SOUTHERN USA RESOURCES INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - SOUTHERN USA RESOURCES INC.	Financial_Report.xls
EX-31.1 - CERTIFICATION - SOUTHERN USA RESOURCES INC.	f10q0312ex31i_southernusa.htm
EX-32.1 - CERTIFICATION - SOUTHERN USA RESOURCES INC.	f10q0312ex32i_southernusa.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2012.

o 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 333-143352

SOUTHERN USA RESOURCES INC.

(Exact name of registrant as specified in its charter)

Delaware		22-3757709
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

527 Mountain View Rd, Ashland, AL 36251

(Address of principal executive offices, including zip code)

(256) 403-6697

(Registrant’s telephone number, including area code)

Atlantic Green Power Holding Company

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

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. (Check one):

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).

Yes o No x

As of May 11, 2012, there were 29,043,528 shares of the registrant’s common stock, par value $.000001 per share, outstanding.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	F-1

	Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and December 31, 2011	F-2

	Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011 and for the Period from September 17, 2009 (Inception) through March 31, 2012 (Unaudited)	F-3

	Consolidated Statement of Stockholders’ Equity for the Period from September 17, 2009 (Inception) through March 31, 2012 (Unaudited)	F-4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 and for the Period from September 17, 2009 (Inception) through March 31, 2012 (Unaudited)	F-5

	Notes to the Consolidated Financial Statements (Unaudited)	F-6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1

Item 4.	Controls and Procedures	3

PART II	OTHER INFORMATION

Item 6.	Exhibits	4

Signatures		5

Exhibits

Forward-Looking Statements

Certain information included in this quarterly report on Form 10-Q and other filings of the registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements in this quarterly report on Form 10-Q may include, without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, the effects of governmental regulation and other risks identified in the registrant’s filings with the Securities and Exchange Commission from time to time. The safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements because we are currently considered a penny stock issuer.

In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the registrant cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements. Except as required by applicable securities laws, the registrant is under no duty to update any of the forward-looking statements contained herein after the date of this quarterly report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Southern USA Resources, Inc.

(Formerly Atlantic Green Power Holding Company)

March 31, 2012 and 2011

Index to the Consolidated Financial Statements

Contents	Page(s)

Consolidated Balance Sheets at March 31, 2012 (Unaudited) and December 31,2011	F-2

Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011, and for the Period from September 17, 2009 (inception) through March 31, 2012 (Unaudited)	F-3

Consolidated Statement of Stockholders’ Equity (Deficit) for the Period from September 17, 2009 (inception) through March 31, 2012 (Unaudited)	F-4

Consolidated Statements of Cash Flows for the Three Months Ended March 31,2012 and 2011, for the Period from September 17, 2009 (inception) through March 31, 2012 (Unaudited)	F-5

Notes to the Consolidated Financial Statements (Unaudited)	F-6

F-1

Southern USA Resources Inc.
(Formerly Atlantic Green Power Holding Company)
(A Development Stage Company)
Consolidated Balance Sheets


	March 31, 2012			December 31, 2011
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	12,024		$	44,517
Prepaid expenses and other current assets		21,982			13,648

Total Current Assets		34,006			58,165

Deposits		174,254			133,644

Total Assets	$	208,260		$	191,809

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilites	$	157,165		$	87,654
Notes payable		310,000			250,000
Convertible notes payable, net of debt discount		486,112			402,778
Derivative liability - convertible notes payable		-			921,428
Derivative liability - warrants		-			1,098,214

Total Current Liabilities		953,277			2,760,074

Total Liabilities		953,277			2,760,074

STOCKHOLDERS' DEFICIT:
Preferred stock at $0.000001 par value: 20,000,000 shares authorized;
none issued or outstanding		-			-
Common stock at $0.000001 par value: 250,000,000 shares authorized;
43,528 shares issued and outstanding at March 31, 2012 and December 31, 2011		1			1
Additional paid-in capital		1,518,508			1,518,508
Deficit accumulated during the development stage		(2,263,526	)		(4,086,774	)

Total Stockholders' Deficit		(745,017	)		(2,568,265	)

Total Liabilities and Stockholders' Deficit	$	208,260		$	191,809

See accompanying notes to the consolidated financial statements.

