UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q/A

Amendment No. 1

 X . QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2010

     . TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______ to _______

Commission File Number 333-157565

 

RESOURCE EXCHANGE OF AMERICA CORP.

(Name of small business issuer in its charter)

 

Florida		26-4065800
(State of incorporation)		(I.R.S. Employer Identification No.)

 

1990 Main Street, Suite 750

Sarasota, FL 34236

(Address of principal executive offices)

(941) 312-0330

(Registrant’s telephone number)

27 Fletcher Ave.

Sarasota, FL 34237

(Former address of principal executive offices)

with a copy to:

Carrillo Huettel, LLP

3033 Fifth Ave. Suite 201

San Diego, CA 92103

Telephone (619) 399-3090

Facsimile (619) 399-0120

 

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  X . No      .

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes      . No      . (Not required)

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.

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      . No  X .

As of June 14, 2010, there were 75,000,000 shares of the registrant’s $.001 par value common stock issued and outstanding.

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Explanatory Note

This Amendment No. 1 to Resource Exchange of America Corp.’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2010 is being filed to amend and restate our consolidated financial statements for the quarter ended April 30, 2010 because they contained errors in the accounting of the reverse merger transaction and convertible debt issued.  Refer to Note 10 of the accompanying financial statements for details.

We have amended our disclosures in the Management’s Discussion and Analysis section in this Quarterly Report, where applicable, to reflect the restatement and to make some improvements, updated the signature page, and are filing as exhibit new certifications by our principal executive officer and principal financial officer required by Sections 302 of the Sarbanes-Oxley Act of 2002.

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RESOURCE EXCHANGE OF AMERICA CORP.*

TABLE OF CONTENTS 

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	19
ITEM 4.	CONTROLS AND PROCEDURES	19
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	19
ITEM 1A.	RISK FACTORS	20
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	20
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	20
ITEM 4.	[REMOVED AND RESERVED]	20
ITEM 5.	OTHER INFORMATION	20
ITEM 6.	EXHIBITS	20

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 "RXAC" refers to Resource Exchange of America Corp.

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PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

April 30, 2010

(Expressed in US dollars)

(unaudited)

	Index
Consolidated Balance Sheets	5
Consolidated Statements of Operations	6
Consolidated Statements of Stockholders’ Deficit	7
Consolidated Statements of Cash Flows	8
Notes to the Consolidated Financial Statements	9

4

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Consolidated Balance Sheets

(Expressed in US Dollars)

	(Restated – Note10) April 30,	January 31,
	2010	2010
	$	$
	(unaudited)
ASSETS
Current Assets
Cash	12,285	32,736
Accounts receivable	–	75,676
Inventory	454	12,450
Current portion of notes receivable (Note 4)	49,219	38,137
Other assets	368	–
Total Current Assets	62,326	158,999
Property and equipment	963	–
Notes receivable (Note 4)	100,034	111,489
Total Assets	163,323	270,488
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities	84,760	5,813
Lines of credit (Note 5)	815,299	841,323
Convertible debt, net of unamortized discount of $136,648 (Note 6)	113,352	–
Derivative liabilities (Note 7)	165,383	–
Total Liabilities	1,178,794	847,136
Nature of Operations and Continuance of Business (Note 1)
Subsequent Events (Note 11)
Stockholders’ Deficit
Common Stock Authorized: 250,000,000 common shares, $0.0001 par value Issued and outstanding: 75,000,000 shares	7,500	7,500
Additional paid-in capital	12,079	12,079
Accumulated deficit	(1,035,050)	(596,227)
Total Stockholders' Deficit	(1,015,471)	(576,648)
Total Liabilities and Shareholders' Deficit	163,323	270,488

(The accompanying notes are an integral part of these consolidated financial statements)

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Consolidated Statements of Operations

(Expressed in US Dollars)

(unaudited)

