UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

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

 

For the fiscal year ended October 31, 2011

 

or

 

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

 

For the transition period from ______________________ to ______________________

 

Commission file number: 000-53575

 

Richland Resources Corp.

(Exact name of registrant as specified in its charter)

 

Nevada		90-0787192
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

1513 Houston Street , Sulphur Springs, Texas 75482

(Address of principal executive offices)

 

 

((903) 439-6400

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act: None

 

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes 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 Exchange Act during the preceding 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S 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 (of for such shorter period that the registrant was required to submit and post such files). Yes  £ No S  

 

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 the 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 S

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

 

As of February 29, 2012 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 last sold, or the average bid and asked price of such common equity, was $546.

 

As of February 29, 2012 the registrant’s outstanding common stock consisted of 5,456,400 shares.

 

 

TABLE OF CONTENTS

 

Item 1. Business	1
Item 1A. Risk Factors	1
Item 1B. Unresolved Staff Comments	2
Item 2. Properties	2
Item 3 Legal Proceedings	2
Item 4. Mine Safety Disclosures	2
PART II	2
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2
Item 6. Selected Financial Data	3
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	3
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	5
Item 8. Financial Statements and Supplementary Data	6
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	14
Item 9A. Controls and Procedures	14
Item 9B. Other Information	15
PART III	15
Item 10. Directors, Executive Officers and Corporate Governance	15
Item 11. Executive Compensation	17
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13. Certain Relationships and Related Transactions, and Director Independence	18
Item 14. Principal Accountant Fees and Services	18
PART IV	19
Item 15. Exhibits, Financial Statement Schedules	19

 

 

PART I

 

Item 1. Business

 

Forward Looking Statements

 

This annual report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

 

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.

 

As used in this annual report, the terms "we", "us" and "our" mean Richland Resources Corp., unless otherwise indicated.

 

All dollar amounts in this annual report refer to U.S. dollars unless otherwise indicated.

 

Business Overview

 

We were incorporated as a Nevada company on October 30, 2006 under the name Double Halo Corp., and later changed our name to Shengrui Resources Co. Ltd., and changed our name to Richland Resources Corp. in April 2011. Prior to the year ended October 31, 2010 we had been involved in the acquisition and exploration of oil and gas properties, and were subsequently engaged in the development of business interests in China with the goal of completing the acquisition of one or more operating companies in the mineral resource industry. Those activities were discontinued before the beginning of the year ended October 31, 2011, and the Company has been inactive. Control of the Company was acquired by Kenneth A. Goggans in March 2011.

 

Our business activities are directed by Kenneth A. Goggans, our President, Chief Executive Officer, and Director, and Max Elghandour, our Chief Financial Officer, Principal Accounting Officer and Treasurer. Messrs. Goggans and Elghandour also manage our operations.

 

Our common stock is quoted on the OTCQB under the symbol “RRCH”:

 

 

Uncertainties

 

We are an independant oil and natural gas company in the development stage. We have not generated any revenues from our business activities, however we expect to generate revenues in the foreseeable future. Since our inception, we have incurred operational losses, and we have been issued a going concern opinion by our auditors. Our operations are financed through funding from a related party

 

We are currently pursuing financing through private offering to fully execute our business plan, however, there is no assurance that we will be able to obtain the necessary financing to do so. Accordingly, there is uncertainty about our ability to continue to operate.

 

Item 1A. Risk Factors

 

Not required.

 

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 2. Properties

 

We do not own or have any rights to acquire an interest in any oil and gas properties or mineral resource properties.

 

Our executive office is located at 1513 Houston Street, Sulphur Springs, Texas 75482. This office is provided to us by Kenneth Goggans, our Chief Executive Officer and sole Director. As of February 1, 2011 we had not entered into any lease agreements for this space.

