 2013. DeBondo agreed to convert the fees due to a convertible loan in the amount of $50,000. The note matures on January 8, 2014 and bears interest at 5%. The holder of this note shall have the right, exercisable in whole or in part, to convert the outstanding principle and accrued interest hereunder into fully paid and non-assessable common shares of the Borrower's stock at fair market value.
On February 4, 2013, the Company signed a promissory note with DeBondo Capital Limited in the amount of $4,000. The note matures on February 4, 2014 and bears interest at 5%. The holder of this note shall have the right, exercisable in whole or in part, to convert the outstanding principle and accrued interest hereunder into fully paid and non-assessable common shares of the Borrower's stock at fair market value.
On March 12, 2013, the Company signed a promissory note with Laurag Associates S.A. in the amount of $2,500. The note matures March 13, 2014 and bears interest at 5%. The holder of this note shall have the right, exercisable in whole or in part, to convert the outstanding principle and accrued interest hereunder into fully paid and non-assessable common shares of the Borrower's stock at fair market value.
NOTE 4 – COMMON STOCK
The Company has an unlimited number of shares of no par value common stock.
On inception, the Company issued 10 shares of common stock at £1.00 per share to its founder for total cash proceeds of £10, which converted at its historical rate is $15. The Company closed a share exchange transaction effective March 21, 2013 with the Company, Allerayde and the sole shareholder of Allerayde. This share exchange transaction constituted a reverse merger and a recapitalization of Allerayde. In conjunction with this reverse merger, the historical accounts of Allerayde become the historical accounts of the Company for accounting purposes. The shareholder of Allerayde was issued 75,872,411 shares of the Company, representing 98.97% of the issued and outstanding shares of the Company.
F-10
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 4 – COMMON STOCK (CONTINUED)
On May 4, 2012, the Company amended its Articles of Incorporation to increase the total authorized shares of common stock, par value $.0001 per share from 250,000,000 shares to 400,000,000 shares and to additionally authorize a total of 100,000,000 shares of preferred stock, par value $.0001 per share which may be issued by the Company.
As of March 31, 2013 there were 76,658,739 shares of common stock issued and outstanding.
NOTE 5 – INCOME TAXES
As of March 31, 2013, the Company had net operating loss carry forwards of approximately $1,487,647 that may be available to reduce future years’ taxable income arising from the same trade. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision for corporate income tax at the expected rate of 34% consists of the following for the periods ended March 31, 2013 and 2012:
|
2013
|
2012
|
|||||||
|
Corporate income tax benefit attributable to:
|
||||||||
|
Current operations
|
$ | 20,162 | $ | 0 | ||||
|
Less: valuation allowance
|
(20,162 | ) | (0 | ) | ||||
|
Net provision for Corporate income taxes
|
$ | 0 | $ | 0 | ||||
The cumulative tax effect at the expected rate of 20% of significant items comprising our net deferred tax amount is as follows as of March 31, 2013:
|
2013
|
||||
|
Deferred tax asset attributable to:
|
||||
|
Net operating loss carryover
|
$ | 504,100 | ||
|
Less: valuation allowance
|
(504,100 | ) | ||
|
Net deferred tax asset
|
$ | 0 | ||
Due to the change in ownership provisions of the Tax Reform Act of 1986, the net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
The Company has entered into a lease agreement for its business premises which calls for monthly payments in the amount of approximately £368 through May 31, 2014. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
F-11
ALLERAYDE SAB, INC.
(FORMERLY RESOURCE EXCHANGE OF AMERICA CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
NOTE 7 – MATERIAL CONTRACTS
The Company entered in to an agreement effective December 1, 2012 with STFC Innovations Ltd. through the European Space Agency Business Incubation Centre at Harwell. The European Space Agency offers to support projects and ideas for business incubation by providing funding, business and technical assistance as well as office accommodation and services. Allerayde SAB was awarded a grant of £41,500. The first drawdown of £10,350 was paid to Allerayde on February 5, 2013 and two further installments will be paid upon meeting agreed milestones between now and May 14, 2014. Part of the terms of the grant is that Allerayde leases office space at Rutherford Appleton Laboratory, Harwell, Oxfordshire, United Kingdom.
