NEVADA
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87-0460247
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(State
or other jurisdiction of
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(IRS
Employer
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incorporation
or organization)
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Identification
No.)
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Page
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|||
No.
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Part
I
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Financial
Information
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Item
1:
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Condensed
Consolidated Financial Statements (Unaudited)
|
||
Balance
Sheets as of March 31, 2010 and September 30, 2009
|
3
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||
Statements
of Operations – For the Three Months Ended March 31, 2010 and
2009
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4
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||
Statements
of Operations – For the Six Months Ended March 31, 2010 and 2009 and from
inception (January 20, 2009) through March 31, 2010
|
5
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||
Statements
of Cash Flows – For the Six Months Ended March 31, 2010 and 2009 and from
inception (January 20, 2009) through March 31, 2010
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6
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||
Notes
to Financial Statements
|
7
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||
Item
2:
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
21
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Item
3:
|
Quantitative
and Qualitative Disclosure about Market Risk
|
25
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Item
4:
|
Controls
and Procedures
|
25
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|
Part
II
|
Other
Information
|
26
|
|
Item
1:
|
Legal
Proceedings
|
26
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Item
1A:
|
Risk
Factors
|
26
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|
Item
2:
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
26
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Item
3:
|
Defaults
Upon Senior Securities
|
26
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|
Item
4:
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Submission
of Matters to a Vote of Security Holders
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26
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Item
5:
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Other
Information
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26
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Item
6:
|
Exhibits
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26
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|
Signatures
|
26
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||
Exhibits
|
March
31,
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September
30,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 1,394 | $ | 582 | ||||
Total
current assets
|
1,394 | 582 | ||||||
Other
assets:
|
||||||||
Available-for-sale
investments - affiliates
|
30,317 | 179,495 | ||||||
Notes
and accrued interest receivable - affiliate
|
54,711 | 57,819 | ||||||
Total
other assets
|
85,028 | 237,314 | ||||||
Total
assets
|
$ | 86,422 | $ | 237,896 | ||||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT)
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
68,854 | 75,094 | ||||||
Accounts
payable - related parties
|
19,662 | 97,854 | ||||||
Convertible
notes payable - related parties
|
230,803 | 100,000 | ||||||
Accrued
expenses - related parties
|
7,188 | 2,844 | ||||||
Deferred
revenue - related party
|
2,933 | - | ||||||
Advances
from related parties
|
- | 31,660 | ||||||
Total
current liabilities
|
329,440 | 307,452 | ||||||