 

Item 3. Legal Proceedings

 

We are not aware of any legal proceedings to which we are a party. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

  

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

 

Our common stock is not traded on any exchange. Our common stock is quoted on the OTCQB under the trading symbol “RRCH”. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company's operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

 

OTCQB securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTCQB securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTCQB issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

 

Our common stock became eligible for quotation on the OTC Bulletin Board on October 31, 2008; it was deleted from the OTC Bulletin Board and moved to the OTCQB on September 7, 2010. The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The high and low bid quotations of our common stock for the periods indicated below are as follows:

 

 

OTC Bulletin Board / OTCQB
Quarter Ended	High ($)	Low ($)
October 31, 2011	*	*
July 31, 2011	*	*
April 30, 2011	*	*
January 31, 2011	*	*
October 31, 2010	1.25	0.25
July 31, 2010	1.25	1.25
April 30, 2010	1.50	1.05
January 31, 2010	1.05	1.01

 

* There were no trading activities during this period

 

Holders

 

As of January 25, 2012 there were approximately 52 holders of record of our common stock. We do not believe that a significant number of beneficial owners hold their shares of our common stock in street name.

 

We have historically not paid dividends on our common stock and we do not expect to declare or pay dividends on shares of our common stock for the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Our future dividend policy will be subject to the discretion of our Board of Directors and will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by the Board.

 

Equity Compensation Plans

 

As of [Filing Date] we did not have any equity compensation plans.

 

Recent Sales of Unregistered Securities

 

During the fiscal year ended October 31, 2011 we did not complete any unreported sales of our equity securities that were not registered under the Securities Act.

 

Item 6. Selected Financial Data

 

Not applicable.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

 

Results of Operations

 

Revenues

 

We have limited operational history. From our inception on October 30, 2006 to October 31, 2011 we did not generate any revenues. As of October 31, 2011 we had no assets and total liabilities of $49,763. We anticipate that we will incur losses in the foreseeable future and our ability to generate revenues in the next 12 months continues to be uncertain.

 

Expenses

 

From our inception on October 30, 2006 to October 31, 2011 we incurred total expenses of $834,943, including $13,500 in management fees, $13,500 in rent, $349,403 in professional fees, $449,550 in stock-based compensation, $4,302 in foreign exchange losses, $647 in bank charges and interest and $4,040 in general and administrative expenses. We also received $36,000 in the form of a gain on the settlement of debt, wrote off $25,000 in oil and gas exploration costs because we allowed our interest in a property located in Worsley, Alberta to expire and wrote off $20,000 in exploration advances as we determined that it was not feasible to continue exploring and developing the oil and gas properties in which we held an interest.

 

 

During the fiscal year ended October 31, 2011 we incurred total expenses of $49,763 in professional fees

 

During the fiscal year ended October 31, 2010 we incurred total expenses of $68,617 including $68,298 in professional fees and $319 in general and administrative expenses. We also received $36,000 in the form of a gain on the settlement of debt and wrote off $20,000 in exploration advances as we determined that it was not feasible to continue exploring and developing the oil and gas properties in which we held an interest.

 

Our general and administrative expenses consisted primarily general office expenses. Our professional fees include legal, accounting and auditing fees.

 

Net Loss

 

From our inception on October 30, 2006 to October 31, 2011 we incurred a net loss of $843,942. During the fiscal year ended October 31, 2011 we incurred a net loss of $49,763 and a net loss per share of $0.01. During the fiscal year ended October 31, 2010 we incurred a net loss of $68,617 and a net loss per share of $0.01.

 

Liquidity and Capital Resources

 

As of October 31, 2011 we had no cash or assets, $49,763 in current liabilities and a working capital deficit of $49,763. As of October 31, 2011 we had an accumulated deficit of $843,843.

 

From our inception on October 30, 2006 until the change of control on March 9, 2011 we were solely dependent on the funds raised through our equity financing however, subsequent to the change of control, the company was financed by a company under common ownership. Our net loss of $843,942 from our inception on October 30, 2006 to October 31, 2011 was funded by equity financing and funding from related parties.

 

We are currently in the process of negotiating a farmout agreement with two independent mineral owners, on which we plan to drill our first four wells. Our plans for the next 12 months are to drill six wells at a total cost of approximately $26.5 Million we estimate that we will spend approximately $1.8 million on on general and administrative expenses. Our general and administrative expenses for the year will consist of salaries and wages, professional fees, investor relations expenses, rent, utilities and gerneral office expenses The professional fees are related to maintaining our status as a public company, particularly our regulatory filings throughout the year, as well as the completion of any financing and the acquisition of any company in which we may acquire an interest.

 

We intend to raise our cash requirements for the next 12 months from private placements, loans from related parties or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us.