	(Restated – Note 10) Three Months Ended	Three Months Ended
	April 30,	April 30,
	2010	2009
	$	$
Revenues	72,690	621,726
Cost of revenues	57,396	441,465
Gross Profit	15,294	180,261
Expenses
Selling, general, and administrative	32,010	125,459
Professional fees	100,386	18,686
Total Expenses	132,396	144,145
Income (Loss) from Operations	(117,102)	36,116
Other Income (Expense)
Accretion of discount on convertible debt	(38,433)	–
Gain on fair value of derivatives	9,698	–
Interest expense	(10,620)	(5,976)
Total Other Income (Expense)	(39,355)	(5,976)
Net Income (Loss) for the Period	(156,457)	30,140
Net Loss Per Share - Basic and Diluted	–	–
Weighted Average Shares Outstanding	75,000,000	75,000,000

(The accompanying notes are an integral part of these consolidated financial statements)

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Consolidated Statements of Stockholders’ Deficit

(Expressed in US Dollars)

(unaudited)

	Shares		Additional Paid-in Capital	(Restated – Note 10) Accumulated Deficit	(Restated – Note 10) Total
		Amount
	#	$	$	$	$
Balance, January 31, 2010	75,000,000	7,500	12,079	(596,227)	(576,648)
February 22, 2010 – recapitalization transaction
Net liabilities assumed upon recapitalization	–	–	–	(250,000)	(250,000)
Stockholders’ distributions	–	–	–	(32,366)	(32,366)
Net loss for the period	–	–	–	(156,457)	(156,457)
Balance, April 30, 2010	75,000,000	7,500	12,079	(1,035,050)	(1,015,471)

(The accompanying notes are an integral part of these consolidated financial statements)

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Consolidated Statements of Cash Flows

(Expressed in US Dollars)

(unaudited)

	(Restated – Note 10) Three Months Ended	Three Months Ended
	April 30,	April 30,
	2010	2009
	$	$
Operating Activities
Net income (loss)	(156,457)	30,140
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Accretion of discounts on convertible debt	38,433	–
Gain on fair value of derivatives	(9,698)	–
Changes in operating assets and liabilities:
Accounts receivable	75,676	(19,917)
Inventory	11,996	(45,631)
Other assets	(368)	(2,664)
Accounts payable and accrued liabilities	78,947	10,578
Net Cash Provided by (Used In) Operating Activities	38,529	(27,494)
Investing Activities
Proceeds from notes receivable	373	–
Purchase of property and equipment	(963)	–
Net Cash Provided By Investing Activities	(590)	–
Financing Activities
Repayment of notes payable	–	(3,024)
Net proceeds from (repayments to) lines of credit	(26,024)	–
Stockholders’ distributions	(32,366)	(38,496)
Net Cash Used in Financing Activities	(58,390)	(41,520)
Change in Cash	(20,451)	(69,014)
Cash, Beginning of Period	32,736	124,780
Cash, End of Period	12,285	55,766
Supplemental Disclosures:
Interest paid	–	–
Income taxes paid	–	–

(The accompanying notes are an integral part of these consolidated financial statements)

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

1.

Nature of Operations and Continuance of Business

Mobieyes Software, 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. The Company’s prior business was a mobile enterprise software company aimed at improving productivity of field service organizations. Upon completion of an acquisition agreement described below, the Company adopted the business of UTP Holdings, LLC (“UTP”). The Company is now engaged in the business of recycling ferrous and nonferrous metals to customers in the United States and abroad.

On February 22, 2010, the Company closed an acquisition agreement in which the Company acquired UTP. Refer to Note 3.

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. As at April 30, 2010, the Company has a working capital deficit of $1,116,468 and has an accumulated deficit of $1,035,050 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern

2.

Summary of Significant Accounting Principles

Basis of Presentation

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The consolidated financial statements include the financial statements of the Company and its’ wholly-owned susbidiaries, UTP Holdings, LLC and Asset Recovery of America, LLC. All inter-company transactions and balances have been eliminated upon consolidation.