Commitments
and contingencies
|
||||||||
STOCKHOLDERS'
(DEFICIT)
|
||||||||
Preferred
stock, $0.001 par value; authorized 12,500 shares; no shares
issued
|
||||||||
and
outstanting; $100 per share liquidation preference
|
- | - | ||||||
Common
stock, $.001 par value; authorized 100,000,000 shares;
50,925,820
|
||||||||
shares
issued and outstanding at March 31, 2010 and September 30,
2009
|
50,926 | 50,926 | ||||||
Additional
paid-in capital
|
9,946,022 | 9,946,022 | ||||||
Non-controlling
interest
|
(126,340 | ) | - | |||||
Accumulated
other comprehensive income (loss)
|
(113,612 | ) | 31,085 | |||||
Accumulated
deficit:
|
||||||||
During
the development stage
|
(123,160 | ) | (97,895 | ) | ||||
Other
|
(9,876,854 | ) | (9,999,694 | ) | ||||
Total
accumulated deficit
|
(10,000,014 | ) | (10,097,589 | ) | ||||
Total
stockholders' (deficit)
|
(243,018 | ) | (69,556 | ) | ||||
Total
liabilities and stockholders' (deficit)
|
$ | 86,422 | $ | 237,896 |
2010
|
2009
|
|||||||
(Restated)
|
||||||||
Revenue
|
||||||||
Management
income - related party
|
$ | 4,400 | $ | - | ||||
Total
income
|
4,400 | - | ||||||
Expenses:
|
||||||||
Related
party services
|
3,000 | 23,110 | ||||||
General
and administrative expense
|
4,903 | 12,593 | ||||||
Total
expenses
|
7,903 | 35,703 | ||||||
Loss
from operations
|
(3,503 | ) | (35,703 | ) | ||||
Other
income (expense):
|
||||||||
Interest
income - related party
|
1,592 | 4,071 | ||||||
Interest
expense - related party
|
(2,832 | ) | - | |||||
Other
income (expense)
|
(1,240 | ) | 4,071 | |||||
Loss
before income taxes
|
(4,743 | ) | (31,632 | ) | ||||
Income
taxes
|
- | - | ||||||
Net
loss before non-controlling interest
|
(4,743 | ) | (31,632 | ) | ||||
Non-controlling
interest
|
- | 1,206 | ||||||
Net
loss
|
(4,743 | ) | (30,426 | ) | ||||
Other
comprehensive income (loss)
|
||||||||
Unrealized
gain (loss) on available-for-sale securities (none attributed to the
non-controlling interest)
|
3,741 | (101,100 | ) | |||||
Net
comprehensive loss
|
$ | (1,002 | ) | $ | (131,526 | ) | ||
Loss
per share, basic and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||
Weighted
average shares outstanding
|
50,925,820 | 50,925,820 |
Development
|
||||||||||||
Stage
|
||||||||||||
Inception
|
||||||||||||
(January
20, 2009)
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||||||||||||
Through
|
||||||||||||
2010
|
2009
|
March 31, 2010
|
||||||||||
(Restated)
|
||||||||||||
Revenue
|
||||||||||||
Management
income - related party
|
$ | 5,867 | $ | - | $ | 8,434 | ||||||
Total
income
|
5,867 | - | 8,434 | |||||||||
Expenses:
|
||||||||||||
Related
party services
|
6,000 | 38,979 | 64,039 | |||||||||
General
and administrative expense
|
14,398 | 53,469 | 30,544 | |||||||||
Total
expenses
|
20,398 | 92,448 | 94,583 | |||||||||
Loss
from operations
|
(14,531 | ) | (92,448 | ) | (86,149 | ) | ||||||
Other
income (expense):
|
||||||||||||
Interest
income - related party
|
3,391 | 5,651 | 8,078 | |||||||||
Interest
expense - related party
|
(4,344 | ) | - | (7,188 | ) | |||||||
Realized
gain (loss) - related party
|
- | - | (24,500 | ) | ||||||||
Other
than temporary decline in available-for-sale securities
|
(13,280 | ) | - | (16,900 | ) | |||||||
Other
income (expense)
|
(14,233 | ) | 5,651 | (40,510 | ) | |||||||
Loss
before income taxes
|
(28,764 | ) | (86,797 | ) | (126,659 | ) | ||||||
Income
taxes
|
- | - | - | |||||||||
Net
loss before non-controlling interest
|
(28,764 | ) | (86,797 | ) | (126,659 | ) | ||||||
Non-controlling
interest
|
- | 11,142 | 3,499 | |||||||||
Net
loss
|
(28,764 | ) | (75,655 | ) | (123,160 | ) | ||||||
Other
comprehensive income (loss)
|
||||||||||||
Unrealized
gain (loss) on available-for-sale securities (none attributed to the
non-controlling interest)
|
(144,697 | ) | (308,100 | ) | (189,824 | ) | ||||||
Net
comprehensive loss
|
$ | (173,461 | ) | $ | (383,755 | ) | $ | (312,984 | ) | |||
Loss
per share, basic and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average shares outstanding
