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EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - American Retail Group, Inc.f10k2010ex31i_resourceacq.htm
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - American Retail Group, Inc.f10k2010ex32ii_resourceacq.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - American Retail Group, Inc.f10k2010ex31ii_resourceacq.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - American Retail Group, Inc.f10k2010ex32i_resourceacq.htm


SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549
 
FORM 10-K
 
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Fiscal Year Ended: December 31, 2010
 
OR
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
 
 
RESOURCE ACQUISITION GROUP, INC.
 
 
(Exact name of registrant as specified in its charter)
 
 
 
Nevada
 
000-53244
 
13-1869744
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number) 
 
(I.R.S. Employer  Identification Number)
 
c/o Primary Capital LLC
80 Wall Street, 5th Floor
New York, New York 10005
 (Address of principal executive offices, including zip code)

(212) 300-0070
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:  None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, $0.001 par value
 
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ 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    No 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
 
 
 

 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer 
o
Accelerated filer
o
Non-accelerated filer
 
o
Smaller reporting company
þ
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes þ No o

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2010, the last day of the registrant’s second fiscal quarter, was $5,745.

The number of shares of Common Stock, $0.001 par value, outstanding on February 9, 2011, was 801,603 shares.
 
 
 

 




 
 

 

TABLE OF CONTENTS
 
 
 
PART I
 
Item 1.
Description of business
   
1
 
Item 1A.
Risk Factors
      2  
Item 2.
Description of property
   
4
 
Item 3.
Legal proceedings
   
4
 
Item 4.
Reserved
   
4
 
           
PART II
 
Item 5.
Market for registrant’s common equity, related stockholder matters and issuer purchase of equity securities.
   
5
 
Item 6.
Selected Financial Information
   
6
 
Item 7.
Management’s discussion and analysis or plan of operations.
   
6
 
Item 8.
Financial statements
   
7
 
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
   
7
 
           
Item 9A(T).
Controls & Procedures
   
7
 
Item 9B.
 Other Information
   
8
 
           
           
PART III
 
Item 10.
Directors, executive officers and corporate governance
   
9
 
Item 11.
Executive compensation.
   
10
 
Item 12.
Security ownership of certain beneficial owners and management and related stockholder matters
   
11
 
Item 13.
Certain relationships and related transactions
   
12
 
           
PART IV
 
Item 14.
Principal Accountant Fees and Services
   
12
 
Item 15.
Exhibits
   
13
 
           
Signatures
   
13
 


 
 
i

 

PART I
 
ITEM 1. BUSINESS.

At this time, the Company’s purpose is to seek, investigate, and if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature.  This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.

The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The Company may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

BACKGROUND

OVERVIEW

We were incorporated in New York on January 27, 1934, and our stock is traded on the Over the Counter Bulletin Board (OTC BB) under the symbol “DKII”.  Until August 25, 2004, DK Investors, Inc. (“DK”), now know as Resource Acquisition Group, Inc. was a closed-end managed investment company which, until the end of 2003, invested solely in tax exempt municipal and state issued securities. At that time, DK had assets of approximately $15,700,000.

At a special shareholders meeting called on December 17, 2003, DK voted for two propositions: (1) to cease operations as an investment company, to sell its assets and distribute the net proceeds, and (2) to continue its corporate existence while looking for a party to purchase control and/or merge with DK.  DK distributed the net proceeds to its shareholders in a capital distribution of $13.19 per share on February 6, 2004 in cash pro rata to shareholders of record on January 30, 2004. At the conclusion of the distribution, DK held approximately $152,000 in cash to cover anticipated expenses and had no other assets and no debts. At the time of the noted distribution DK had approximately 175 shareholders of record plus shareholders who hold shares in street name through broker-dealers and banks.

On March 30, 2005, the Company entered into a share acquisition and exchange agreement with SGK Nanostructures, Inc. (a New York corporation incorporated on September 18, 2003), and the shareholders of SGK.  As a result of this transaction, SGK shareholders received shares totaling 95% of the outstanding common stock and the Company increased the authorized shares from 3,500,000 to 50,000,000 shares, up to 40,000,000 of which shall be common stock, having a par value of $0.0001per share and up to 10,000,000 of which shall be preferred stock having a par value of $0.001 per share, issuable in one or more series.  In conjunction with the transaction the management and the board of DK Investors resigned and were replaced by the management of SGK Nanostructures, Inc.

On August 18, 2009, the holder of shares representing 64.49% of our common stock took action by written consent to change the Company’s name from DK Investor, Inc. to Resource Acquisition Group Inc.  The Board of Directors authorized the change in the Company’s name to Resource Acquisition Group Inc. to more correctly reflect the business operations of indentifying and acquiring natural resources.

On October 26, 2009, the Company and SGK Nanostructures, Inc., a New York corporation (“SGK”) and wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Agreement”). The Agreement was executed to further the Company’s plan to spin-off its corporate assets as described in the Company’s Definitive 14C filed with the Securities & Exchange Commission on September 2, 2009.

On October 27, 2009, DK Investors, Inc. entered into an Agreement and Plan of Merger with Resource Acquisition Group, Inc., (“Resource Acquisition”) a Nevada Corporation and wholly owned subsidiary of the Company, whereby the Company merged with and into Resource Acquisition and Resource Acquisition being the surviving corporation.  Pursuant to the Merger Agreement, Resource Acquisition acquired all of the assets and assumed all of the liabilities and obligations of the Company.  The shareholders of the Company received one (1) common share of Resource Acquisition for every two (200) hundred common shares of the Company owned. The Merger Agreement was executed to further the Company’s plan to re-domesticate its corporate existence from New York to Nevada as described in the Company’s Definitive 14C filed with the Securities & Exchange Commission on September 2, 2009.
 
 
1

 
 
At a Board meeting held on December 30, 2010, Mr. Leo agreed to lend to the Corporation seven thousand ($7,000.00) U.S. dollars (the “Principal”), which shall bear interest at a rate of four (4%) percent per annum with the Principal and interest payable on demand, Further Mr. Leo has agreed to retroactively reduce the interest rate of all promissory notes due him to 4% and to extend the due dates of all notes to March 31, 2011. Also, Brian Zucker agreed to forgive the Corporation the accrued salaries due to him in the amount of $31,459.50.  In connection with the concessions by Mr. Leo, the Corporation agreed to issue him 699,679 shares of common stock.