 

Even though we plan to raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for funding our operations as we do not have tangible assets to secure any such financing. We anticipate that any additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide any assurance that we will be able to raise sufficient funds from the sale of our common stock to finance our operations or activities. In the absence of such financing, we will not be able complete any business acquisitions and we may be forced to cease our limited operations.

 

 

 

We also hope to obtain financing as part of any acquisition agreement that we may ultimately negotiate. However, there is no guarantee that we will enter into a definitive acquisition agreement, and if we successfully complete an acquisition our capital requirements and business plans may change substantially.

 

Going Concern

 

Our financial statements for the fiscal year ended October 31, 2011 have been prepared on a going concern basis and contain an additional explanatory paragraph in Note 1 which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We have not generated any revenues, have achieved losses since our inception, and relied on the sale of securities to fund our Operations until our change of control on March 9, 2011, for the remainder of the year ended October 31, 2011 the company was funded by a related party. We may not generate any revenues even if we successfully complete the acquisition of one or more operating companies, and we are dependent on obtaining outside financing in order to maintain our operations and continue our activities. If we are unable to raise equity or secure alternative financing, we may not be able to continue our operations and our business may fail.

 

If our operations and cash flow improve, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or an improvement in our liquidity situation. The threat of our ability to continue as a going concern will cease to exist only when our revenues have reached a level able to sustain our business operations.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

 

Based on our current level of operating activities, our critical accounting policies are limited to estimating liabilities and costs incurred. As of October 31, 2011, we had no cash accounts with any banks, and accordingly, our operating costs are funded by a company under common ownership. We record liabilities to the company under common ownership based on those charges incurred on our behalf.

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

 

Not required.

 

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders

Richland Resources Corporation

 

We have audited the accompanying balance sheet of Richland Resources Corporation (the “Company”), a company in the development stage, as of October 31, 2011, and the related statements of operations and comprehensive loss, cash flows and changes in stockholders’ deficit for the year then ended and for the period from October 30, 2006 (inception) through October 31, 2011. 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. The financial statements of the Company for the period from October 30, 2006 (inception) through October 31, 2010, were audited by other auditors whose report, dated March 23, 2011, on those financial statements included an explanatory paragraph that expressed substantial doubt about the Company's ability to continue as a going concern. The cumulative statements of operations and comprehensive loss, cash flows and changes in stockholders’ deficit for the period from October 30, 2006 (inception) to October 31, 2011 include amounts for the period from October 30, 2006 (inception) to October 31, 2010, which were audited by other auditors, and our opinion, insofar as it relates to the amounts included for the period from October 30, 2006 (inception) through October 31, 2010, is based solely on the report of other auditors.

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 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 audit provides 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 Richland Resources Corporation as of October 31, 2011, and the results of its operations and its cash flows for the year then ended and for the period from October 30, 2006 (inception) through October 31, 2011, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and its total liabilities exceeds its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Hein & Associates LLP

Dallas, Texas

February 29, 2012

 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

To the Shareholders and the Board of Directors of

Richland Resources Corporation

(formerly Shengrui Resources Co. Ltd.)

 

 

We have audited the accompanying balance sheet of Richland Resources Corporation (formerly Shengrui Resources Co. Ltd.) (the “Company”) as of October 31, 2010 and the related statements of operations and comprehensive loss, stockholders' equity and cash flows for the year ended October 31, 2010. The Company’s management is responsible for these financial statements based on our audit.

 

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, 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 financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 31, 2010, and the results of its operations and its cash flows for the year then ended 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. The Company has generated negative cash flows from operating activities during the year ended October 31, 2010, and the Company has an accumulated deficit of $794,179 for the year ended October 31, 2010. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

“DAVIDSON & COMPANY LLP”

 

Vancouver, Canada	Chartered Accountants
March 23, 2011

 

 

 

 

 

RICHLAND RESOURCES CORP.

(Formerly Shengrui Resources Co. Ltd.)