|
50,925,820 | 50,835,161 |
Development
|
||||||||||||
Stage
|
||||||||||||
Inception
|
||||||||||||
(January
20, 2009)
|
||||||||||||
Through
|
||||||||||||
2010
|
2009
|
March 31, 2010
|
||||||||||
(Restated)
|
||||||||||||
Operating
activities:
|
||||||||||||
Net
loss
|
$ | (28,764 | ) | $ | (75,655 | ) | $ | (123,160 | ) | |||
Adjustments
to reconcile net increase (decrease) in net assets
|
||||||||||||
from
operations to net cash used in operating activities:
|
||||||||||||
Other
than temporary decline in available-for-sale securities
|
13,280 | - | 16,900 | |||||||||
Gain
(loss) on sale/impairment of investment in related party
|
- | - | 24,500 | |||||||||
Non-controlling
interest
|
- | (11,142 | ) | (3,499 | ) | |||||||
Amortization
of deferred revenue - related party
|
(5,867 | ) | - | (5,867 | ) | |||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable and accrued interest - related parties
|
(3,391 | ) | (1,882 | ) | (8,077 | ) | ||||||
Accounts
payable and accrued expenses
|
(6,240 | ) | 64,343 | 22,022 | ||||||||
Accounts
payable and accrued expenses - related parties
|
4,344 | - | 38,000 | |||||||||
Net
cash used in operating activities
|
(26,638 | ) | (24,336 | ) | (39,181 | ) | ||||||
Investing
activities:
|
||||||||||||
Proceeds
from investments
|
6,500 | - | 6,500 | |||||||||
Net
cash used in investing activities
|
6,500 | - | 6,500 | |||||||||
Financing
activities:
|
||||||||||||
Common
stock issued for cash
|
- | 10,000 | - | |||||||||
Advances
from related parties for working capital
|
20,950 | 5,000 | 27,610 | |||||||||
Net
cash used in investing activities
|
20,950 | 15,000 | 27,610 | |||||||||
Net
increase (decrease) in cash and cash equivalents
|
812 | (9,336 | ) | (5,071 | ) | |||||||
Cash
and cash equivalents, beginning of period
|
582 | 10,886 | 6,465 | |||||||||
Cash
and cash equivalents, end of period
|
$ | 1,394 | $ | 1,550 | $ | 1,394 | ||||||
Supplemental
Cash Flow Information:
|
||||||||||||
Cash
paid for interest and income taxes:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
- | - | - | |||||||||
Non-cash
investing and financing activities:
|
||||||||||||
Note
payable issued to acquire investment
|
$ | - | $ | - | $ | 100,000 | ||||||
Accrued
interest receivable included in amended note
|
5,326 | - | 8,915 | |||||||||
Convertible
notes payable issued for advances from affiliates
|
63,310 | - | 63,310 | |||||||||
Convertible
notes payable issued for accounts payable to affiliates
|
67,493 | - | 67,493 |
NOTE
1:
|
ORGANIZATION
|
|
·
|
Trading
securities reported at fair value with unrealized gains and losses
included in earnings;
|
|
·
|
Available-for-sale
securities reported at fair value with unrealized gains and losses, net of
applicable deferred income taxes, reported in other comprehensive
income;
|
|
·
|
Held-to-maturity
securities and other investments reported at amortized cost;
and
|
|
·
|
Investments
using the equity method of
accounting.
|
2.
|
RESTATEMENT
|
Three
|
Six
|
|||||||
Months
|
Months
|
|||||||
Ended
March 31, 2009
|
||||||||
Net
loss, as originally reported
|
$ | (114,482 | ) | $ | (341,695 | ) | ||
Unrealized
loss on marketable equity securities included in
operations
|
101,100 | 308,100 | ||||||
Elimination
of management fee charged portfolio company
|
- | (7,500 | ) | |||||
Elimination
of interest charged on note written off September 30, 2008
|
- | (2,582 | ) | |||||
Expenses
accrued
|
(18,250 | ) | (43,120 | ) | ||||
Net
loss before noncontrolled interest
|
(31,632 | ) | (86,797 | ) | ||||
Noncontrolled
interest
|
1,206 | 11,142 | ||||||
Net
loss as restated
|
(30,426 | ) | (75,655 | ) | ||||
Other
comprehensive income (loss):
|
||||||||
Unrealized
loss on available-for-sale securities
|
(100,100 | ) | (308,100 | ) | ||||
Net
comprehensive loss
|
$ | (130,526 | ) | $ | (383,755 | ) | ||
Net
loss per share, basic and diluted:
|
||||||||
As
originally reported
|
$ | (0.00 | ) | $ | (0.00 | ) | ||
Restated
|
$ | (0.00 | ) | $ | (0.00 | ) |
3.