The Company expects to incur additional costs related to its ongoing reporting obligations. We intend to raise additional debt and/or equity financing to sustain our operations. We do not expect to generate a positive cash flow from operations.. Accordingly, we will require external financing to sustain our operations, perhaps for a significant period of time. Successful future operations are subject to a number of technical and business risks, including our continued ability to obtain future funding

Our principal office is located at c/o Primary Capital LLC, 80 Wall Street, 5th Floor, New York, NY 10005. Our telephone number is (212) 300-0070. Our common stock is quoted on the OTC Bulletin Board under the trading symbol “DKII”.

EMPLOYEES

At December 31, 2010, we had two part-time employees.  Our employees are not covered by labor union contracts or collective bargaining agreements. From time to time, the Company also employs independent contractors to support its operations. At December 31, 2010, the Company utilized 1 outside contractor in the accounting area.
 
We have entered into employment agreements with our President, Chief Executive Officer and Secretary, Mr. John Leo, and our Chief Financial Officer, Mr. Brian Zucker. Mr. Leo and Mr. Zucker will not provide services to Resource Acquisition Group, Inc. on a full-time basis.
 
ITEM 1A. RISK FACTORS.

In addition to other information in this Annual Report on Form 10-K, the following important factors should be carefully considered in evaluating the Company and its business because such factors currently have a significant impact on the Company’s business, prospects, financial condition and results of operations

FORWARD LOOKING STATEMENTS - CAUTIONARY FACTORS

Certain statements in this report on Form 10-K contain “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These statements are typically identified by their inclusion of phrases such as “the Company anticipates”, or “the Company believes”, or other phrases of similar meaning. These forward-looking statements involve risks and uncertainties and other factors that may cause the actual results, performance or achievements to differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Except for the historical information and statements contained in this Report, the matters and items set forth in this Report are forward looking statements that involve uncertainties and risks some of which are discussed at appropriate points in the Report and are also summarized as follows:

Additional risks and uncertainties not currently known or deemed to be immaterial also may materially adversely affect the business, financial condition and/or operating results.

WE HAVE A LIMITED OPERATING HISTORY AND WILL FACE MANY OF THE DIFFICULTIES THAT COMPANIES IN THE DEVELOPMENT STAGE MAY FACE.

As a result of the Company’s limited operating history, the current difficult economic conditions it may be difficult for you to assess our growth and earnings potential. The Company believes that due primarily to the relatively brief time DKII has been available to the general public, there has not yet been developed, implemented and demonstrated a commercially viable business model from which to successfully operate any form of business that relies on the products and services that we intend to market, sell, and distribute.  Therefore, we have faced many of the difficulties that companies in the early stages of their development in new and evolving markets often face, as they are described herein.  We may continue to face these difficulties in the future, some of which may be beyond our control.  If we are unable to successfully address these problems, our future growth and earnings will be negatively affected.
 
WE HAVE A LIMITED OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY AND MAY BE UNABLE TO OPERATE PROFITABLY AS A STAND-ALONE COMPANY.

Resource Acquisition Group, Inc. only has limited operating history as an independent public company.  The business has operated at a loss for the last few years, and such losses may continue or increase. Resource Acquisition Group, Inc. may not be able to successfully put in place the financial, administrative and managerial structure necessary to operate as an independent public company, and the development of such structure will require a significant amount of management’s time and other resources.
 
 
2

 
 
WE HAVE RECEIVED A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS THAT DESCRIBES UNCERTAINITY REGARDING OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Resource Acquisition Group, Inc. has received a report from its independent auditors for the fiscal years ended December 31, 2010 and December 31, 2009, containing an explanatory paragraph describing the issues leading to substantial doubt about the uncertainty regarding the Company’s ability to continue as a going concern due to its historical negative cash flow and because, as of the date of the auditors’ opinion, the Company did not have access to sufficient committed capital to meet its projected operating needs for at least the next 12 months.
 
Our financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  We have not made any adjustments to our financial statements as a result of the going concern modification to the report of our independent registered public accounting firm.  If we become unable to continue as a going concern, we could have to liquidate our assets, which means that we are likely to receive significantly less for those assets than the values at which such assets are carried on our financial statements Any shortfall in the proceeds from the liquidation of our assets would directly reduce the amounts, if any, that holders of our common stock could receive in liquidation.
 
There can be no assurance that management’s plans will be successful, and other unforeseeable actions may become necessary. Any inability to raise capital may require us to reduce the level of our operations. Such actions would have a material adverse effect on us, our business, and operations and result in charges that would be material to our business and results of operations.
 
RISKS RELATED TO OUR COMMON STOCK

WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.

We intend to retain any future earnings to finance the growth and development of our business. Therefore, we do not expect to pay any cash dividends in the foreseeable future on our common stock. Any future dividends will depend on our earnings, if any, and our financial requirements.

FUTURE SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.
 
Sales of our common stock in the public market could lower the market price of our Common Stock. Sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that our management deems acceptable or at all.
 
OUR COMMON STOCK IS DEEMED TO BE “PENNY STOCK” WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS.
 
Our common stock is deemed to be “penny stock” as that term is defined in Rule 3A51-1 promulgated under the Securities Exchange Act of 1934.  Penny stocks are stock:
 
  
with a price of less than $5.00 per share;
 
  
that are not traded on a “recognized” national exchange;
 
  
whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ listed stock must still have a price of not less than $5.00 per share); or
 
  
in issuers with net tangible assets of less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three years.
 
Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks.  Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investor for a prospective investor.  These requirements may reduce the potential market for our common stock by reducing the number of potential investors.  This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them.  This could cause our stock price to decline.
 
 
3

 
 
Risk Factor Related to Controls and Procedures

The Company has limited segregation of duties amongst its employees with respect to the Company’s preparation and review of the Company’s financial statements due to the limited number of employees, which is a material weakness in internal controls, and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company’s financial reporting which could harm the trading price of the Company’s stock.