Interim Financial Statements

These interim unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future.

Use of Estimates

The preparation of these consolidated financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, allowance for doubtful accounts, valuation of convertible debt and derivative liabilities, and deferred asset tax valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Accounts Receivable

The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on the age of receivable and the specific identification of receivables the Company considers at risk.

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

2.

Summary of Significant Accounting Principles (continued)

Inventory

Inventory is stated at the lower of cost or market and consists primarily of scrap metal.

Property and Equipment

Property and equipment, consisting of machinery and equipment, is stated at cost and is amortized using the straight-line method over their estimated lives of five years.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition”. Revenue consists of the sale of recycled metals and demolition services. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred or the service has been performed, and collectability is reasonably assured.

Revenues from demolition contracts are recognized on the percentage of completion method. Under this method, revenue is measured by the percentage of costs incurred to date to estimated total costs for each contract. Management considers total cost to be the best available measure of progress on the contracts. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change in the near term.

The Company has determined that the percentage of completion method is appropriate due to the following: 1) reasonably dependable estimates have been made, 2) the contract clearly specifies the enforceable rights of both the Company and the client, the consideration to be exchanged, and the manner and terms of settlement, 3) the client can be expected to satisfy its obligations under the contract, and 4) the Company can be expected to perform its contractual obligations.

Contract costs include all direct material, labor, equipment rental and subcontractor costs and certain indirect costs related to contract performance such as supplies, tools, repairs and similar costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Operating expenses are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and revenues in the near term. These changes are recognized in the period in which the revisions are determined.

Impairment of Long-lived Assets

In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Foreign Currency Translation

The Company’s functional currency and its reporting currency is the United States. Monetary balance sheet items expressed in foreign currencies are translated into US dollars at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

2.

Summary of Significant Accounting Principles (continued)

Earnings (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Comprehensive Loss

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at April 30, 2010 and 2009, the Company had no items representing comprehensive loss.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Financial Instruments and Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures” and ASC 825, “Financial Instruments” require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

2.

Summary of Significant Accounting Principles (continued)

Financial Instruments and Fair Value Measures (continued)

The Company’s financial instruments consist principally of cash, accounts receivable, notes receivable, accounts payable and accrued liabilities, lines of credit, and convertible debt. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of accounts receivable and accounts payable and accrued liabilities approximate their current fair values because of their nature and respective maturity dates or durations. The carrying amount of the notes receivable approximates fair value based on the interest rate. The carrying amounts of the convertible note payable and lines of credit approximate fair value because they are priced at interest rates consistent with the Company’s current borrowing rates on similar debt based on the security underlying the debt or the conversion features associated with the debt.

Recent Accounting Pronouncements

In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosures”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. The adoption of this standard on February 1, 2010, with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010, did not have a material effect on the Company’s consolidated financial statements. The adoption of the remainder of the standard is not expected to have a material effect on the Company’s consolidated financial statements

In February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (ASC Topic 855) “Amendments to Certain Recognition and Disclosure Requirements” (“ASU No. 2010-09”). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In March 2010, the FASB issued Accounting Standards Update 2010-11 (ASU 2010-11), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives”. The amendments in this update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this update. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and 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.

3.

Acquisition of UTP Holdings, LLC

On February 22, 2010, the Company entered into and closed an acquisition agreement with UTP Holdings, LLC (“UTP”), a company incorporated under the laws of Florida. The Company agreed to acquire 100% of UTP in exchange for a $250,000 convertible promissory note payable to the majority stockholder of UTP. UTP is engaged in the business of recycling ferrous and nonferrous metals to customers in the United States and abroad.

The acquisition was a capital transaction in substance and therefore has been accounted for as a recapitalization, which is outside the scope ASC 805, “Business Combinations”. Under recapitalization accounting, UTP is considered the acquirer for accounting and financial reporting purposes, and acquired the assets and assumed the liabilities of the Company. Assets acquired and liabilities assumed are reported at their historical amounts. The Company had a note payable of $250,000 on the acquisition date. These consolidated financial statements include the accounts of the Company since the effective date of the recapitalization and the historical accounts of the business of UTP since inception.