F-2

Southern USA Resources Inc.
(Formerly Atlantic Green Power Holding Company)
(A Development Stage Company)
Consolidated Statements of Operations

							For the Period from
	For the Three			For the Three			September 17, 2009
	Months Ended			Months Ended			(inception) through
	March 31, 2012			March 31, 2011			March 31, 2012
	(Unaudited)			(Unaudited)			(Unaudited)

NET REVENUES	$	-		$	-		$	-

OPERATING EXPENSES:
Professional fees		60,198			44,581			398,813
Compensation		17,131			55,111			404,033
General and administrative		20,483			44,520			365,430
Expense of project development costs		-			-			43,998
Write-off of western site investment		-			-			741,147

Total operating expenses		97,812			144,212			1,953,421

LOSS FROM OPERATIONS		(97,812	)		(144,212	)		(1,953,421	)

OTHER (INCOME) EXPENSE:
Interest income		(3	)		(367	)		(6,135	)
Interest expense - other		15,252			2,506			80,129
Interest expense - discount on notes		83,333			148,089			2,505,240
Change in fair value of derivative liabilities		(2,019,642	)		24,650			(2,269,129	)

Total other (income) expense		(1,921,060	)		174,878			310,105

INCOME (LOSS) BEFORE INCOME TAXES		1,823,248			(319,090	)		(2,263,526	)

INCOME TAX PROVISION		-			-			-

NET (INCOME) LOSS	$	1,823,248		$	(319,090	)	$	(2,263,526	)

NET INCOME (LOSS) PER COMMON SHARE
- BASIC AND DILUTED:	$	41.89		$	(7.35	)

Weighted common shares outstanding
- basic and diluted		43,528			43,415

See accompanying notes to the consolidated financial statements.

F-3

Southern USA Resources Inc.
(Formerly Atlantic Green Power Holding Company)
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
For the Period from September 17, 2009 (Inception) through March 31, 2012
(Unaudited)

								Deficit
	Common Stock, $0.000001 Par Value				Additional			Accumulated			Total
	Number of				Paid-in			during the			Stockholders'
	Shares		Amount		Capital			Development Stage			Equity (Deficit)

Balance, September 17, 2009 (inception)		38,100	$	1	$	1,476,578		$	-		$	1,476,579

Reverse acquisition adjustment		5,101		-		(289,890	)					(289,890	)

Net loss									(53,910	)		(53,910	)

Balance, December 31, 2009		43,201		1		1,186,688			(53,910	)		1,132,779

Common stock issued for services		28		-		44,000						44,000

Stock options issued for future employees services						37,820						37,820

Stock options issued for future employees services						(37,820	)					(37,820	)

Amortization of deferred compensation						34,669						34,669

Net loss									(1,820,265	)		(1,820,265	)

Balance, December 31, 2010		43,228		1		1,265,357			(1,874,175	)		(608,817	)

Common stock issued with convertible notes		300		-		250,000						250,000

Amortization of deferred compensation						3,151						3,151

Net loss									(2,212,599	)		(2,212,599	)

Balance, December 31, 2011		43,528		1		1,518,508			(4,086,774	)		(2,568,265	)

Net income, three months ended March 31, 2012									1,823,248			1,823,248

Balance, March 31, 2012		43,528	$	1	$	1,518,508		$	(2,263,526	)	$	(745,017	)

See accompanying notes to the consolidated financial statements.

F-4

Southern USA Resources Inc.
(Formerly Atlantic Green Power Holding Company)
(A Development Stage Company)
Consolidated Statements of Cash Flows

							For the Period from
	For the Three			For the Three			September 17, 2009
	Months Ended			Months Ended			(inception) through
	March 31, 2012			March 31, 2011			March 31, 2012
	(Unaudited)			(Unaudited)			(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,823,248		$	(319,090	)	$	(2,263,526	)

