UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/A

(Amendment No. 2)

(Mark One)

x

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: December 31, 2010

 

¨

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________

 

Commission file number: 000-52901 

 

PRETORIA RESOURCES TWO, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		26-0383696
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

4392 Enchantment Cove Lane, Charlotte NC 28216
(Address of registrant's principal executive offices)	(Zip Code)

 

Registrant's telephone number, including area code:

704-408-7575

 

Securities registered under Section 12(b) of the Exchange Act:

 

None

 

Securities registered under Section 12(g) of the Exchange Act:

 

Common Stock, par value $0.0001 per share

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨Yes x No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act   ¨ Yes x No

 

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.

x Yes ¨ 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

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨

 

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 ¨	Smaller reporting company x
	(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

x Yes ¨ No

 

The aggregate market value of voting and non-voting common equity held by non-affiliates as of March 30, 2011 was approximately $ -0- .

 

At March 30, 2011 there were 1,000,000 shares of common stock outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

None

 

 

FORWARD-LOOKING STATEMENTS

 

This Amendment No. 2 on Form 10-K/A (“Amendment No. 2”) to Annual Report on Form 10-K and the documents incorporated by reference into the Annual Report on Form 10-K include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to, our being a development stage company with no operating history; our lack of funding; the inexperience of our management with respect to our business plan; our potential inability to consummate a business combination with an operating company that is generating revenues; the possibility that our company may never generate revenues; unknown risks that may attend to a business with which we consummate a business combination; our personnel allocating her time to other businesses and potentially having conflicts of interest with our business; the ownership of our securities being concentrated, and those other risks and uncertainties detailed herein and in the Company’s filings with the Securities and Exchange Commission.

 

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Amendment No. 2. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Amendment No. 2, those results or developments may not be indicative of results or developments in subsequent periods.

 

These forward-looking statements are subject to numerous risks, uncertainties and assumptions about us described in “Risk Factors.” The forward-looking events we discuss in this Amendment No. 2 speak only as of the date of such statement and might not occur in light of these risks, uncertainties and assumptions. Except as required by applicable law, we undertake no obligation and disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

 EXPLANATORY NOTE

 

In this Amendment No. 2 on Form 10-K/A (“Amendment No. 2”) to the Annual Report on Form 10-K for the year ended December 31, 2010 as originally filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2011 (the “Original Filing”), as amended by Amendment No. 1 to the Original Filing filed with the SEC on December 1, 2011, we refer to Pretoria Resources Two, Inc., a Nevada corporation, as “we,” “us,” “our” or “our company.”

 

We are filing this Amendment No. 2 to (i) to include all of the information called for by Item 8 of Form 10-K, including the notes to the financial statements, (ii) expand the first paragraph of the audit report filed with Amendment No.2 to include the language omitted from the report filed with Amendment No. 1 and (iii) eliminate the parenthetical “unaudited” from the headings of the statements of stockholders’ deficit and cash flows.

 

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each item of the Original Filing and Amendment No. 1 that is amended by this Amendment No. 2 is superseded in its entirety, and this Amendment No. 2 is accompanied by currently dated certifications on Exhibit 31.1 and 32.1.

 

Except as expressly set forth in this Amendment No. 2, we are not amending any other part of the Original Filing or Amendment No. 1. This Amendment No. 2 continues to speak as of the date of the Original Filing or Amendment No. 1, as the case may be, except as such disclosure is amended by this Amendment No. 2, and does not reflect events occurring after the filing of the Original Filing or Amendment No. 1, as the case may be, or modify or update any related or other disclosures, including forward-looking statements, unless expressly noted otherwise. Accordingly, this Amendment No. 2 should be read in conjunction with the Original Filing, Amendment No. 1 and with our other filings made with the SEC subsequent to the filing of the Original Filing and Amendment No. 1. The filing of this Amendment No. 2 shall not be deemed an admission that the Original Filing or Amendment No. 1 when made included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

  

 

PART II

 

 

Item 8. Financial Statements and Supplementary Data.