NOTE 8 – SUBSEQUENT EVENTS
On April 4, 2013, the Company amended the convertible promissory note of $37,500 issued on February 23, 2011 (the "February 2011 Note"), the convertible promissory note of $27,500 issued on March 24, 2011 (the "March 2011 Note") and the convertible promissory note of $27,500 issued on May 25, 2011 (the "May 2011 Note") to reflect the conversion price of $0.01 per share.
On April 6, 2013, all of the outstanding principal and interest of the February 2011 Note, the March 2011 Note and the May 2011 Note were converted into an aggregate of 12,346,500 shares of common stock of the Company.
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to March 31, 2013 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above.
F-12
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
|
March 31,
|
December 31,
|
|||||||
|
2013
$
|
2012
$
|
|||||||
|
Current Assets
|
5,332
|
16
|
||||||
|
Current Liabilities
|
2,663,102
|
3,096
|
||||||
|
Working Capital Deficit
|
(2,657,770
|
)
|
(3,080
|
)
|
||||
Cash Flows
|
Three months
ended March 31, 2013
$
|
Three months
ended March 31, 2012 $
|
|||||||
|
Cash Flows provided by (used in) Operating Activities
|
1,394 | 0 | ||||||
|
Cash Flows provided by Investing Activities
|
0 | 0 | ||||||
|
Cash Flows provided by (used in) Financing Activities
|
0 | 0 | ||||||
|
Net Increase (decrease) in Cash During Period
|
1,394 | 0 | ||||||
Operating Revenues
Operating revenues for the period ended March 31, 2013 were $16,289, which were proceeds from a grant.
Operating revenues for the period ended March 31, 2012 were $nil.
Operating Expenses and Net Loss
Operating expenses for the period ended March 31, 20113 were $77,514, which is comprised of consulting fees of $50,000, professional fees of $4,24, salaries and benefits of $8,184, rent of $1,640, general and administrative expenses of $7,809 and interest expenses of $5,634.
Operating expenses for the period ended March 31, 2012 were $0.
Net loss for the period ended March 31, 2013 was $61,225.
Liquidity and Capital Resources
As of March 31, 2013 and December 31, 2012, the Company’s cash balance was $1,332 and $16, respectively. As of March 31, 2013, the total asset balance was $5,332.
As of March 31, 2013, the Company had total liabilities of $2,663,102 compared with total liabilities of $3,096 as of December 31, 2012. The increase in total liabilities is mainly attributed to the liabilities assumed pursuant to the Share Exchange Agreement, dated March 21, 2013, among the Company, Allerayde SAB Limited and the sole shareholder of Alleradye SAB Limited (the “Share Exchange Agreement”).
As of March 31, 20113, the Company had a working capital deficit of $2,657,770 compared to a deficit of $3,080 as of December 31, 2012.
4
Cashflows from Operating Activities
During the period ended March 31, 2013, the Company generated $1,394 of cash from operating activities compared to $0 of cash used by operating activities during the period ended March 31, 2012.
Cashflows from Investing Activities
During the period ended March 31, 2013, the Company received $0 of cash from investing activities compared to $0 for the period ended March 31, 2012.
Cashflows from Financing Activities
During the period ended March 31, 2013, the Company used $0 of cash in financing activities compared to $0 for the period ended March 31, 2012.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Financings
We will continue to rely on debt and equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
5
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and except for below, there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation: on March 21, 2013, Mark Dresner, our former CEO and a director of the Company resigned from all his positions as director and/or officer of the Company. Michael J. Rhodes was appointed as the President, Chief Executive Officer and director of the Board.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
6
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 14, 2013, in connection with a 1-for-100 reverse split of the Company’s Common Stock (the “Reverse Split”), the Company issued to Cede& Co an additional 11 shares of Common Stock as a result of rounding up the shares held in the brokerage accounts under Cede & Co pursuant to the Reverse Split.
The above issuances of shares of our Common Stock were conducted in accordance with an exemption from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) by virtue of compliance with the provisions of Regulation D under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
|
Exhibit
Number
|
Description of Exhibit
|
Filing Reference
|
||
|
31.01
|
Certification of Principal Executive and Financial Officer Pursuant to Rule 13a-14.
|
Filed herewith.
|
||
|
32.01
|
CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act.
|
Filed herewith.
|
||
7
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
ALLERAYDE SAB, INC.
|
|||
|
Dated: May 20, 2013
|
/s/ Michael J.Rhodes
|
||
|
By: Michael J. Rhodes
|
|||
|
Title: President, Chief Executive Officer, Secretary & Treasurer
|
|||
8