Management has found it necessary to limit the Company’s administrative staffing in order to conserve cash, until the Company’s level of business activity increases. As a result, there is no segregation of duties amongst the employees, and the Company and its independent public accounting firm has identified this as a material weakness in the Company’s internal controls. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of employees and limited segregation of duties, management believes that the Company is capable of following its disclosure controls and procedures effectively.
 
Effective internal controls are necessary for the Company to provide reliable financial reports and prevent fraud. Inferior internal controls could cause investors to lose confidence in the Company’s reported financial information, which could have a negative financial effect on the trading price of the Company’s stock. Management has found it necessary to limit the Company’s administrative staffing in order to conserve cash, until the Company’s level of business activity increases. As a result, there is no segregation of duties amongst the employees, and the Company and its independent public accounting firm has identified this as a material weakness in the Company’s internal controls. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of employees and limited segregation of duties, management believes that the Company is capable of following its disclosure controls and procedures effectively.

ITEM 2. PROPERTY.

We do not own any real property.  Our corporate headquarters are in c/o Primary Capital LLC, 80 Wall Street, 5th Floor, New York, New York, which we currently co-occupy and sublease from Primary Capital. The rent for the sublease is currently waived. We intend to continue subleasing such space and anticipate no relocation of our offices in the foreseeable future. We are unaware of any environmental problems in connection with this location, and, because of the nature of our activities, do not anticipate such problems.

ITEM 3. LEGAL PROCEEDINGS .

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.  We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.
 
ITEM 4 . (REMOVED AND RESERVED).
 
 
 
4

 

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET INFORMATION

Our Common Stock, $.001 par value, is quoted on the OTC Bulletin Board under the symbol “DKII.” The following table shows the high and low closing prices for the periods indicated.

 Year
 
High
   
Low
 
             
2010
           
First Quarter
   
0.10
     
0.10
 
Second Quarter
   
0.10
     
0.10
 
Third Quarter
   
1.85
     
1.45
 
Fourth Quarter
   
0.30
     
0.30
 
                 
2009
               
First Quarter
   
0.10
     
0.10
 
Second Quarter
   
0.10
     
0.10
 
Third Quarter
   
0.10
     
0.10
 
Fourth Quarter
   
0.05
     
0.05
 
 
HOLDERS OF COMMON EQUITY

As of February 7, 2011, the number of record holders of our common shares was approximately 165.

DIVIDEND INFORMATION

To date, the Company has never paid a dividend. We have no plans to pay any dividends on common stock in the near future. We intend to retain all earnings, if any, for the foreseeable future, for use in our business operations.

DESCRIPTION OF SECURITIES

The Company originally was authorized by the Certificate of Incorporation to issue 40,000,000 shares of common stock, $0.0001 par value per share and 10,000,000 shares of preferred stock, $0.001 par value per share. Pursuant to the Amendment, the number of common shares authorized to issue to be issued is increased to 200,000,000 shares of common stock, $0.001 par value per share. As of the date the Amendment was approved by the Board and the majority stockholders, there were 801,603 shares of our common stock issued and outstanding.

The Board approved a resolution to effect a 200-for-1 reverse stock split.  Under this reverse stock split each 200 shares of our Common Stock was converted automatically into 1 share of Common Stock.  To avoid the issuance of fractional shares of Common Stock, the Company issued an additional share to all holders of fractional shares.  At the completion  of the reverse stock split, there were 101,924 shares of common stock issued and outstanding.  There are now 801,603 shares issued and outstanding.

PREFERRED STOCK

We have authorized 10,000,000 shares of “blank check” preferred stock, par value $0.001 per share, of which none have been issued.   Our Board of Directors has the authority, without further action by the stockholders, to issue from time to time the blank check preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences and restrictions that the Board may determine. The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and purchase funds and other matters. The issuance of preferred stock could adversely affect the voting power or other rights of the holders of common stock.
 
As of December 31, 2010, 0 shares of Preferred Stock are issued and outstanding.

COMMON STOCK

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders. Holders of our common stock are entitled to receive dividends ratably, if any, as may be declared by the Board of Directors out of legally available funds, subject to any preferential dividend rights of any outstanding preferred stock (there are none currently). Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive ratably our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.
 
 
5

 
 
Holders of our common stock have no preemptive, subscription, redemption or conversion rights. The outstanding shares of common stock are fully paid and non-assessable. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of preferred stock which we may designate and issue in the future without further shareholder approval.
 
ITEM 6. SELECTED FINANCIAL DATA.
 
Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
 
Forward Looking Statements
 
A number of the statements made by the Company in this report may be regarded as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
 
Forward-looking statements include, among others, statements concerning the Company’s outlook, pricing trends and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.

All predictions as to future results contain a measure of uncertainty and accordingly, actual results could differ materially.  Some of the factors that could cause a difference are set forth in Item 1A “Risk Factors” in this Report.  This discussion and analysis of financial condition and results of operations should be read in conjunction with our Financial Statements and Risk Factors included in this filing.

Overview and Plan of Operation

At this time, the Company’s purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature.  This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.

The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The Company may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

Results of Operations 2010 Compared to 2009

For the years ended December 31, 2010 and 2009 we had no revenue.

We incurred operating expenses of $32,342 and $42,771 for the years ended December 31, 2010 and 2009, respectively. Our operating expenses primarily consisted of fees paid to attorneys and accountants in order to fulfill the Company’s SEC reporting obligations.  Interest expense from continuing operations for the years ended December 31, 2010 and 2009 was $11,412 and $8,641 respectively.

At the end of 2010 Brian Zucker, our Chief Financial Officer, forgave accrued salary due to him in the amount of $31,460, which is presented under other income in the statement of operations.  Mr. Leo also agreed to a retroactive reduction in the interest accrued on the Company’s debt due to him.    In contrast, during 2009 we reported $5,000 in note default fees.

The Company realized a net loss from continuing operations of $12,294 for the year ended December 31, 2010.  During 2009 our continuing operating produced a net loss of $56,412.  During 2009, we recognized a loss of $18.205 from the operations that we discontinued during that year, and a gain on disposition of subsidiary in the amount of $192,788.
 