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

4.

Notes Receivable

On November 24, 2009, the Company entered into two separate note receivable agreements with a Florida salvage company. One note bears interest, beginning March 3, 2010, at 5% per annum. Weekly payments of $881, including principal and interest, were to begin on April 10, 2010 with the note maturing on March 30, 2013. As of April 30, 2010, no payments have been made on this note. The balance on the note as of April 30, 2010 is $127,593. Accrued interest at April 30, 2010 totalled $368. The second note bears no interest and is due in monthly instalments of $373 that began on December 16, 2009 and matures December 16, 2014. As of April 30, 2010, the balance on the second note is $21,660.

The Company has filed suit against the Florida salvage company to collect the amount due on the first note. The note maker continues to remain current on the second note receivable to the Company that is subject to a court order requiring payments. This indicates an ability but an unwillingness to pay. Accordingly, the Company is in the process of obtaining a court order regarding this note receivable and believes the note maker will comply with that court order as well.

5.

Lines of Credit

a)

Effective January 31, 2005, 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. The line of credit is secured by the principal residence of the President of the Company. Monthly interest-only payments are required. As of April 30, 2010, the outstanding balance is $790,299 (January 31, 2010 - $780,073).

b)

Effective March 18, 2010, the Company entered into a line of credit agreement with an company owned by the 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. The balance on the line of credit at April 30, 2010 is $25,000. Refer to Note 11(a).

6.

Convertible Debt

a)

On February 22, 2010, the Company issued a $250,000 promissory note to the President of the Company. The note bears interest at 10% per annum, is unsecured, and due on December 31, 2010. 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. During the three months ended April 30, 2010, $38,433 has been accreted increasing the carrying value of the convertible debt to $113,352. The carrying value of the convertible debt as of April 30, 2010 of $113,352 will be accreted to the face of $250,000 to maturity. During the three months ended April 30, 2010, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $9,698 and as of April 30, 2010, the fair value of the conversion option derivative liability was $165,383.

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 bears interest at 8% per annum, is unsecured, and 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. No amounts have been drawn on this agreement as of April 30, 2010. Refer to Note 11(b).

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

7.

Derivative Liabilities

The conversion option of the convertible debt disclosed in Note 6(a) is required to record derivatives at its estimated fair values on each balance sheet date with changes in fair values reflected in the statement of operations.

The Company uses the Black-Scholes valuation model to calculate the fair value of the derivative liabilities. The following table shows the weighted average assumptions used in the calculation of the conversion option:

	2010
Expected dividend yield	–
Risk-free interest rate	0.25%
Expected life (in years)	0.7
Expected volatility	128%

8.

Related Party Transactions

a)

During the three months ended April 30, 2010, the Company paid $2,250 (2009 - $nil) in rent to the Chief Financial Officer of the Company.

b)

During the three months ended April 30, 2010, the Company paid $1,547 (2009 - $1,547) for an automobile leased by the President of the Company.

c)

During the three months ended April 30, 2010, the Company paid $8,500 (2009 - $7,000) in rent to a company controlled by the President of the Company.

d)

During the three months ended April 30, 2010, the Company incurred $59,750 (2009 - $16,000) in management fees to a company controlled by the President of the Company.

9.

Common Stock

a)

On March 1, 2010, the President of the Company returned 255,000,000 shares of common stock (post-split) to the Company for cancellation.

b)

On March 19, 2010, the Company effected a 25 for 1 forward stock split of the issued and outstanding shares. All share amounts of the Company have been retroactively adjusted for all periods presented.

10.