Adjustments to reconcile net income (loss) to net cash used in operating activities
Write-off of western site investment		-			-			741,147
Stock based compensation		-			3,151			83,820
Amortization of debt discount		83,333			148,089			736,111
Derivative liability recognized as interest expense		-			-			1,769,129
Change in fair value of derivative liabilities		(2,019,642	)		24,650			(2,269,129	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(8,333	)		7,616			(21,981	)
Accounts payable and accrued liabilities		69,511			1,468			157,170

NET CASH USED IN OPERATING ACTIVITIES		(51,883	)		(134,116	)		(1,067,259	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits		(40,610	)		(28,811	)		(741,701	)
Proceeds from sale of investment projects		-			-			168,000
Construction in progress		-			(22,225	)		(341,700	)

NET CASH USED IN INVESTING ACTIVITIES		(40,610	)		(51,036	)		(915,401	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		60,000			250,000			320,681
Repayment of note payable		-			(1,210	)		(10,681	)
Proceeds from convertible notes		-			-			500,000
Proceeds from sale of common stock		-			-			1,184,684

NET CASH PROVIDED BY FINANCING ACTIVITIES		60,000			248,790			1,994,684

NET CHANGE IN CASH		(32,493	)		63,638			12,024

Cash at beginning of period		44,517			135,325			-

Cash at end of period	$	12,024		$	198,963		$	12,024

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	$	-		$	-		$	269
Income tax paid	$	-		$	-		$	2,204

See accompanying notes to the consolidated financial statements.

F-5

Southern USA Resources, Inc.

(Formerly Atlantic Green Power Holding Company)

(A Development Stage Company)

March 31, 2012 and 2011

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1 - Organization and Operations

Southern USA Resources, Inc. (formerly Atlantic Green Power Holding Company, Lodestar Mining, Incorporated)

Southern USA Resources, Inc. (the “Company”) was incorporated as “Lodestar Mining, Incorporated” on October 31, 2006 under the laws of the State of Delaware.

On February 4, 2010, the Company changed its name to Atlantic Green Power Holding Company.

On April 23, 2012, the Company changed its name to Southern USA Resources, Inc.

Atlantic Green Power Corporation

Atlantic Green Power Corporation (“Atlantic”) (a development stage company) was incorporated on September 17, 2009 under the laws of the state of New Jersey. Atlantic was formed to develop renewable energy systems and related activities. Prior to October 1, 2009, Atlantic was inactive.

Acquisition of Atlantic Green Power Corporation Recognized as a Reverse Acquisition

On January 29, 2010, Lodestar entered into an Agreement and Plan of Exchange (the “Share Exchange Agreement”) with Atlantic and Ian McKinnon (“McKinnon”), the majority stockholder of Lodestar.

Pursuant to the terms of the Share Exchange Agreement, Lodestar agreed to issue an aggregate of 38,099,250 shares of Lodestar's common stock to the Atlantic shareholders in exchange for all of the issued and outstanding shares of Atlantic (the “Share Exchange”). In addition, in accordance with the terms of a Stock Purchase Agreement between Lodestar and McKinnon, Lodestar purchased 15,150,000 shares of its common stock owned by Ian McKinnon for $250,000, using funds received from Atlantic, and retired the purchased common stock. The shares of common stock issued by the Company in the Share Exchange represented approximately 88.2% of the issued and outstanding shares of common stock immediately after the retirement of the 15,150,000 shares purchased from McKinnon.

As a result of the ownership interests of the former shareholders of Atlantic, for financial statement reporting purposes, the Share Exchange between the Company and Atlantic has been treated as a reverse acquisition with Atlantic deemed the accounting acquirer and the Company deemed the accounting acquiree under the purchase method of accounting in accordance with Section 805-10-55 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”). The reverse merger is deemed a capital transaction and the net assets of Atlantic (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Atlantic which are recorded at historical cost. The equity of the Company is the historical equity of Atlantic retroactively restated to reflect the number of shares issued by the Company in the transaction.

Formation of LLCs

On March 7, 2011 and March 8, 2011, Atlantic formed six Delaware limited liability companies (the “LLCs”), through which Atlantic will seek to develop solar projects in southern New Jersey. As of December 31, 2011, four of the LLCs were inactive.