(A Development Stage Company)

BALANCE SHEETS

(Expressed in US Dollars)

As of October 31

 

		2011				2010
ASSETS		$	-			$	-
LIABILITIES
Current
Accounts payable and accrued liabilities		$	-			$	68,956
Due to related parties			49,763				102,500
Total current liabilities			49,763				171,456
STOCKHOLDERS' DEFICIT
Capital stock (100,000,000 shares authorized, $0.0001 par value, 5,456,400 shares issued and outstanding)			546				546
Additional paid-in capital			793,633				622,177
Deficit accumulated during the development stage			(843,942	)			(794,179	)
Total stockholders’ deficit		$	(49,763	)		$	(171,456	)

 

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

 

 

RICHLAND RESOURCES CORP.

(Formerly Shengrui Resources Co. Ltd.)

(A Development Stage Company)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in US Dollars)

 

		Period from October 30, 2006 (inception) through October 31,				Years Ended October 31,
		2011				2011				2010
Expenses
Bank charges and interest		$	647			$	-			$	-
General and administrative expenses			4,040				-				319
Foreign exchange loss			4,302				-				-
Management fees			13,500				-				-
Rent			13,500				-				-
Professional fees			349,403				49,763				68,298
Stock-based compensation			449,550				-				-
			834,942				49,763				68,617
Loss before other items			(834,942	)							(68,617	)
Other items
Write-off of exploration advances			(20,000	)			-				-
Write-off of exploration costs			(25,000	)			-				-
Gain on settlement of debt			36,000				-				-
Net loss and comprehensive loss for the period		$	(834,942	)		$	(49,763	)		$	(68,617	)
Loss per share							(0.01	)			(0.01	)
Basic							5,456,000				5,456,000
Weighted average number of shares outstanding

 

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

 

 

RICHLAND RESOURCES CORP.

(Formerly Shengrui Resources Co. Ltd.)

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

 

 

		Period from October 30, 2006 inception) to				Year ended				Year ended
		October 31, 2011				October 31, 2011				October 31, 2010
Cash flow from operating activities
Net loss and comprehensive loss for the period		$	(843,942	)		$	(49,763	)		$	(68,617	)
Add back non-cash operating activities:
Donated rent			13,500				-				--
Donated services			13,500				-				--
Write-off of exploration advances			20,000				-				--
Consulting fees			25,930				-				--
Gain on settlement of debt			(36,000	)			-				--
Stock-based compensation			449,550				-				-
Write-off of exploration costs			25,000				-				-
Changes in non-cash working capital
Exploration advances			(20,000	)			-				-
Accounts payable			104,956				-				11,226
Due to related parties			106,835				49,763				57,072
Net cash used in operating activities			(140,671	)			--				(319	)
Cash flow from investing activities
Acquisition of oil and gas properties			(50,930	)			-				--
Net cash used in investing activities			(50,930	)			-				-
Cash flow from financing activities
Advances from related parties			91,511				-				--
Capital stock subscribed			71,660				-				-
Proceeds from the issuance of capital stock			42,780				-				-
Repurchase of capital stock			(14,350	)			-				-
Net cash provided by financing activities			191,601				-				--
Net change in cash during the period			-				-				(319	)
Cash, beginning of the period			-				-				319
Cash, end of the period		$	-			$	-			$	-

 

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

 

RICHLAND RESOURCES CORP.

(Formerly Shengrui Resources Co. Ltd.)

(An Exploration Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(Expressed in US Dollars)

 

 

			Common Stock								Additional Paid				Deficit Accumulated during the Development				Total Stockholders’
			Shares				Amount				in Capital				Stage				Deficit
Balances, November 1, 2009			5,456,400			$	546			$	622,177			$	(725,562	)		$	(102,839	)
Net loss			-				-				-				(68,617	)			(68,617	)
Balances, October 31, 2010			5,456,400				546				622,177				(794,179	)			(171,456	)
Assumption of liabilities by related party			-				-				68,956				-				68,956
Extinguishments of related party debt			-				-				102,500				-				102,500
Net loss			-				-				-				(49,763	)			(49,763	)
Balances, October 31, 2011			5,456,400			$	546			$	793,633			$	(843,942	)		$	(49,763	)

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

 

1. NATURE OF OPERATIONS AND GOING CONCERN

 

Richland Resources Corp. (formerly Shengrui Resources Co. Ltd. and Double Halo Resources Inc.) (the “Company”) was incorporated in the State of Nevada on October 30, 2006. The Company was considered an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting and Reporting for Development Stage Enterprises”, until the change of control occurring on March 9, 2011. Since then the company is considered a development and production oil and natural gas company. The Company’s principal business was formerly the acquisition and exploration of natural resources. It is currently foucused on the acquisition, development and production of oil and natural gas.