Restatement

The Company has restated its consolidated financial statements as at April 30, 2010 and for the three months then ended. These financial statements have been restated to remove the goodwill improperly recognized on the reverse merger transaction and to properly account for the convertible debt instrument in which the conversion feature was determined to be a derivative liability. There was no effect on net loss per share.

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RESOURCE EXCHANGE OF AMERICA CORP.

(formerly Mobieyes Software, Inc.)

Notes to the Consolidated Financial Statements

April 30, 2010

(Expressed in US dollars)

(unaudited)

10.

Restatements (continued)

a)

Balance Sheet

	As at April 30, 2010
	As reported $	Adjustment $	As restated $
Assets
Goodwill	250,000	(250,000)	–
Liabilities
Convertible note payable	250,000	(136,648)	113,352
Derivative liabilities	–	165,383	165,383
Shareholders’ Deficit
Accumulated deficit	(756,315)	(278,735)	(1,035,050)

b)

Statement of Operations

	For the three months ended April 30, 2010
	As reported $	Adjustment $	As restated $
Other Income (Expense)
Accretion of discount on convertible debt	–	(38,433)	(38,433))
Gain on fair value of derivatives	–	9,698	9,698
Net loss	(127,722))	(28,735)	(156,457)

c)

Statement of Cash Flows

	For the three months ended April 30, 2010
	As reported $	Adjustment $	As restated $
Operating activities
Net loss for the period	(127,722))	(28,735)	(156,457)
Accretion of discount on convertible debt	–	38,433	38,433
Gain of fair value of derivatives	–	(9,698)	(9,698)

11.

Subsequent Events

a)

On May 12, 2010, the Company received $25,000 against the line of credit described in Note 5(b).

b)

On May 19, 2010, the Company received $10,000 against the draw down convertible promissory note described in Note 6(b).

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis 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 specifically consider various factors, including the risk factors outlined below.  These factors 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

Comparison of the three months ended April 30, 2010 and 2009

Operations and Net Income (Loss)

For the three months ended April 30, 2010 compared to the three months ended September 30, 2009, we had a net loss of $156,457 compared to net income of $30,140, respectively. The net loss during the current period was attributed to an increase in professional fees of $81,700 relating to the acquisition of UTP Holdings Inc. and the resulting legal, accounting, and audit fees relating to the acquisition.  Furthermore, during the three months ended April 30, 2010, we had a decrease in our gross profit of $164,967 due to a sharp decline in our revenues.  Finally, we recorded accretion expense of $38,433 related to the beneficial conversion feature of our $250,000 convertible note payable issued upon acquisition of UTP (the “UTP Note”).

Sales Revenue and Gross Profit

During the three months ended April 30, 2010, the Company recorded sales revenue of $72,690 compared to sales revenue of $621,726 during the three months ended April 30, 2009.  The decrease in sales revenue is attributed to the fact that the current economic market in the United States has resulted in significant declines in the amount of new and recurring business and due to the fact that the Company focused its fiscal 2010 activity on the acquisition of UTP and the related due diligence procedures surrounding the acquisition, which was finalized on February 22, 2010.  

As a result, gross profit for the three months ended April 30, 2010 was $15,294 compared with gross profit of $180,261 for the three months ended April 30, 2009.  

Liquidity and Capital Resources

As at April 30, 2010, we had current assets of $62,326 and a working capital deficit of $1,116,468 compared with current assets of $158,999 and a working capital deficit of $668,137 as at January 31, 2010.  The increase in the working capital deficit is attributed to the fact that the Company issued a $250,000 note for the acquisition of UTP on February 22, 2010.  Furthermore, the Company’s accounts payable increased by $78,947 relating to the fact that the Company did not raise sufficient proceeds from its financing or operations to repay outstanding obligations to vendors.  

During the three months ended April 30, 2010, the Company did not issue any common shares or receive any proceeds from equity financing.