Sale of 85% Equity Interest in LLC – First Project Company

On April 26, 2011, Atlantic closed on a sale of an eighty-five percent (85%) interest in one of the LLCs (the “First Project Company”) to Invenergy Solar Development LLC (“Invenergy”). Atlantic received a cash payment of $78,000, as reimbursement of project costs, and will receive future consideration based on the development of an up to an 18 Mega Watt solar project in southern New Jersey. The First Project Company is the holder of one of the queue positions to connect to the PJM Interconnection, LLC (“PJM”) interconnection grid that was previously assigned to Atlantic. Through the First Project Company, Atlantic and Invenergy will jointly pursue the development of a solar project on several parcels of land located in southern New Jersey, the rights to which have been assigned to the Project Company by Invenergy.

F-6

In addition to the cash payment of $78,000, Atlantic will receive a success fee for each Mega Watt of installed solar energy capacity with respect to the solar project to be developed through the Project Company, up to a maximum of 18 Mega Watts. Once the facilities are placed in operation, Atlantic also will receive a percentage of the distributions from the First Project Company after a preferred distribution of twice the success fee is paid to Invenergy.

Sale of 80% Equity Interest in LLC – Second Project Company

On July 22, 2011, Atlantic closed on a sale of an eighty percent (80%) interest in another of the LLCs (the “Second Project Company”) to Invenergy. In exchange for an eighty percent (80%) interest in the Second Project Company, Atlantic received a cash payment of $90,000, as reimbursement of project costs, and will receive future consideration based on the development of an up to 10 Mega Watt solar project in southern New Jersey. The Second Project Company is the holder of another of the queue positions to connect to the PJM interconnection grid that was previously assigned to Atlantic. Through the Second Project Company, Atlantic and Invenergy will jointly pursue the development of a solar project on a parcel of land located in southern New Jersey, the rights to which have been assigned to the Second Project Company by Invenergy.

In addition to the cash payment of $90,000, Atlantic will receive a success fee for each Mega Watt of installed solar energy capacity with respect to the solar project to be developed through the Second Project Company, up to a maximum of 10 Mega Watts. Once the facilities are placed in operation, Atlantic also will receive a percentage of the distributions from the Second Project Company after a preferred distribution of twice the success fee is paid to Invenergy.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation- Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2011 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2012.

Principles of Consolidation

The consolidated financial statements of the Company include all accounts of the Company and its wholly owned subsidiary, Atlantic. All intercompany balances and transactions have been eliminated.

Development Stage Company

The Company is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

F-7

The Company’s significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment, if any, of long-lived assets, including the values assigned to deposits and construction in progress, income tax rate, income tax provision, deferred tax assets and the valuation allowance of deferred tax assets, and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company follows 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 and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about 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 (3) broad levels. The three (3) 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.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

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. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate their fair values because of the short maturity of these instruments.

The Company’s notes payable and convertible notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2012 and December 31, 2011.

The Company’s Level 3 financial liabilities consist of the derivative warrant issued in October 2010 for which there is no current market for this security such that the determination of fair value requires significant judgment or estimation. The Company valued the reset adjustments in the warrant on subsequent potential equity offerings using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

F-8

It is not, however, practical to determine the fair value of advances from stockholders due to their related party nature.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability and derivative feature of convertible notes at every reporting period and recognizes gains or losses in the consolidated statements of operations are attributable to the change in the fair value of the derivatives.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheets as follows:

March 31, 2012

Fair Value Measurement Using

Carrying Value

Level 1

Level 2

Level 3

Total

Derivative conversion features and warrant liabilities

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2012:

	Fair Value Measurement Using Level 3 Inputs
			Derivative Liabilities			Total

Balance, December 31, 2011		$	2,019,642		$	2,019,642

Purchases, issuances and settlements			-			-

Total gains or losses (realized/unrealized)
included in net loss			(2,019,642	)		(2,019,642	)

Transfers in and/or out of Level 3			-			-

Balance, March 31, 2012		$	-		$	-

December 31, 2011			Fair Value Measurement Using

	Carrying Value		Level 1		Level 2		Level 3		Total

Derivative conversion features and warrant liabilities	$	2,019,642	$	-	$	-	$	2,019,642	$	2,019,642