 
6

 
 
LIQUIDITY AND CAPITAL RESOURCES

The Company does not currently have sufficient resources to cover ongoing expenses and expansion. As of December 31, 2010, the Company had $10,919 of cash and current liabilities owing of $116,691. We plan on raising additional funds from institutional investors to implement our business model.  In the event we are unsuccessful this will have a negative impact on our operations.  Our President, John Leo, has previously provided funding for working capital needs and our expectation is that he will continue to do so.

If the Company cannot find sources of additional financing to fund its working capital needs, the Company will be unable to obtain sufficient capital resources to operate our business. We cannot assure you that we will be able to access any financing in sufficient amounts or at all when needed. Our inability to obtain sufficient working capital funding will have an immediate material adverse effect upon our financial condition and our business.
 
The Company currently has no other significant sources of working capital or cash commitments. However, no assurance can be given that Resource Acquisition Group, Inc. will raise sufficient funds from such financing arrangements, or that Resource Acquisition Group, Inc. will ever produce sufficient revenues to sustain its operations, or that a market will develop for its common stock for which a significant amount of Resource Acquisition Group, Inc. financing is dependent upon.
 
Our operations used $37,632 in cash during 2010.  However, Mr. Leo loaned us $44,500 during 2010, with the result that our cash reserves increased by $6,868.  In 2009 that relative balance was mirrored, as we used 41,509 from the cash provided by our discontinuance of SGK Nanostructures, Inc. to satisfy outstanding loans, resulting in a net reduction of $1,509 in our cash reserves.

There was no significant impact on the Company’s operations as a result of inflation for the year ended December 31, 2010.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of certain assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
 
Impact of Recent Accounting Pronouncements
 
OFF BALANCE SHEET ARRANGEMENTS
 
During fiscal 2010, we did not engage in any off-balance sheet activities nor have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements and notes of this Form 10-K appear after the signature page to this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

 
7

 
 
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The evaluation of our disclosure controls and procedures included a review of their objectives and design, our implementation of them and their effect on the information generated for use in this Form 10-K. In the course of the controls evaluation, we reviewed any data errors or control problems that we had identified and sought to confirm that appropriate corrective actions, including process improvements, were being undertaken. This type of evaluation is performed on a quarterly basis so that the conclusions of management, including our Chief Executive Officer and Chief Financial Officer, concerning the effectiveness of the disclosure controls can be reported in our periodic reports on Form 10-K and Form 10-Q. Many of the components of our disclosure controls and procedures are also evaluated on an ongoing basis. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures and to modify them as necessary. The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Sec. 240.13a-15(e) or 240.15d-15(e)) as of December 31, 2010.   In the course of that evaluation, they determined that that there is limited segregation of duties amongst the Company’s employees with respect to the Company’s preparation and review of the Company’s financial statements. This material weakness is a result of the Company’s limited number of employees. This material weakness may affect management’s ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with U.S. GAAP.  Based on their evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15,  the Company’s Chief Executive Officer and Chief Financial Officer found the Company’s disclosure controls and procedures  to be ineffective.
 
EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness in the Company’s internal control over financial reporting exists in that there is limited segregation of duties amongst the Company’s employees with respect to the Company’s preparation and review of the Company’s financial statements. This material weakness is a result of the Company’s limited number of employees. This material weakness may affect management’s ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with U.S. GAAP.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. In making this assessment, management used the framework set forth in the report entitled “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a Company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company have concluded, as of the end of the fiscal year covered by this Annual Report on Form 10-K, due to a lack of segregation of duties that our internal control over financial reporting has not been effective. However, at this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. The Company intends to remedy the material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the Company’s employees as soon as the Company has the financial resources to do so. Management is required to apply judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

CHANGES IN INTERNAL CONTROLS

Management of the Company has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, any change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal year covered by this Annual Report on Form 10-K. There was no change in the Company’s internal control over financial reporting identified in that evaluation that occurred during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, other than what has been reported above.
 
ITEM 9B. OTHER INFORMATION

None.

 
8

 

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Resource Acquisition Group, Inc. board of directors consists of three directors.  Listed below is certain information concerning individuals who currently serve as directors and executive officers of Resource Acquisition Group, Inc.  
 
Name
 
Age
 
 Position with
 Resource Acquisition Group, Inc.
 
Since
 
               
John Leo
   
46
 
President, Chief Executive Officer,
     
         
Secretary, Treasurer and Director
   
2005
 
                   
Brian F. Zucker
   
49
 
Chief Financial Officer, Director
   
2005
 
                   
Jimmy Sung
   
39
 
Director
   
2010
 
 
John Leo, 46, is our Chief Executive Officer, President, Secretary, Treasurer and a member of our Board of Directors.  Mr. Leo is the founder, president, and general securities principal of Primary Capital LLC (PC), a full service investment banking firm registered with the Securities and Exchange Commission  (SEC), Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corporation (SIPC).  PC’s core focus and expertise is in reverse merger transactions and private placement financings.  PC works with both domestic and foreign issuers, with a specific expertise in identifying profitable private companies in China as well as other emerging markets such as Eastern Europe that have the potential to be successful public companies in the United States.   Mr. Leo graduated from Rollins College with a degree in psychology. Mr. Leo maintains the following FINRA registrations: Series 7, 63, 55, 24 and 79.
 
Brian Zucker, 49, is our Chief Financial Officer as well as Financial Operations Principal for numerous broker dealers and hedge funds. He is a member of the American Institute of Certified Public Accountants, as well as a member of the New York and New Jersey State Society of CPA’s. He has over twenty years of experience as a CPA specializing in the securities industry.  He started his career as a Senior Consultant at both Price Waterhouse and Deloitte Haskins and Sells. Mr. Zucker currently manages a firm which provides a broad range of services to hedge funds, broker dealers and high net worth individuals. Mr. Zucker holds a Bachelor’s degree in accounting from Pace University in New York, and has the following FINRA licenses: series 7, 63, 24 and 27.

Jimmy Sung, 39, is the Financial Operations Principal of Primary Capital, LLC, a registered broker-dealer.  From 2002 to 2007 Mr. Sung was employed at various registered broker-dealer, in operational and managerial capacities.  From 1998, Mr. Sung was employed as a consultant by Anderson Consulting.  Mr. Sung earned a B.A. degree with a major in economics from New York University in 1993.  He was awarded an M.B.A. degree by St. John’s University in 1998.  Mr. Sung maintains the following FINRA registrations: Series 7, 63, 55, 27 and 79.
 