Cash Flows from Operating Activities

During the three months ended April 30, 2010, the Company generated net cash flows from operating activities of $38,529 compared to net cash used in operating activities of $27,494 for the three months ended April 30, 2009.  The increase in the net cash provided by operating activities is attributed to the fact that the Company collected outstanding accounts receivable of $75,676 and had an increase in accounts payable and accrued liabilities of $78,947 compared to an increase in accounts receivable of $19,917 and inventory of $45,631 for the comparable period in fiscal 2009.  

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Cash Flows from Investing Activities

There were no significant investing activities for the three months ended April 30, 2010 and 2009.

Cash Flows from Financing Activities

During the three months ended April 30, 2010, the Company used cash of $58,390 in financing activities as compared with the use of $41,520 for financing activities during the three months ended April 30, 2009.  

Management is currently looking for more capital to complete our corporate objectives. In addition, we may engage in joint activities with other companies. We cannot predict the extent to which its liquidity and capital resources will be diminished prior to the consummation of a business acquisition or whether its capital will be further depleted by its operating losses. See Management’s Discussion and Analysis for discussions concerning potential business cooperation or combination with other companies.

Quarterly Developments

On February 22, 2010, the Company entered into an Asset Purchase Agreement with UTP Holdings, LLC, a privately held Florida limited liability company ("UTP"). In accordance with the terms and provisions of the Purchase Agreement, the Company acquired one hundred percent of the assets of UTP in exchange for (i) the assumption of the outstanding balance of a line of credit issued to Dana J. Pekas, UTP's majority shareholder, by Regions Bank (f/k/a AmSouth Bank) in an amount of up to $800,000 which shall be fully repaid on or before December 31, 2010; and, (ii) the issuance of a two hundred fifty thousand dollar ($250,000) 10% Convertible Promissory Note, with such Note being fully due and payable on or before December 31, 2010.

On April 27, 2010, the Company entered into a definitive Joint Venture Agreement with T & M Salvage, Inc. (“T & M”). Under the terms of the Joint Venture, after payment to T & M for processing and transportation fees, the gross profits shall be split equally between the Company and T & M. The full duties of the Company and T&M are set forth in the Agreement.

Additionally, in April 2010 the Company formed American Asset Recovery, LLC, a Florida limited liability company as a wholly-owned subsidiary formed to hold various demolition licenses for the benefit of the Company.

Developments Subsequent to April 30, 2010

On May 11, 2010, the Company, through its wholly owned subsidiary, Asset Recovery of America, LLC (“ARA”), entered into a definitive Joint Venture Agreement with Harry’s Haul, LLC. (“HHL”). Under the terms of the Joint Venture, the Company has agreed to provide all financing and administrative services necessary for HHL to conduct all demolition operations associated with each project. The gross profits shall be split equally between the Company and HHL.

On May 20, 2010, the Company entered into a definitive Joint Venture Agreement with Paw Materials, Inc. (“PAW”). Under the terms of the Joint Venture, the Company has agreed to provide the enterprise resource planning (“ERP”) system software, all financing machines and software, as well as find buyer and negotiate sale pricing for all ferrous products that PAW will separate and store as defined by the ERP software. The gross profits shall be split equally between the Company and PAW.

Off-Balance Sheet Arrangements

On April 27, 2010, we entered into a Joint Venture agreement with a Florida-based metals recycling company for acquiring, processing, managing quality control, and delivering ferrous metals for commercial related accounts.  The Joint Venture partner's asset recovery, processing and sorting capabilities will provide us with an ample supply of recycled ferrous metals to sell to clients domestically and internationally. As of April 30, 2010 $5,049 in revenue and $4,363 worth of expenses had been generated from this arrangement which has been included in the financials.

On May 11, 2010, the Company's wholly-owned subsidiary, Asset Recovery of America, entered into a Joint Venture agreement with a Florida-based demolition company. The Joint Venture includes an asset recovery project in Orlando, Florida, valued at US$190,000 and also provides us with ferrous and non-ferrous metals being removed from the project, which ARA will be able to process and resell.  