F-9

	Fair Value Measurement Using Level 3 Inputs
			Derivative Liabilities		Total

Balance, December 31, 2010		$	1,686,351	$	1,686,351

Purchases, issuances and settlements

Total gains or losses (realized/unrealized)
included in net loss			333,291		333,291

Transfers in and/or out of Level 3			-		-

Balance, December 31, 2011		$	2,019,642	$	2,019,642

Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company has adopted paragraph 360-10-35-17 of the Codification for its long-lived assets. The Company’s long-lived assets, which include deposits are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

The impairment charges, if any, are included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Debt Issuance Costs

Debt issuance costs are capitalized and amortized over the finite life of the underlying debt instrument. The unamortized amounts are included in other assets in the accompanying consolidated balance sheets. Early debt repayment results in expensing these costs.

Discount on Debt

The Company allocated the proceeds received from convertible debt instruments between the underlying debt instruments and has recorded the conversion feature as a liability in accordance with paragraph 815-15-25-1 of the Codification (“Paragraph 815-15-25-1”). The conversion feature and certain other features that are considered embedded derivative instruments, such as a conversion reset provision have been recorded at their fair value within the terms of Paragraph 815-15-25-1 as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The conversion liability is marked to market each reporting period with the resulting gains or losses shown in the consolidated statements of operations.

F-10

Derivative Instruments

The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Paragraph 810-10-05-4 of the Codification and Paragraph 815-40-25 of the Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitment and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

F-11

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Revenue Recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. 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 product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Stock-Based Compensation for Obtaining Employee Services

The Company accounts for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

The fair value of options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

Expected term of share options and similar instruments: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate employee termination behavior. The contractual term of share options or similar instruments is used as expected term of share options or similar instruments for the Company if it is a newly formed corporation.

Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected contractual life of the option and similar instruments.

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option and similar instruments.

The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

F-12

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

The fair value of option or warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:



Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. The contractual term of share options or similar instruments is used as expected term of share options or similar instruments for the Company if it is a newly formed corporation.



Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, nonforfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, nonforfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised.

F-13

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

Income Tax Provision

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which 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 fiscal 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 Income and Comprehensive Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Uncertain Tax Positions

The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the three months ended March 31, 2012 or 2011.

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants.

F-14

The following table shows the potentially outstanding dilutive common shares excluded from the diluted net loss per share calculation for the three months ended March 31, 2012 and 2011 as they were anti-dilutive:

	March 31, 2012		March 31, 2011
Stock options issued on February 5, 2010 to Rania Pontikos, Director of Technology and Strategic Planning		200,000		200,000

Convertible notes issued on October 12, 2010		714,286		714,286

Warrants issued with the convertible notes		535,714		535,714

Total		1,450,000		1,450,000

Cash Flows Reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Subsequent Events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the consolidated financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its consolidated financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently Issued Accounting Pronouncements

FASB Accounting Standards Update No. 2011-05

In June 2011, the FASB issued the FASB Accounting Standards Update No. 2011-05 “Comprehensive Income” (“ASU 2011-05”), which was the result of a joint project with the IASB and amends the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income (OCI) in the statement of stockholders’ equity. Instead, the new guidance now gives entities the option to present all non-owner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.

The amendments in this Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within those years, beginning after December 15, 2011.

FASB Accounting Standards Update No. 2011-08

In September 2011, the FASB issued the FASB Accounting Standards Update No. 2011-08 “Intangibles—Goodwill and Other: Testing Goodwill for Impairment” (“ASU 2011-08”). This Update is to simplify how public and nonpublic entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.

The guidance is effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.

F-15

FASB Accounting Standards Update No. 2011-10

In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-10 “Property, Plant and Equipment: Derecognition of in Substance Real Estate-a Scope Clarification” (“ASU 2011-09”). This Update is to resolve the diversity in practice as to how financial statements have been reflecting circumstances when parent company reporting entities cease to have controlling financial interests in subsidiaries that are in substance real estate, where the situation arises as a result of default on nonrecourse debt of the subsidiaries.

The amended guidance is effective for annual reporting periods ending after June 15, 2012 for public entities. Early adoption is permitted.

FASB Accounting Standards Update No. 2011-11

In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.