 

FINANCIAL STATEMENT INDEX

 

Report of Independent Registered Public Accounting Firm	F-1
Balance Sheet for the years ended December 31, 2010 and 2009	F-2
Statement of Operations for the years ended December 31, 2010 and 2009 and cumulative since inception (May 25, 2007) (Unaudited)	F-3
Statement of Stockholders’ Deficit for the years ended December 31, 2010 and 2009 and cumulative since inception (May 25, 2007) (Unaudited)	F-4
Statement of Cash Flows for the years ended December 31, 2010 and 2009 and cumulative since inception (May 25, 2007) (Unaudited)	F-5
Notes to Financial Statements	F-6

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Pretoria Resources Two, Inc.

(A Development Stage Company)

 

We have audited the accompanying balance sheets of Pretoria Resources Two, Inc. (a development stage company) as of December 31, 2010, and 2009, and the related statements of operations, changes in stockholder’s deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

 We conducted our audits 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 audits 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pretoria Resources Two, Inc. as of December 31, 2010, and 2009, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the financial statements, the Company has insufficient working capital, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

March 30, 2011

 

 

 

 

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Balance Sheets

 

		As of
		December 31, 2010				December 31, 2009
ASSETS
CURRENT ASSETS
Cash		$	300			$	51
TOTAL CURRENT ASSETS			300				51
TOTAL ASSETS		$	300			$	51
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Related Party Note Payable		$	25,323			$	12,177
Note Payable			15,000				15,000
Accrued Interest on related party note payable			2,274				737
Accrued Expenses			4,149				3,178
TOTAL CURRENT LIABILITIES			46,746				31,092
TOTAL LIABILITIES			46,746				31,092
STOCKHOLDER'S DEFICIT
Preferred stock ($0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at December 31, 2010 and December 31, 2009)			-				-
Common stock ($0.0001 par value; 100,000,000 shares authorized: 1,000,000 issued and outstanding at December 31, 2010 and December 31, 2009)			100				100
Deficit accumulated during development stage			(46,546	)			(31,141	)
TOTAL STOCKHOLDER'S DEFICIT			(46,446	)			(31,041	)
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT		$	300			$	51

 

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

 

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statement of Operations

 

										For the Period
										From Inception
		For the years								(May 25, 2007) to
		ended December 31,								December 31, 2010
		2010				2009				(Unaudited)
REVENUES:
Income		$	-			$	-			$	-
Total Revenue		$	-			$	-			$	-
EXPENSES:
Selling, General and Administrative			948				2,935				5,526
Professional Fees			11,949				4,900				34,597
Total Expense			12,897				7,835				40,123
Loss from operations			(12,897	)			(7,835	)			(40,123	)
OTHER INCOME/(EXPENSE):
Interest Expense			(2,508	)			(1,937	)			(6,423	)
NET LOSS			(15,405	)			(9,772	)			(46,546	)
Basic and fully diluted net loss per common share:			(0.02	)			(0.01	)			(0.05	)
Weighted average common shares outstanding			1,000,000				1,000,000				1,000,000

 

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

 

 

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statement of Stockholder's Deficit

 

																		Additional				Deficit
		Common Stock								Preferred Stock								Paid-in				Accumulated During				Total
		Shares				Amount				Shares				Amount				Capital				Developmental Stage				Deficit
Balances, May 25, 2007 (Unaudited)			-			$	-				-			$	-			$	-			$	-			$	-
Issuance of founders' shares			1,000,000				100				-				-				-				-				100
Net loss			-				-				-				-				-				(9,895	)			(9,895	)
Balances, December 31, 2007 (Unaudited)			1,000,000			$	100				-			$	-			$	-			$	(9,895	)		$	(9,795	)
Net loss			-				-				-				-				-				(11,474	)			(11,474	)
Balances, December 31, 2008 (Unaudited)			1,000,000			$	100				-			$	-			$	-			$	(21,369	)		$	(21,269	)
Net loss			-				-				-				-				-				(9,772	)			(9,772	)
Balances, December 31, 2009			1,000,000			$	100				-			$	-			$	-			$	(31,141	)		$	(31,041	)
Net loss			-				-				-				-				-				(15,405	)			(15,405	)
Balances, December 31, 2010			1,000,000			$	100				-			$	-			$	-			$	(46,546	)		$	(46,446	)