AUDIT COMMITTEE
 
The Audit Committee currently consists of Messrs. Leo and Zucker, with Mr. Leo serving as the Chairman of the Committee. Management is responsible for the Company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s financial statements in accordance with generally accepted accounting principles and to issue a report thereon and as to management’s assessment of the effectiveness of internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes. None of the members of the Audit Committee is independent as defined by the rules of the Nasdaq Stock Market.

AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors has determined that we have an Audit Committee financial expert, as defined under Item 407(d)(5)(i) of Regulation S-K, serving on our Audit Committee. John C. Leo is our Audit Committee financial expert.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC.  Officers, directors and greater than ten percent shareholders are required by the rules and regulations of the SEC to furnish the Company with copies of all forms they file pursuant to Section 16(a).  Below is the information with respect to failures of directors, officers and/or beneficial owners of more than ten percent of any class of equity securities of the Company to timely file reports under Section 16(a):
 
 
9

 
 
 
 
Name
 
Date of Reporting Event
 
 
Required Filing
Date 
 
Date of Filing
John C. Leo
 
5/31/2009(1)
 
6/2/2009
 
Form 5 filed on 02/03/2011
John C. Leo
 
12/31/2010(2)
 
1/4/2011
 
Form 5 filed on 02/03/2011
Jimmy Sung
 
November 5, 2010(3)
 
November 15, 2010
 
Not Filed
             
(1)
Date of issuance of shares of the Company’s Common Stock.
(2)
Date of issuance of shares of the Company’s Common Stock.
(3)
Date of appointment as a Director of the Company.
 
ITEM 11.   EXECUTIVE COMPENSATION.

The following table sets forth compensation information for services rendered by certain of our executive officers in all capacities during the last three completed fiscal years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted, and certain other compensation, if any, whether paid or deferred.
 
Summary Compensation Table

Name and Position(s)
 
Year
 
Salary($)
   
Stock Awards
   
All other Compensation
   
Total Compensation
 
                             
John Leo(1)
                           
President, Chief Executive
 
2010
 
$
10,000
(2)
 
$
0
   
$
0
   
$
10,000
 
    Officer and Director
 
2009
 
$
10,000
(2)
 
$
0
   
$
0
   
$
10,000
 
   
2008
 
$
10,000
(2)
 
$
0
   
$
0
   
$
10,000
 
                                     
                                     
Brian Zucker(3)
                                   
   Chief Financial Officer
 
2010
 
$
10,000
(4)
 
$
0
   
$
0
   
$
10,000
 
   
2009
 
$
10,000
(4)
 
$
0
   
$
0
   
$
10,000
 
   
2008
 
$
10,000
(2)
 
$
0
   
$
0
   
$
10,000
 
                                     

(1)  
Mr. Leo is currently serving as our Chief Executive Officer, President, Secretary and Director. Prior to that time, Mr. Leo served as our President, Secretary and Director since October 14, 2005. Mr. Leo’s employment contract is for a term of five-years at a base salary of $10,000.
(2)  
$10,000 was accrued and unpaid for each of the years ended December 31, 2010, 2009 and 2008.  On December 31, 2010 the Company issued 699,679 shares issued in exchange for $31,460 of accrued salary, 30,000 of accrued default fees, and a retroactive reduction in interest rate on outstanding loans to the company.
(3)  
Mr. Zucker has been serving as our Chief Financial Officer and Director since October 14, 2005. Mr. Zucker’s employment contract is for a term of five-years at a base salary of $10,000.
(4)  
$10,000  was accrued and unpaid for the each of the years ended December 31, 2010, 2009 and 2008.  On December 31, 2010 Mr. Zucker permanently waived payment of the accrued salary.
   
 
 
10

 
 
 
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
 
   
Name
 
Shares Acquired on Exercise (#)
   
Value Realized ($)
   
Number of Securities Underlying Unexercised Options/SARs at FYE (#) Exercisable/Unexercisable
   
Value of Unexercised In-the-Money Options/SARs at FY-End ($) Exercisable/Unexercisable
 
                         
None
   
0
     
0
     
0
     
0 / 0
 

Stock Option Grants

The Company did not issue any stock options for the years ended December 31, 2010 and 2009.

EMPLOYMENT CONTRACTS

John C. Leo

Resource Acquisition Group, Inc. entered into a five-year employment agreement with Mr. Leo as of October 14, 2005. Mr. Leo will serve as Resource Acquisition Group, Inc.’s President, Corporate Secretary and Director for a term of five years. As consideration, Resource Acquisition Group, Inc. agreed to pay Mr. Leo the sum of $10,000 annually. Resource Acquisition Group, Inc. also agreed to pay Mr. Leo an Annual bonus issued in the Company’s common stock in an amount to be determined by the Board of Directors of the Company. In the event Mr. Leo’s employment agreement is terminated by Resource Acquisition Group, Inc. for cause or due to Mr. Leo’s disability or retirement, Resource Acquisition Group, Inc. will pay him (1) any unpaid base salary through the date of termination and any accrued vacation; (2) Any unpaid bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (3) Reimbursement for any unreimbursed expenses properly incurred through the date of termination; (4) all other payments or benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement, plan or program (Collectively, “Accrued Benefits”).

In the event Mr. Leo’s employment agreement is terminated due to Mr. Leo’s death, Resource Acquisition Group, Inc. will pay to his estate his “Accrued Benefits” as described above.

Brian F. Zucker

Resource Acquisition Group, Inc. entered into a five-year employment agreement with Mr. Zucker as of October 14, 2005. Mr. Zucker will serve as the Company’s Chief Financial Officer and Director for a term of five years. As consideration, Resource Acquisition Group, Inc. agreed to pay Mr. Zucker the sum of $10,000 annually. Resource Acquisition Group, Inc. also agreed to pay Mr. Zucker an Annual bonus issued in the Company’s common stock in an amount to be determined by the Board of Directors of the Company. In the event Mr. Zucker’s employment agreement is terminated by Resource Acquisition Group, Inc. for cause or due to Mr. Zucker’s disability or retirement, Resource Acquisition Group, Inc. will pay him (1) any unpaid base salary through the date of termination and any accrued vacation; (2) Any unpaid bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (3) Reimbursement for any unreimbursed expenses properly incurred through the date of termination; (4) all other payments or benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement, plan or program (Collectively, “Accrued Benefits”).