 

Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate substantial earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. As at October 31, 2011 the Company has accumulated losses of $843,942 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is October 31.

 

Use of estimates

 

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

 

Loss per share

 

Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at October 31, 2011 and 2010, the Company did not have any potentially dilutive shares outstanding.

 

 

Income taxes

 

We are subject to U.S. federal income taxes along with state income taxes in Texas. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statement of operations.

 

Based on our analysis, we did not have any uncertain tax positions as of October 31, 2011 or 2010. We have never filed U.S. or Texas income tax returns.

 

We are required to compute tax asset benefits for net operating losses carried forward. Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. Potential benefit of net operating losses have not been recognized in these financial statements because we cannot be assured that it is more likely than not we will utilize the net operating losses carried forward in future years.

 

3. RELATED PARTY TRANSACTIONS

 

As at October 31, 2011, the Company is indebted to companies with directors in common for $49,763 (2010 – $102,500), representing expenditures paid on behalf of the Company. This amount is unsecured, non-interest bearing, due on demand and has no specific terms of repayment. Included in accounts payable and accrued liabilities is $ Nil (2010 – 14,110) accrued for accounting fees due to a company with a director in common.

 

During the year ended October 31, 2011, the Company incurred $7,000 (2010 – $25,200) for accounting services and general and administrative support provided by a company with directors in common.

 

4. DEFERRED INCOME TAXES

 

Deferred income tax assets and liabilities are determined based upon differences between 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. Income tax expense differs from the amount that would result from applying the US federal and state income tax rates to earnings before income taxes. The Company has never filed a U.S. federal or state income tax returns. As a result, net operating loss carryforwards generated prior to the year ended October 31, 2011 may never be realized. Additionally, the use of net operating loss carryforwards generated prior to March 9, 2011 are limited by change in control provisions of the US Internal Revenue Code. Accordingly, management has disregarded all net operating loss carryforwards generated prior to November 1, 2010 for puposes of estimating its deferred tax assets and liabilities as of October 31, 2011. Deferred tax assets resulting from the Company’s net operating loss carryforward are reduced to zero by a full valuation allowance because the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years.

 

The Company is subject to United States federal and state income taxes at an approximate rate of 34%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as

follows:

 

 

 

		October 31, 2011				October 31, 2010
Income tax recovery at statutory rate		$	(16,919	)		$	(23,330	)
Items non deductible for tax purposes			-				-
Adjustments to the valuation allowance		$	16,919			$	23,330
Provision for income taxes		$	-			$	-

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities are as follows:

 

 

 

			October 31, 2011				October 31, 2010
Net operating loss carryforward		$	16,919			$	108,266
Valuation Allowance			(16,919	)			(108,266	)
Net deferred income tax asset		$	-			$	-

 

 

 

The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

 

5. SUBSEQUENT EVENTS

 

On January 9, 2012, the Company hired Max Elghandour as its Chief Financial Officer.

 

6. Restatement of Quarterly Filings (UNAUDITED)

 

During the preparation of our annual financial statements, we noted that we had erroneously recorded accounts payable assumed by our former parent company as a gain on settlement of liabilities, and that we had erroneously neglected to record operating expenses incurred on our behalf by related parties throughout our interim periods included in the year ended October 31, 2011. The following is a summary of interim periods included in the year ended October 31, 2011, as restated:

 

 

		As of or for the Three Months Ended
		January 31, 2011				April 30, 2011				July 31, 2011
Category:
Total liabilities, as previously reported		$	28,655			$	28,655			$	28,655
Total liabilities, as restated			28,655				31,827				37,996
Total expenses, as previously reported			9,877				—				—
Total expenses, as restated			9,877				21,950				6,169
Net income (loss), as previously reported			26,191				—				—
Net loss, as restated			(9,877	)			(21,950	)			(6,169	)

 

 

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

 

None. 

 

Item 9A. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

Management Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 31, 2011 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of October 31, 2011, we determined that there were control deficiencies that constituted material weaknesses, as described below.

 

1. Certain entity level controls establishing a “tone at the top” were considered material weaknesses. We do not have an audit committee, nor do we have formal policies on fraud or a code of ethics.