The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.

FASB Accounting Standards Update No. 2011-12

In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-12 “Comprehensive Income: Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”). This Update is a deferral of the effective date pertaining to reclassification adjustments out of accumulated other comprehensive income in ASU 2011-05. FASB is to going to reassess the costs and benefits of those provisions in ASU 2011-05 related to reclassifications out of accumulated other comprehensive income. Due to the time required to properly make such a reassessment and to evaluate alternative presentation formats, the FASB decided that it is necessary to reinstate the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of Update 2011-05.

All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011.

Other Recently Issued, but Not Yet Effective Accounting Pronouncements

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Note 3 – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage at March 31, 2012, and net cash used in operating activities for the three months then ended, respectively. In addition, the Company has no lending relationships with commercial banks and is dependent upon the completion of one or more financings and/or strategic partnerships to fund its continuing operations and development of solar projects. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to commence operations and generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.

F-16

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 – Deposits

Deposits reflect the costs incurred by the Company to obtain the local zoning board approvals and other permits necessary for the construction of a solar farm on property leased by Atlantic in Upper Pittsgrove Township, New Jersey, consulting fees related to the development of the Upper Pittsgrove Township solar farm, deposits on Real Estate Contracts and payments to PJM related to the obtainment of queue positions to interconnect to the PJM interconnection grid with respect to the Upper Pittsgrove Township solar farm and other potential solar projects to be developed by the Company, such as the solar projects to be developed through the First Project Company and the Second Project Company.

On February 27, 2012 the Company entered into (i) an Assignment of Mineral Lease with Gerald Short, Carolyn Short and Charles H. Merchant, Sr., (ii) a Southern Real Estate Sales Contract with John Hancock Life Insurance Company (U.S.A.) and (iii) a Real Estate Sales Contract with David E. Riley (each a “Real Estate Contract” and collectively, the “Real Estate Contracts”), pursuant to which the Company will acquire certain real property located in the state of Alabama (the “Land Purchase”). The Company applied the proceeds received from a Note entered into on February 27, 2012 toward the required deposits under each of the Real Estate Contracts.

Based on the transaction described above, the Company expects to change the direction of its business. Since February 3, 2010, the Company has engaged in the development of utility-scale solar energy generation projects in the Mid-Atlantic region of the United States through its wholly-owned subsidiary, Atlantic Green Power Corporation (“Atlantic Green Power”). In anticipation of closing the Land Purchase, the Company expects to change its business strategy to the exploitation of potential mineral mining rights with respect to the properties to be acquired under the Real Estate Contracts.

Note 5 – Notes Payable

Note Payable – Whalehaven

On February 4, 2011, the Company entered into a Subscription Agreement with Whalehaven Capital Fund Limited (“Whalehaven”), pursuant to which Whalehaven loaned the Company $250,000, evidenced by a promissory note which has a term of six months and accrues interest at a 6% per annum (the “Whalehaven Note”). In addition, pursuant to the terms of the Subscription Agreement, the Company issued to Whalehaven 300,000 shares of the Company’s common stock in reliance upon an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) of the Securities Act.

The fair value of the common stock issued, estimated on the date of grant, was $480,000, which was recorded as a discount up to the value of the short-term note of $250,000. The Company credited $250,000 to additional paid-in capital and debited the same amount to the discount to the short-term note payable. The discount is being amortized over the term of the Whalehaven Note of six months. For the year ended December 31, 2011 $250,000 had been amortized and included in interest expense.

On August 4, 2011, the Whalehaven Note matured. From and after August 4, 2011, the Whalehaven Note accrues interest at a default rate of 8% annually.

As of March 31, 2012, accrued and unpaid interest under the Whalehaven Note was $20,692.

Notes Payable

On February 27, 2012, the Company entered into a Subscription Agreement with certain accredited investors (the “Subscribers”), pursuant to which the Subscribers collectively loaned $60,000 to the Company, evidenced by promissory notes (the “Notes”) which mature on May 26, 2012 and accrue interest at a rate of six percent (6%) annually

As of March 31, 2012, accrued and unpaid interest under the Notes was $334.