In the event Mr. Zucker’s employment agreement is terminated due to Mr. Zucker’s death, Resource Acquisition Group, Inc. will pay to his estate his “Accrued Benefits” as described above.

Director Compensation

For the year ended December 31, 2010, none of the members of our Board of Directors received compensation for his service as a director. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMEN AND RELATED STOCKHOLDER MATTERS.

The following tables set forth certain information regarding the beneficial ownership of our voting securities as of February 8, 2011 of (i) each person known to us to beneficially own more than 5% of the applicable class of voting securities, (ii) each of our directors, (iii) each named executive officer and (iv) all directors and executive officers as a group. As of February 8, 2011 a total of 801,603, shares of common stock were outstanding. Each share of common stock is entitled to one vote on matters on which holders of common stock are eligible to vote. The column entitled “Percentage of Total Voting Stock” shows the percentage of total voting stock beneficially owned by each listed party.

 
11

 
 
The number of shares beneficially owned is determined under rules promulgated by the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of December 31, 2008, through the exercise or conversion of any stock option, convertible security, warrant or other right. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of capital stock listed as owned by that person or entity.

Ownership of Common Stock
Name and Position(s)
 
Title of Class
 
Common Stock Beneficially Owned
   
Percentage
 Ownership (2)
 
                 
John C. Leo, CEO, Director (1),
 
Common Stock
   
744,153
     
92.8
%
Brian Zucker, Director
 
Common Stock
   
     
-- 
 
Jimmy Sung, Director
 
Common Stock
   
     
-- 
 

(1)
The  address for each beneficial owner is c/o Primary Capital LLC, 80 Wall Street, 5th Floor, New York, New York 10005
   
(2)
Percentage ownership for Resource Acquisition Group, Inc. Common Stock is based on 801,603 shares of common stock outstanding as of February 8, 2011.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 
During the past several years, John C. Leo, our Chief Executive Officer, has loaned the Company the funds needed for its working capital.  At December 31, 2009, Mr. Leo held  notes payable issued by the Company  with an outstanding balance of $55,500.  The notes carry a fixed rate of 15%. Principal and interest are to be paid at the occurrence of the following events: a) Any financing in excess of $25,000, b) A change of control of the board, c) The issuance of shares equal to or greater than 10% of the outstanding in any 12 month period or other securities in which upon conversion would equate to an issuance in excess of 10% of the outstanding, d) The occurrence of any business combination transaction.
 
During 2010 Mr. Leo loaned additional funds to the Company, such that at December 31, 2010 the balance of the notes payable to Mr. Leo by the Company was $100,000.  Further Mr. Leo has agreed to retroactively reduce the interest rate of all promissory notes due him to 4% and to extend the due dates of all notes to March 31, 2011. Also, Brian Zucker agreed to forgo the accrued salaries due to him by the Company in the amount of $31,459.50.  In connection with the concessions by Mr. Leo, the Corporation agreed to issue him 699,679 shares of common stock.
 
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth fees billed to the Company by the Company’s independent auditors for the year ended December 31, 2010 and December 31, 2009 for (i) services rendered for the audit of the Company’s annual financial statements and the review of the Company’s quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.

 
           SERVICES
 
2010
   
2009
 
             
           Audit Fees
 
$
5,500
   
$
5,000
 
                 
           Audit - Related Fees
   
1,500
     
-0-
 
                 
           Tax fees
   
-0-
     
-0-
 
                 
           All Other Fees
   
1,000
     
-0-
 
                 
           Total
 
$
8,000
   
$
5,000
 
                 
 
Prior to engaging our accountants to perform a particular service, our Audit Committee obtains an estimate for the service to be performed. The Audit Committee in accordance with its procedures approved all of the services described above.


 
12

 
 
PART IV



ITEM 15. EXHIBITS

Exhibits

Exhibit No.
 
Description
     
31.1
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herein.
     
31.2
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herein.
   
                 
32.1
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herein.
     
32.2
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herein.


SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.


           Dated: February 9, 2011

 
Resource Acquisition Group, Inc.
 
       
 
By:
/s/  John C. Leo
 
   
John C. Leo
 
   
Chief Executive Officer, President, CEO Secretary, Treasurer and Director
 
                  
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
Signature
 
Title
 
Date
         
/s/  John C. Leo
 
Chief Executive Officer, Director
 
February 9, 2011
John C. Leo
       
         
/s/ Brian F. Zucker
 
Chief Financial Officer, Chief
 
February 9, 2011
Brian F. Zucker
 
 Accounting Officer, Director
   



 
13

 
 
 
 
 

RESOURCE ACQUISITION GROUP, INC.
Formerly known as DK Investors, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
 
 
 
 



 
 

 
 
 
 
RESOURCE ACQUISITION GROUP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

   
PAGE(S)
 
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
     
       
Report of Independent Registered Public Accounting Firm
   
F-2
 
         
    Consolidated Balance Sheets as of December 31, 2010 and 2009
   
F-3
 
         
    Consolidated Statements of Operations for the years ended
       
    December 31, 2010 and 2009
   
F-4
 
  
       
    Consolidated Statements of Changes in Stockholders’ (Deficit) for the
       
    Years ended December 31, 2010 and 2009
   
F-5
 
         
    Consolidated Statements of Cash Flow for the years ended December 31,
       
    2010 and 2009
   
F-6
 
         
    Notes to Consolidated Financial Statements
   
F-7-F-10
 


 
F-1

 




 
Paritz & Company, P.A.
 
15 Warren Street, Suite 25
Hackensack, New Jersey 07601
(201)342-7753
Fax: (201) 342-7598
E-Mail: paritz @paritz.com
 
     Certified Public Accountants
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Resource Acquisition Group, Inc.