 

2. Management override of existing controls is possible given our small size and lack of personnel.

 

3. We do not have a system in place to review and monitor internal control over financial reporting. Management is currently evaluating remediation plans for the above control deficiencies.

 

 

4. We were unable to prepare our financial statements for the year ended October 31, 2011 in a timely manner.

 

In light of the existence of these control deficiencies, we concluded that there is a reasonable possibility that a mterial misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls. As a result, management has concluded that we did not maintain effective internal control over financial reporting as of October 31, 2011 based on criteria established in Internal Control—Integrated Framework issued by COSO.

 

Changes in Internal Control

 

During the fiscal year ended October 31, 2011 there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

None.

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

The following table sets forth the name, age and position of our executive officers and directors as of March 25, 2011.

 

Name	Age	Position
Kenneth A. Goggans	31	Chief Executive Officer and sole Director
Max Elghandour	61	Chief Financial Officer, Principal Accounting Officer, Treasurer

 

Our current director will serve as such until our next annual shareholder meeting or until their successors are elected who accept the position. Our current executive officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

 

Kenneth A. Goggans –Chief Executive Officer, Secretary, Director

 

Mr. Goggans has served as the Chief Executive Officer and sole director of Richland Resources since acquiring controlling interest in April 2011. Mr. Goggans has also served as Chief Executive Officer of Richland Resources Corporation, a Delaware corporation, since its formation in June 2010. Mr. Goggans had served as Chief Executive Officer of Manek Energy, Inc., a company that he founded in 2005 and which sold its primary operations to Weatherford International, Ltd. in February 2010. Mr. Goggans also serves as Chief Executive Officer of Manek Equipment Company, an oilfield equipment company that he founded in January 2008. Mr. Goggans holds a Bachelor of Arts degree in Business Administration and a Masters in Business Administration, each awarded by Texas Tech University, Lubbock, Texas.

 

Max Elghandour – Chief Financial Officer, Principal Accounting Officer, Treasurer

 

Mr. Elghandour, is the Chief Financial Officer of Richland Resources since January 2012. His career has spanned over 36 years in financial management, operations and accounting with over 25 years in the oil and gas Industry. His career has included assignments as the Vice President and Controller of Holly Corporation (HOC-NYSE) and Holly Energy Partners (HEP-NYSE). Prior to Holly, Mr. Elghandour held positions of Treasurer and Vice President of Xanser Corporation (XNR-NYSE), Vice President of Kaneb Pipeline Partners (KPP- NYSE) a midstream oil and Chief Financial Officer of Greka Energy Corporation.In his current capacity, Mr. Elghandour directs the financial strategy of Richland Resources and guides the financial execution of mergers and acquisitions for new projects and drilling opportunities. Mr. Elghandour is a unique financial executive who actively supports local charities and non-profits as a member of the non-profit Executives In Action (EAI) and actively participates as a mentor in the Professional Leadership Program at the University of North Dallas.

 

 

Other than as described above, none of our directors currently serve as a director of any other public company or any company registered as an investment company.

 

Significant Employees

 

There are no individuals other than our executive officers who make a significant contribution to our business.

 

Family Relationships

 

There are no family relationships among our directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

 

Legal Proceedings

 

None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:

 

·

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

·

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

·

being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

·

being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;

·

any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business activity;

·

and judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions; or

·

any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 

Section 16(a) Beneficial Ownership Compliance Reporting

 

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than ten percent (10%) of our common stock to file reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended October 31, 2011 our directors, executive officers and ten percent (10%) stockholders complied with all applicable filing requirements.

 

Code of Ethics

 

We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we have not yet finalized the content of such a code. Companies whose equity securities are quoted on the OTC Bulletin Board or OTCQB are not currently required to implement a code of ethics.

 

Audit Committee

 

Our Board of Directors has determined that we do not have an audit committee financial expert on our Board carrying out the duties of the audit committee. The Board has determined that the cost of hiring a financial expert to act as a director and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having an audit committee financial expert on the Board.

 

Nominating Committee

 

We do not have a nominating committee and we have not undertaken any material changes to the procedures by which security holders may recommend nominees to our Board of Directors since our last annual report.