|
INVESTMENTS
IN AFFILIATES
|
March
31,
|
September
30,
|
|||||||
2010
|
2009
|
|||||||
Available-for-sale
securities - affiliates
|
$ | 30,317 | $ | 179,495 | ||||
Notes
receivable due from affiliate, Efftec International, Inc.
("EFFI")
|
||||||||
Principal
|
53,916 | 55,089 | ||||||
Accrued
interest
|
795 | 2,730 | ||||||
$ | 54,711 | $ | 57,819 |
Realized
|
Unrecognized
|
|||||||||||||||
Holding
|
Holding
|
Fair
|
||||||||||||||
Cost
|
Losses
|
Gains (Losses)
|
Value
|
|||||||||||||
March 31, 2010
|
||||||||||||||||
Efftec
International, Inc.
|
$ | 8,400 | $ | - | $ | 9,800 | $ | 18,200 | ||||||||
North
American Energy
|
135,530 | - | (123,413 | ) | 12,117 | |||||||||||
$ | 143,930 | $ | - | $ | (113,613 | ) | $ | 30,317 | ||||||||
September 30, 2009
|
||||||||||||||||
Efftec
International, Inc.
|
$ | 12,880 | $ | - | $ | - | $ | 12,880 | ||||||||
North
American Energy
|
135,530 | - | 31,085 | 166,615 | ||||||||||||
$ | 148,410 | $ | - | $ | 31,085 | $ | 179,495 |
4.
|
DEFERRED
REVENUE
|
Realized
|
Unrecognized
|
|||||||||||||||
Holding
|
Holding
|
Fair
|
||||||||||||||
Cost
|
Losses
|
Gains (Losses)
|
Value
|
|||||||||||||
December 31, 2009
|
||||||||||||||||
Efftec
International, Inc.
|
$ | 8,400 | $ | - | $ | 9,800 | $ | 18,200 | ||||||||
North
American Energy
|
135,530 | - | (123,413 | ) | 12,117 | |||||||||||
$ | 143,930 | $ | - | $ | (113,613 | ) | $ | 30,317 | ||||||||
September 30, 2009
|
||||||||||||||||
Efftec
International, Inc.
|
$ | 12,880 | $ | - | $ | - | $ | 12,880 | ||||||||
North
American Energy
|
135,530 | - | 31,085 | 166,615 | ||||||||||||
$ | 148,410 | $ | - | $ | 31,085 | $ | 179,495 |
2009
|
2008
|
|||||||
Notes
and accrued interest receivable – affiliates Efftec International,
Inc.
|
$ | 59,619 | $ | 57,819 | ||||
59,619 | 57,819 |
2010
|
2009
|
|||||||
G.
David Gordon & Associates, P.C. and G. David Gordon
|
$ | 2,162 | $ | 55,354 | ||||
Hank
Durschlag
|
15,000 | 9,000 | ||||||
Ross
Silvey
|
2,500 | 2,500 | ||||||
$ | 19,662 | $ | 66,854 |
Date
|
Int. Rate
|
2010
|
2009
|
|||||||||||
Avenel
Financial Group
|
4/10/2009
|
6 | % | $ | 100,000 | $ | 100,000 | |||||||
Amy
Gordon
|
2/26/2010
|
12 | % | 5,000 | - | |||||||||
Chef
on the Go
|
2/26/2010
|
12 | % | 2,660 | - | |||||||||
Progressive
Capital
|
2/26/2010
|
12 | % | 25,650 | - | |||||||||
Avenel
Financial Group
|
2/26/2010
|
12 | % | 20,000 | - | |||||||||
MLM
Concepts, LLC
|
2/26/2010
|
12 | % | 10,000 | - | |||||||||
Avenel
Financial Group
|
3/1/2010
|
12 | % | 32,492 | ||||||||||
BJB
Services, Inc.