On May 20, 2010, we entered into a Joint Venture agreement with another Florida-based demolition and processing company.  The company is supplying us with an Accumulation Yard location to which individuals and commercial accounts can deliver ferrous metals. Pursuant to the terms and conditions of the agreement, the demolition company shall provide us with the processed ferrous metals that are then sold by the Company. The net profit is shared evenly between the parties.  

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Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and 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.

 

Future Financings

We will continue to rely on 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 planned acquisitions and exploration activities.

Critical Accounting Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition”. Revenue consists of the sale of recycled metals and demolition services. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred or the service has been performed, and collectability is reasonably assured.

Revenues from demolition contracts are recognized on the percentage of completion method. Under this method, revenue is measured by the percentage of costs incurred to date to estimated total costs for each contract. Management considers total cost to be the best available measure of progress on the contracts. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change in the near term.

The Company has determined that the percentage of completion method is appropriate due to the following: 1) reasonably dependable estimates have been made, 2) the contract clearly specifies the enforceable rights of both the Company and the client, the consideration to be exchanged, and the manner and terms of settlement, 3) the client can be expected to satisfy its obligations under the contract, and 4) the Company can be expected to perform its contractual obligations.

Contract costs include all direct material, labor, equipment rental and subcontractor costs and certain indirect costs related to contract performance such as supplies, tools, repairs and similar costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Operating expenses are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and revenues in the near term. These changes are recognized in the period in which the revisions are determined.

Recent Accounting Standards

In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosures”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. The adoption of this standard on February 1, 2010, with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010, did not have a material effect on the Company’s consolidated financial statements. The adoption of the remainder of the standard is not expected to have a material effect on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (ASC Topic 855) “Amendments to Certain Recognition and Disclosure Requirements” (“ASU No. 2010-09”). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

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In March 2010, the FASB issued Accounting Standards Update 2010-11 (ASU 2010-11), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives”. The amendments in this update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this update. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Management’s Quarterly Evaluation of Disclosure Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed 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 Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2010.  Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.  Please refer to our Annual Report on Form 10-K as filed with the SEC on February 9, 2010, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of April 30, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. Our management has concluded that, as of April 30, 2010, our internal control over financial reporting is not effective based on these criteria, due to material weaknesses resulting from not having an Audit Committee or financial expert on our Board of Directors and our failure to maintain appropriate cash controls.  Please refer to our Annual Report on Form 10-K as filed with the SEC on February 9, 2010, for a complete discussion relating to the foregoing evaluation of our Internal Control over Financial Reporting.

Changes in Internal Control Over Financial Reporting

 

There were no changes in internal controls over financial reporting that occurred during the three months ended April 30, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

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.

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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.

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

1.

Quarterly Issuances:

On February 22, 2010 the Company issued a two hundred fifty thousand dollar ($250,000) 10% Convertible Promissory Note payable to the majority member of UTP, with such Note being fully due and payable on or before December 31, 2010.

On April 29, 2010, the Company entered into a Line of Credit Note (the "Note") with Paramount Trading Company, Inc. ("Paramount"). Under the terms of the Note, the Company may borrow up to $250,000, for general working capital. The minimum advance under the Note is $25,000 and the interest rate of the Note is 8%. The Note contains customary events of default, including, among others, non-payment of principal and interest and in the event the Company is involved in certain insolvency proceedings. In the event of a default, all of the obligations of the Company under the Note may be declared immediately due and payable. Further Paramount shall have the right, but not the obligation, at any time, to convert all or any portion of the outstanding principal amount and accrued interest into fully paid and non-assessable shares of Company's Common Stock.

2.

Subsequent Issuances:

Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

ITEM 4. [REMOVED AND RESERVED]

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

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SIGNATURES

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

		RESOURCE EXCHANGE OF AMERICA CORP.
Dated: December 20, 2010		By:   /s/ Dana Pekas
			Dana Pekas
			Chief Executive Officer, President and Treasurer

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