 

Item 11. Executive Compensation

 

None of our directors or executive officers has received any compensation from us during the fiscal year ended October 31, 2011. Pursuant to Item 402(a)(5) of Regulation S-K we have omitted all tables and columns since no compensation has been awarded to, earned by, or paid to these individuals

 

Pension, Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

 

Compensation Committee

 

We currently do not have a compensation committee of the Board of Directors or a committee performing a similar function. It is the view of the Board that it is appropriate for us not to have such a committee because of our size and because the Board as a whole determines executive compensation.

 

Compensation of Directors

We do not pay our sole director any fees for attendance at Board meetings or similar remuneration or reimburse him for any out-of-pocket expenses he incurs in connection with our business.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

We do not have any compensation plans or individual compensation arrangements under which our securities are authorized for issuance to either employees or non-employees.

 

The following table sets forth the ownership, as of January 25, 2011, of our common stock by each of our directors, by all of our executive officers and directors as a group and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of January 25, 2011, there were 5,456,400 shares of our common stock issued and outstanding. All persons named have sole or shared voting and investment control with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this annual report.

 

 

 

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Common Stock	Kenneth Goggans 1513 Houston Street Sulphur Springs, TX 75482	3,780,000	69.3
	Max Elghandour 1513 Houston Street Sulphur Springs, TX 75482	-	-
All Officers and Directors as a Group		3,780,000	69.3

 

(1)	Kenneth A. Goggans is our President, Chief Executive Officer and our sole Director.
(2)	Max Elghandour is our Chief Financial Officer, Principal Accounting Officer and Treasurer.

 

Changes in Control

 

There are no arrangements known to us the operation of which may, at a subsequent date, result in a change in our control.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence

 

During the year ended October 31, 2011, we were indebted to Richland Resources Corporation, a Delaware corporation controlled by Kenneth A. Goggans, our Chief Executive Officer, for $49,763, representing expenditures paid on our behalf. This amount is unsecured, non-interest bearing, due on demand and has no specific terms of repayment.

 

 

Other than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last three fiscal years.

 

Director Independence

 

The OTC Quotation Bureau, on which our common stock is quoted, does not have any director independence requirements. Our board has not taken action to define “independence” for purposes of service on our board. Mr. Goggans, who is our sole director, is also an executive officer and owns a controlling interest in our voting sock, and would not be deemed “independent” under current stock exchange definitions. As additional directors join our board, we intend to develop a definition of independence and evaluate our governance policy with respect to director independence.

 

 

Item 14. Principal Accountant Fees and Services

 

Audit and Non-Audit Fees

 

The following table sets forth the fees for professional audit services and the fees billed for other services rendered by our auditors, Hein and Company, LLP in connection with the audit of our financial statements for the year ended October 31, 2011, and the prior auditors, Davidson & Company LLP, in connection with the audit of our financial statements for the year ended October 31, 2010, and any other fees billed for services rendered by our auditors during these periods.

 

Hein and Associates, LLP
Period from November 1, 2010 to October 31, 2011
Audit fees		$	13,571
Audit-related fees		$	-0-
Tax fees		$	-0-
All other fees		$	-0-
Total		$	13,571

 

Davidson & Company, LLP
Period from November 1, 2009 to October 31, 2011
Audit fees		$	20,000
Audit-related fees		$	10,300
Tax fees		$	-0-
All other fees		$	-0-
Total		$	30,300

 

Since our inception, our Board of Directors, performing the duties of the audit committee, has reviewed all audit and non-audit related fees at least annually. The Board, acting as the audit committee, pre-approved all audit related services for the year ended October 31, 2011.

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules

 

(1) Financial Statements

 

See the “Index to Consolidated Financial Statements” set forth on page F-1.

 

(2) Financial Statement Schedules

 

None. The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or the notes related thereto.

 

Exhibit Number	Exhibit Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

SIGNATURES

 

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

 

Date:  February 29, 2012	Richland Resources Corp.
	By:	/s/ Kenneth A. Goggans
		Chief Executive Officer, Sole Director

 

 

 

 

Pursuant to the requirements of 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.

 

 

 

Date:  February 29, 2012	By:	/s/ Kenneth A. Goggans
		Chief Executive Officer, Sole Director
Date:  February 29, 2012
	By:	/s/ Max Elghandour
		Chief Financial Officer and Treasurer