We have audited the accompanying consolidated balance sheets of Resource Acquisition Group, Inc. as of December 31, 2010 and 2009 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Resource Acquisition Group, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

.As discussed in Note 1, the accompanying financial statements have been prepared assuming the Company will continue as a going concern.  The ability of the Company to continue as a going concern and to emerge from the development stage is dependent upon its successful execution of its plan of operations and ability to raise additional financing.  There is no guarantee that the Company will be able to raise additional capital or sell any of its products or services at a profit.  The Company did not generate any revenue during the years ended December 31, 2010 and 2009.  In addition, as of December 31, 2010 the Company has a stockholders’ deficit and negative working capital of $105,772.  These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.




Hackensack, New Jersey
February 8, 2011

 
F-2

 


RESOURCE ACQUISITION GROUP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
 
ASSETS
 
   
December 31,
   
December 31,
 
   
2010
   
2009
 
             
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 10,919     $ 4,051  
                 
TOTAL CURRENT ASSETS AND TOTAL ASSETS:
  $ 10,919     $ 4,051  
                 
LIABILITIES AND STOCKHOLDERS (DEFICIT)
               
                 
CURRENT LIABILITIES:
               
Accounts payable and accrued expenses
  $ 16,691     $ 121,588  
Notes Payable - officer
    100,000       55,500  
                 
Total current liabilities
    116,691       177,088  
                 
                 
Total liabilities
    116,691       177,088  
                 
STOCKHOLDERS' (DEFICIT)
               
Preferred stock, $.001 par value, 10,000,000 shares authorized;
           
  -0- shares issued and outstanding
    -       -  
Common stock, $.001 par value, 200,000,000 shares authorized;
           
801,603 and 101,924 shares issued and outstanding at December 31, 2010 and December 31, 2009 respectively
           
      802       102  
Additional paid-in capital
    230,712       151,853  
Accumulated deficit
    (337,286 )     (324,992 )
                 
Total stockholders' (deficit)
    (105,772 )     (173,037 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
  $ 10,919     $ 4,051  
                 
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
F-3

 
 


 
RESOURCE ACQUISITION GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

             
   
Year Ended
   
Year Ended
 
   
Dec. 31, 2010
   
Dec. 31, 2009
 
             
OPERATING EXPENSES:
           
General and administrative expenses
    1,278       898  
Officer's salaries
    20,000       15,000  
Professional fees
    11,064       26,873  
                 
      Total operating expenses
    32,342       42,771  
                 
(LOSS) FROM  OPERATIONS
    (32,342 )     (42,771 )
                 
OTHER INCOME (EXPENSE)
               
  Forgiveness of accrued salary - officer
    31,460       -  
  Interest expense
    (11,412 )     (8,641 )
  Note default fee - related party
    -       (5,000 )
                 
TOTAL OTHER INCOME (EXPENSE)
    20,048       (13,641 )
                 
LOSS FROM CONTINUING OPERATIONS
    (12,294 )     (56,412 )
                 
 LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
    -       (18,205 )
                 
NET GAIN ON DISPOSITION OF SUBSIDIARY, NET OF TAX
    -       192,788  
                 
NET INCOME(LOSS)
    (12,294 )     118,171  
                 
                 
Basic and Diluted income (loss) per common share
               
   From continuing operations
    (0.12 )     (1.05 )
   Discontinued operations
    -       (0.34 )
   Gain on disposition of subsidiary
    -       3.59  
                 
TOTAL BASIC INCOME (LOSS) PER COMMON SHARE
  $ (0.12   $ 2.20  
                 
WEIGHTED AVERAGE SHARES OUTSTANDING
    103,841       53,653  



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


 
F-4

 
 
 
RESOURCE ACQUISITION GROUP, INC.
(CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 
 
   
Common Stock
   
Preferred Stock
   
Additional
   
Liability for
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Paid - In Capital
   
stock to be issued
   
Deficit
   
Total
 
                                                 
Balance, December 31, 2008
    62,596       63       -     $ -     $ 73,237     $ -     $ (443,163 )   $ (369,863 )
                                                                 
Common stock issued for redemption of notes payable
    39,328       39                       78,616                       78,655  
                                                                 
Net loss for the Year ended December 31, 2009
                    -       -       -               118,171       118,171  
                                                                 
Balance, December 31, 2009
    101,924       102       -     $ -       151,853     $ -     $ (324,992 )   $ (173,037 )
                                                                 
Common stock issued in exchange of accrued salary, interest and fees
    699,679       700                       78,859                       79,559  
                                                                 
Net loss for the Year ended December 31, 2009
                    -       -       -               (12,294 )     (12,294 )
                                                                 
Balance, December 31, 2010
    801,603       802       -     $ -       230,712     $ -     $ (337,286 )   $ (105,772 )
                                                                 
                                                                 

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

 
F-5

 
 

 
RESOURCE ACQUISITION GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
             
   
Year Ended
   
Year Ended
 
   
December 31, 2010
   
December 31, 2009
 
             
CASH FLOW FROM OPERATING ACTIVITIES
           
Net (loss)
  $ (12,294 )   $ 118,171  
                 
Adjustments to reconcile net loss to net cash
               
(used in) operating activities:
               
   Gain on disposition of subsidiary
    -       (192,788 )
   Forgiveness of accrued salary
    (31,460 )     -  
                 
Changes in assets and liabilities
               
    Increase (Decrease) in accounts payable and accrued expenses
    (5,290 )     16,262  
    Increase in accrued interest
    11,412       16,846  
                 
Net cash used in operating activities
    (37,632 )     (41,509 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
                 
   Net cash used in investing activities
    -       -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
    Proceeds from loan and note payable
    44,500       40,000  
   Net cash provided by financing activities
    44,500       40,000  
                 
NET INCREASE (DECREASE) IN CASH
               
AND CASH EQUIVALENTS
    6,868       (1,509 )
                 
CASH AND CASH EQUIVALENTS -
               
BEGINNING OF YEAR / PERIOD
    4,051       5,560  
                 
CASH AND CASH EQUIVALENTS - END OF
               
YEAR / PERIOD
  $ 10,919     $ 4,051  
                 
                 
SUPPLEMENTAL DISCLOSURE OF NONCASH
               
 FINANCING ACTIVITIES:
               