F-17

Notes payable consisted of the following at March 31, 2012 and December 31, 2011:

	March 31, 2012			December 31, 2011
Note payable – Whalehaven, entered into on February 4, 2011 for a term of six (6) months maturing on August 4, 2011, with interest at 6% per annum with principal and interest through August 4, 2011 and a default rate of 8% annually until repaid in full.	$	250,000		$	250,000

Discount on note payable		(250,000	)		(250,000	)

Accumulated amortization of discount		250,000			250,000

		250,000			250,000

Notes payable – Entered into on February 27, 2012 for a term of three (3) months maturing on May 26, 2012, with interest at 6% per annum.		60,000			-

Discount on note payable		(-	)		(-	)

Accumulated amortization of discount		-			-

		60,000			-

Total notes payable		310,000			-

Discount on note payable		(250,000	)		(-	)

Accumulated amortization of discount		250,000			-


	$	310,000		$	250,000

The Company recorded $5,307 inclusive of $4,973 interest expense for note payable - Whalehaven and $334 interest expense for the other notes payable for the three months ended March 31, 2012. The Company recorded $85,839 inclusive of $83,333 amortization of the discount to the notes, $2,500 interest expense for note payable - Whalehaven and $6 in other interest expense for the three months ended March 31, 2011.

Note 6 – Convertible Notes Payable

Convertible Notes Payable

On October 12, 2010, the Company entered into a Subscription Agreement with Alpha Capital Anstalt and Adventure Ventures LLC (collectively, the “Subscribers”), pursuant to which the Subscribers purchased convertible notes in the aggregate principal amount of $500,000, which are convertible into shares of the Company’s common stock, and warrants to purchase 535,714 shares of common stock with an exercise price of $1.00 per share.

F-18

Convertible notes payable consisted of the following at March 31, 2012 and December 31, 2011:

	March 31, 2012			December 31, 2011
Convertible notes payable, entered into on October 12, 2010 for a term of 18 month maturing on April 12, 2012, with interest at 8% per annum with principal and interest due on maturity. The notes are currently in default.	$	500,000		$	500,000

Discount on note payable		(500,000	)		(500,000	)

Accumulated amortization of discount		486,112			402,778


	$	486,112		$	402,778

The Company recorded $83,333 and $64,756 amortization of the discount to the notes for the three months ended March 31, 2012 and 2011, respectively. The Company recorded $9,945 and $0 interest expense on the convertible notes for the three months ended March 31, 2012 and 2011, respectively.

Conversion Feature

Each convertible note has a term of eighteen months and accrues interest at 8% per annum. The holder of the convertible note has the right from and after the issuance thereof until such time as the convertible note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of common stock at a conversion price of $0.70 per share. The conversion price and number and kind of shares to be issued upon conversion of the convertible notes are subject to adjustment from time to time as more fully described in the convertible notes.

Due to the fact that these convertible notes have full reset adjustments based upon the issuance of equity securities by the Company in the future, they are subject to derivative liability treatment under Section 815-40-15 of the Codification (formerly FASB Emerging Issues Task Force 07-5). The convertible notes have been measured at fair value using a lattice model at year end with gains and losses from the change in fair value of derivative liabilities recognized on the consolidated statements of operations.

The convertible notes, when issued, gave rise to a derivative liability which was recorded as a discount to the notes of $500,000 and interest expense of $831,765.

The embedded derivative of the convertible notes was re-measured at March 31, 2012 and March 31, 2011 yielding a gain on change in fair value of the derivatives of $921,428 and a loss of $(11,184), for the three months ended March 31, 2012 and 2011, respectively. The derivative value of the convertible notes at March 31, 2012 and December 31, 2011 yielded a derivative liability at fair value of $0 and $921,428, respectively.

Derivative Warrants

Each of the warrants issued to the Subscribers has a term of five years from October 12, 2010 and was fully vested on the date of issuance. The warrants are exercisable at $1.00 per share. The number of shares of common stock underlying each warrant and the exercise price are subject to certain adjustments as more particularly described in the warrants.