|
3/1/2010
|
12 | % | 35,000 | ||||||||||
$ | 230,802 | $ | 100,000 |
2010
|
2009
|
|||||||
Non-interest
bearing advances from affiliates:
|
||||||||
Avenel
Financial Group
|
$ | - | $ | 20,000 | ||||
MLM
Concepts
|
- | 5,000 | ||||||
Chef-on-the-Go
|
- | 1,660 | ||||||
G.
David Gordon
|
- | 5,000 | ||||||
- | 31,660 |
2010
|
2009
|
|||||||
Efftec
International, Inc.
|
$ | 2,933 | $ | - |
2010
|
2009
|
|||||||
Affiliates
|
$ | 7,188 | $ | 2,844 |
2010
|
2009
|
|||||||
Management
income - Efftec International, Inc.
|
$ | 5,867 | $ | - |
2010
|
2009
|
|||||||
Interest
income - Efftec International, Inc.
|
$ | 3,391 | $ | 3,082 |
2010
|
2009
|
|||||||
Related
party expenses:
|
||||||||
Director
fees - Ross Silvey
|
$ | - | $ | 3,000 | ||||
Legal
fees - G. David Gordon & Associates, P.C.
|
- | 25,119 | ||||||
CEO
compensation - Hank Durschlag
|
6,000 | 10,860 | ||||||
$ | 6,000 | $ | 38,979 |
Balance
|
Balance
|
|||||||||||
September 30,
|
October 1,
|
|||||||||||
2009
|
Adjustment
|
2009
|
||||||||||
Noncontrolling
interest
|
$ | - | $ | (126,340 | ) | $ | (126,340 | ) | ||||
Accumulated
deficit:
|
||||||||||||
During
the development stage
|
(97,895 | ) | 3,499 | (94,396 | ) | |||||||
Other
|
(9,999,694 | ) | 122,841 | (9,876,853 | ) | |||||||
$ | (10,097,589 | ) | $ | 126,340 | $ | (9,971,249 | ) |
|
·
|
Related
party services declined from $23,110 in 2009 to $3,000 in
2010. The Company is not currently paying director fees and has
reduced the CEO compensation from $2,000 per month to $1,000 per
month. The 2009 period also included legal expenses which did
not repeat in 2010.
|
|
·
|
Other
general and administrative expense declined from $12,593 in 2009 to $4,903
in 2010. This decline is primarily the elimination of costs
associated with USN's website.
|
|
·
|
Related
party services declined from $38,979 in 2009 to $6,000 in
2010. The Company is not currently paying director fees and has
reduced the CEO compensation from $2,000 per month to $1,000 per
month. The 2009 period also included legal expenses which did
not repeat in 2010.
|
|
·
|
Other
general and administrative expense declined from $54,469 in 2009 to
$14,398 in 2010. This decline is primarily the elimination of
costs associated with USN's
website.
|
|
·
|
None.
|
|
·
|
None.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
4:
|
CONTROLS
AND PROCEDURES
|
ITEM
1:
|
LEGAL
PROCEEDINGS
|
ITEM
1A:
|
RISK
FACTORS
|
ITEM
2:
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
ITEM
3:
|
DEFAULTS
UPON SENIOR SECURITIES
|
ITEM
4:
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM
5:
|
OTHER
INFORMATION
|
ITEM
6:
|
EXHIBITS
|
|
31.1
|
Certification
pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act
of 2002
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act
of 2002
|
DOUBLE EAGLE HOLDINGS, LTD. | ||
May
10, 2010
|
By: |
/s/M.E.
Durschlag
|
M.E. Durschlag, President, | ||
Chief Executive Officer and | ||
Chief Financial Officer |