Stock issued for redemption of notes, accrued interest and fees
    -       78,655  
Stock issued for redemption of accrued salary, accrued interest and fees
    78,559       -  


The accompanying notes are an integral part of these consolidated financial statements
 
 
F-6

 
 
RESOURCE ACQUISITION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
 
NOTE 1-
Provision For Income Taxes
            
We intend to attempt to raise additional debt and/or equity financing to sustain our operations. The Company's future cash requirements will depend on many factors, including continued scientific progress in our research and development programs, the time and costs involved in obtaining regulatory approvals, the costs involved in filing, prosecuting and enforcing patents, competing technological and market development and the cost of product commercialization. We do not expect to generate a positive cash flow from operations at least until the commercial launch of our first product and possibly later given the expected spending for research and development programs and the cost of commercializing product candidates. Accordingly, we will require external financing to sustain our operations, perhaps for a significant period of time. Successful future operations are subject to a number of technical and business risks, including our continued ability to obtain future funding, satisfactory product development, regulatory approvals and market acceptance for our products.
 
Going Concern

As shown in the accompanying consolidated financial statements, the Company incurred substantial net losses for the years ended December 31, 2010 and 2009, and has no revenue stream to support itself. In addition, at December 31, 2010, the Company had a stockholders’ deficit and negative working capital of $105,772.These factors, among others raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon, among other things its ability to raise additional capital or to secure a future business combination.  There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations.  Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating, cash flow positive company.

The financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.
 
Recapitalization

Through a series of agreements entered into in September, 2009 which were authorized by written consent of the shareholders, the Company:


1.             Changed its name from DK Investors, Inc. to Resource Acquisition Group, Inc.
2.             Authorized a reverse stock split of 200 to 1 on its outstanding common stock.
3.             Amended it Articles of Incorporation to increase its authorized common stock from 40,000,000 to 200,000,000 shares.
4.             Spun-off its operating subsidiary (SGK Nanostructures, Inc.) to its shareholders on a pro-rata basis.
5.             Changed its state of incorporation from New York to Nevada.

The spin-off referred to above, conveyed the Company’s business activities and technology in nanotechnology and certain liabilities to SGK. The net effect was the transfer of liabilities in excess of assets of $192,788. The results of operations of the nanotechnology business are classified as discontinued operations on the accompanying statement of operations.

 
F-7

 

RESOURCE ACQUISITION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010 AND 2009
 
NOTE 2-
Provision For Income Taxes
                          
Basis of Presentation
 
The accompanying consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America.

Subsequent events have been evaluated through the issuance date of these financial statements.

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

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash and cash equivalents.  At December 31, 2010 and 2009, the Company maintained cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation up to $250,000 and $100,000, respectively.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed on the straight-line method over the estimated useful asset lives, which range from three to five years. Repairs and maintenance are charged to expense as incurred.

Fair Value of Financial Instruments and Fair Value Measurements
 
We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, and Notes payable to our officer, the carrying amounts approximate fair value due to their short maturities.
 
Effective January 1, 2008, we adopted accounting guidance for financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
 
Level 1:
Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:
Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
 
 
 
F-8

 
 
RESOURCE ACQUISITION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010 AND 2009
 
Income Taxes

We account for income taxes in accordance with authoritative guidance, in which, we record a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible. We consider, among other available information, uncertainties surrounding the recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment.

Loss Per Share of Common Stock
 
Basic net loss per share attributable to common stockholders is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, including common stock equivalents, such as conversions, exercise or contingent exercise of securities. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period.
 
 NOTE 3-         
Commitments
 
At the present time the Company pays no rent and operates from the office of its President, John Leo.  

The Company has two employees both of whom are executive officers. The Company compensates these officers and stockholders under employment agreements with an initial five year term ending October 14, 2010.  Base salaries under the agreements are $10,000 each per year.
 
NOTE 4-         
Notes Payable
 
As of December 31, notes payable consisted of the following:
       
             
   
2010
   
2009
 
Unsecured notes payable to an officer / shareholder at
               
at 4%.  Proceeds of the notes were used for general
               
working capital and to provide the Company with
               
short term liquidity and to pay overdue bills.  
               
                 
The due date for the notes have been extended by the
               
officer to March 31, 2011.
   
100,000
     
55,000
 
                 
 
NOTE 5-
Stockholders Equity
              
On December 31, 2010 the Company issued 699,679 shares of common stock in exchange for $31,460 of accrued salary, $30,000 of accrued default fees, and a retroactively reduction in the interest rate on the notes payable referred to in note 4  from 15% to 4% (which amounted to $18,099) to an officer and majority shareholder of the Company.

 
 
 
F-9

 

 
RESOURCE ACQUISITION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010 AND 2009

NOTE 6-
Provision For Income Taxes

Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s consolidated tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
 
At December 31, 2010 and 2009, deferred tax assets consist of the following:

   
2010
   
2009
 
Deferred taxes due to net operating loss carryforwards
   
166,880
     
162,577
 
                 
Less: Valuation allowance
   
(166,880
)
   
(162,577
)
Net deferred tax assets
   
-
     
-
 
                 
 
At December 31, 2010 and 2009, the Company had deficits accumulated in the approximate amounts of $327,286 and $324,992 available to offset future taxable income, if any  through 2028. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
 
NOTE 7-
Related Party Transactions
 
Mr. John Leo, President, Corporate Secretary and a shareholder of the Company, holds our notes payable with a total outstanding balance of $100,000 and $55,500 at December 31, 2010 and 2009, respectively.
 
NOTE 8-
Legal Proceedings
 
The Company was named as a defendant in an adversary proceeding in a bankruptcy proceeding (In Re Nanodynamics, Inc., BK NO. 09-13438-MJK) entitled, Wallach, as Trustee v. SGK Nanostructures Inc., Adv.   No. 10-01007-MJK, in the United States Bankruptcy Court for the Western District of New York.  The plaintiff trustee sought to hold the Company liable under a promissory note in the amount of $110,000 executed by the Company’s formerly wholly-owned subsidiary, SGK.  On August 5, 2010, the complaint against the Company was dismissed with prejudice.


F-10