  

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

 

 

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statement of Cash Flows

 

										Cumulative Totals
										Since Inception
										May 25, 2007 to
		For the years ended								December 21,
		December 31,								2010
		2010				2009				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(15,405	)		$	(9,772	)		$	(46,546	)
Adjustments to reconcile net (loss) to net cash used in operations:
Changes in Assets and Liabilities:
Increase in Accrued Interest on Related Party Notes Payable			1,308				737
Increase (decrease) in Accrued Expenses			1,200				(3,137	)			5,115
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			(12,897	)			(12,172	)			(41,431	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on Related Party Debt			13,146				12,177				25,323
Borrowings on Debt			-				-				15,000
Proceeds from Sale of Stock			-				-				100
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			13,146				12,177				40,423
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS			249				5				(1,008	)
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD			51				46				-
END OF THE PERIOD		$	300			$	51			$	(1,008	)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest		$	-			$	-			$	-
Taxes		$	-			$	-			$	-

 

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

 

 

 

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

NOTE A—BUSINESS ACTIVITY

 

Pretoria Resources Two, Inc. (the "Company”) was organized under the laws of the State of Nevada on September 27, 2007 and is the successor in interest to Pretoria Resources, Inc., which was a corporation organized under the laws of the State of Delaware on May 25, 2007 as a corporation.  The Company’s objective is to acquire or merge with a target business or company in a business combination.

 

NOTE B—GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business.  As reflected in the accompanying financial statements, the Company has a deficit accumulated during the development stage of $46,546 used cash from operations of $40,123 since its inception, and has a negative working capital of $46,446 at December 31, 2010.

 

 The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  The Company’s ability to continue as a going concern is also dependent on its ability to find a suitable target company and enter into a possible reverse merger with such company.  Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however there is no assurance of additional funding being available.  These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty.

 

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation- The financial statements included herein were prepared under the accrual basis of accounting.

 

The results for the year ended December 31, 2010 may not be indicative of results for any future periods.

 

Cash and Cash Equivalents- For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.

 

Management’s 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 disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business.

 

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D

 

Revenue Recognition- The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts.  The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

	(i)	persuasive evidence of an arrangement exists,
	(ii)	the services have been rendered and all required milestones achieved,
	(iii)	the sales price is fixed or determinable, and
	(iv)	collectability is reasonably assured.

 

Comprehensive Income (Loss) - The Company reports Comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.

 

Net Income per Common Share- Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.  Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.  There were no potentially dilutive shares outstanding as of December 31, 2010.

 

Deferred Taxes- The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification.  Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

 

Fair Value of Financial Instruments- The carrying amounts reported in the balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.

 

Accounts Receivable- Accounts deemed uncollectible are written off in the year they become uncollectible. As of December 31, 2010, the balance in Accounts Receivable was $0.

 

Impairment of Long-Lived Assets- The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets.  Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during the period ended December 31, 2010.

 

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D

 

Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

 

Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.  Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

	Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
	Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
	Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2010.

 

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2010, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the period ended December 31, 2010.

 

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D

 

Recent Accounting Pronouncements

 

In March 2010, the FASB issued Accounting Standard Update No. 2010-11 “Derivatives and Hedging” (Topic 815). ASU No. 2010-11 update provides amendments to subtopic 815-15, Derivatives and hedging. The amendments clarify about the scope exception in paragraph 815-10-15-11 and section 815-15-25 as applicable to the embedded credit derivatives. The ASU is effective on the first day of the first fiscal quarter beginning after June 15, 2010. Therefore, for a calendar-year-end entity, the ASU becomes effective on July 1, 2010. Early application is permitted at the beginning of the first fiscal quarter beginning after March 5, 2010

 

In April 2010, the FASB issued Accounting Standard Update No. 2010-12. “Income Taxes” (Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. On March 30, 2010 The President signed the Health Care & Education Affordable Care Act reconciliation bill that amends its previous Act signed on March 23, 2010. FASB Codification topic 740, Income Taxes, requires the measurement of current and deferred tax liabilities and assets to be based on provisions of enacted tax law. The effects of future changes in tax laws are not anticipated.” Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period-end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and the reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff “does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns.”

 

In April 2010, the FASB issued Accounting Standard Update No. 2010-13 “Stock Compensation” (Topic 718). ASU No.2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted.

 

In April 2010, the FASB issued Accounting Standards Update No.2010-14, “Accounting for Extractive Activities – Oil & Gas” (Topic 932). ASU No. 2010-14 amends FASB accounting Standard paragraph 932-10-S99-1 due to SEC release no. 33-8995 [FR 78], Modernization of Oil and Gas Reporting and provides update as to amendments to SEC Regulation S-X, Rule 4-10.

 

In April 2010, the FASB issued Accounting Standard Update No. 2010-15. “Financial Services-Insurance” (Topic 944) ASU No.2010-15 gives direction on how investments through separate accounts affect an insurer’s consolidation analysis of those investments. Under the ASU: an insurance entity should not consider any separate account interests held for the benefit of policy holders in an investment to be the insurer's interests and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for the benefit of a related party policy holder as defined in the Variable Interest Entities Subsections of Subtopic 810-10 and those Subsections require the consideration of related parties. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. Early adoption is permitted. The amendments in this Update should be applied retrospectively to all prior periods upon the date of adoption.

 

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D

 

Recent Accounting Pronouncements (cont’d)

 

In April 2010, the FASB issued Accounting Standard Update No. 2010-16. “Entertainment-Casinos” (Topic 924). ASU No.2010-16 addresses diversity in practice regarding whether an entity accrues liabilities for a base jackpot before it is won because they could avoid the payment. The amendments in this update clarify that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. This guidance applies to both base and progressive jackpots. The ASU amendments are effective for fiscal years, and the interim periods within those fiscal years, beginning on or after December 15, 2010.

 

In April 2010, the FASB issued Accounting Standard Update No. 2010-17. “Revenue Recognition-Milestone Method” (Topic 605) ASU No.2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. An entity often recognizes these milestone payments as revenue in their entirety upon achieving a specific result from the research or development efforts. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. Determining whether a milestone is substantive is a matter of judgment made at the inception of the arrangement. The ASU is effective for fiscal years and interim periods within those fiscal years beginning on or after June 15, 2010. Early application is permitted. Entities can apply this guidance prospectively to milestones achieved after adoption. However, retrospective application to all prior periods is also permitted.

 

In April 2010, the FASB issued Accounting Standard Update No. 2010-18. “Receivables” (Topic 310). ASU No.2010-18 provides guidance on accounting for acquired loans that have evidence of credit deterioration upon acquisition. Paragraph 310-30-15-6 allows acquired assets with common risk characteristics to be accounted for in the aggregated as a pool. Upon establishment of the pool, the pool becomes the unit of accounting. When loans are accounted for as a pool, the purchase discount is not allocated to individual loans; thus all of the loans in the pool accrete at a single pool rate (based on cash flow projections for the pool). Under subtopic 310-30, the impairment analysis also is performed on the pool as a whole as opposed to each individual loan. Paragraphs 310-40-15-4 through 15-12 establish the criteria for evaluating whether a loan modification should be classified as a troubled debt restructuring. Specifically paragraph 310-40-15-5 states that “a restructuring of a debt constitutes a troubled debt restructuring for purposes of this subtopic if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.” The ASU is effective for modification of loans accounted for within pools under subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted.

 

In May 2010, the FASB issued Accounting Standard Update No. 2010-19 “Foreign Currency”. (“ASU No. 2010-19”). ASU 2010-19, codifies the SEC staff announcement made at the March 18, 2010, EITF meeting. The ASU “provides the SEC staff’s views on certain foreign currency issues related to investments in Venezuela.” These issues relate to Venezuela’s highly inflationary status. The ASU became effective on March 18, 2010.

 

Other ASUs not effective until after December 31, 2010, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

 

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

NOTE D-SEGMENT REPORTING

 

The Company follows the guidance set forth by section 280-10 of the FASB Accounting Standards Codification for reporting and disclosure on operating segments of the Company. It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined that it did not have any separately reportable operating segments as of December 31, 2010.

 

NOTE E-CAPITAL STOCK

 

The Company is authorized to issue 100,000,000 common shares at $.0001 par value per share.

 

During the period from inception (May 25, 2007) through December 31, 2010, the Company issued 1,000,000 shares to Allison Carroll.

 

On December 23, 2008, former, major shareholders Gail Davis and Barbara Deadwiley resigned as officers and as members of the Company’s board; all shares were cancelled and issued to Allison Carroll who now serves as the Company’s officer and board member.

 

The Company is authorized to issue 10,000,000 preferred shares at $.0001 par value per share.  During the period from inception (May 25, 2007) through December 31, 2010, the Company issued no preferred shares.

 

NOTE F-DEVELOPMENT STAGE COMPANY

 

The Company is in the development stage as of December 31, 2010 and to date has had no significant operations. Recovery of the Company assets is dependent on future events, the outcome of which is indeterminable. In addition, successful completion of the Company’s development program and its transition, ultimately, to attaining profitable operations is dependent upon obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure.

 

NOTE G—RELATED PARTY NOTE PAYABLE AND NOTE PAYABLE

 

The Company has Notes Payable outstanding to related parties:

 

			12/31/2010				12/31/2009
Note Payable (Related Party), due upon demand, 8% per year		$	25,323			$	12,177

 

The Notes Payable is listed as follows:

 

			12/31/2010				12/31/2009
Note Payable, due upon demand, 8% per year		$	15,000			$	15,000

 

Accrued interest not paid for the period from inception (May 25, 2007) through December 31, 2010 was $6,423.

 

As of December 31, 2010 and 2009 the Company owed accrued interest to a related party of $2,274 and $737, respectively.

 

 

NOTE H—INCOME TAXES

 

The Company provides for income taxes under (now included under Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.

 

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. For Federal and New York income tax purposes, the Company has net operating loss carry forwards that expire through 2029. The net operating loss as of December 31, 2010, is approximately $46,546 and $31,141 as of December 31, 2009. No tax benefit has been reported in the financial statements because after evaluating our own potential tax uncertainties, the Company has determined that there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to the net loss before provision for income taxes for the following reasons:

  

			December 31, 2010				December 31, 2009
Deferred tax asset:
NOL Carry forward		$	15,826			$	10,588
Valuation allowances		$	(-15,826	)		$	(-10,588	)
Deferred Tax Asset		$	0			$	0

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

(a)	Financial Statements

 

The financial statements of Pretoria Resources Two, Inc. and the report of independent registered public accounting firm thereon are set forth under Part II, Item 8 of this report.    

 

(b)

Exhibits.

 

The following are filed as exhibits to this report:

 

	Exhibit No.	Description	Location Reference
	2.1	Agreement and Plan of Merger dated September 27, 2007, among the registrant, Pretoria Resources, Inc., a Delaware corporation, and Pretoria Resources Two, Inc., a Nevada corporation.	1
	3.1	Certificate of Incorporation of Pretoria Resources, Inc.	1
	3.2	By-laws of Pretoria Resources, Inc.	1
	3.3	Articles of Incorporation of Pretoria Resources Two, Inc.	1
	3.4	By-laws of Pretoria Resources Two, Inc.	1
	4.1	Form of demand promissory note executed by the registrant in favor of Gail Davis.	1
	31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as Amended.	2
	32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	2

 

1.	Incorporated by reference to the registrant's registration statement on Form 10 as filed with the SEC on November 7, 2007.
2.	Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on January 24, 2012.

 

	PRETORIA RESOURCES TWO, INC.
	By:	/s/ Allison Carroll
		Allison Carroll

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on January 24, 2012.

 

Signature		Title
/s/ Allison Carroll		President, Principal Executive Officer, Principal Accounting
Allison Carroll		Officer, Principle Financial Officer and Director