The warrants, when issued, gave rise to a derivative liability which was recorded as interest expense of $937,364. The embedded derivative of the warrants was re-measured at March 31, 2012 and March 31, 2011 yielding a gain on change in fair value of the derivative of $1,098,214, for the three months ended March 31, 2012 and a loss on change in fair value of the derivative of $(13,466) for the three months ended March 31, 2011. The derivative value of these warrants at March 31, 2012 and December 31, 2011 yielded a derivative liability at fair value of $0 and $1,098,214, respectively.

As of March 31, 2012 warrants to purchase 535,714 shares of Company common stock remain outstanding.

F-19

The table below summarizes the Company’s derivative warrant activity through March 31, 2012:


	2010-2012 Warrant Activities
										APIC		(Gain) Loss
	Derivative Shares		Non-derivative Shares		Total Warrant Shares		Fair Value of Derivative Warrants			Reclassification of Derivative Liability		Change in Fair Value of Derivative Liability

Derivative warrant at December 31, 2009		-		-		-	$	-		$	-	$	-

Issuances		535,714		-		535,714		(937,364	)				-

Exercise of warrants		-		-		-		-			-		-

Exercise of warrants – Cashless		-		-		-		-			-		-

Total warrant exercised		-		-		-		-			-		-

Extinguishment of warrant liability resulting from waiver of anti-dilution		-		-		-		-			-		-

Derivative warrants remaining		-		-		-		-			-		-

Mark to market		-		-				211,681			-		(211,681	)

Derivative warrant at December 31, 2010		535,714		-		535,714		(725,683	)		-		(211,681	)

Exercise of warrants		-		-		-		-			-		-

Derivative warrants remaining		-		-		-		-			-		-

Mark to market		-		-				(372,531	)		-		372,531

Derivative warrant at December 31, 2011		535,714		-		535,714		(1,098,214	)		-		160,850

Exercise of warrants		-		-		-		-			-		-

Derivative warrants remaining		-		-		-		-			-		-

Mark to market		-		-		-		1,098,214			-		1,098,214

Derivative warrant at March 31, 2012		535,714		-		535,714		-			-		-

Note 7 – Related Party Transactions

Ground Lease with an Officer and Director

Effective November 30, 2009, Atlantic entered into the Ground Lease with Edward Stella, Jr., a director of Atlantic and who was subsequently elected as a director and appointed as Vice President of Project Development of the Company upon the consummation of the Share Exchange on February 3, 2010. The Ground Lease was negotiated between the parties at arms’ length. The Ground Lease permitted Atlantic to construct and operate a solar farm on the leased premises located in Upper Pittsgrove Township, New Jersey.

On August 6, 2010, Atlantic and Mr. Stella restructured the Ground Lease into two separate lease agreements, each relating to one of the two tracts of property leased by Atlantic pursuant to the original Ground Lease: the East Tract Ground Lease Agreement relating to the 130-acre eastern tract, of which approximately 90 acres are suitable for development of a solar farm, and the West Tract Ground Lease Agreement relating to the 520-acre western tract, of which approximately 422 acres are suitable for development of a solar farm. Each of these restructured lease agreements has an initial term of 25 years.

F-20

Strategic Planning and Debt/Equity Financing Brokerage Service from Millennium Power, Inc., an Entity Controlled by an Employee

Rania K. Pontikos, Director of Technology and Strategic Planning for the Company, is also a principal in Millennium Power, Inc. (“Millennium Power”), an engineering consulting firm that provides strategic planning and engineering services for the Company.

On July 2, 2010, the Company entered into a Finder’s Agreement with Millennium Power, pursuant to which Millennium Power is to identify prospective candidates interested in making an investment in, or pursuing a strategic initiative with, the Company. Millennium Power is engaged by the Company under the Finder’s Agreement as a non-exclusive independent contractor and is compensated at a rate equal to a maximum of 2% of the investment amount in the Company made by any investor introduced to the Company by Millennium Power.

The Company did not pay any amounts to Millenium Power under the Finder’s Agreement during the interim period ended March 31, 2012 or 2011.

Note 8 - Commitments and Contingencies

Litigations, Claims and Assessments

The Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

Note 9 – Stockholders’ Deficit

Shares Authorized

Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Billion and Twenty Million (1,020,000,000) shares of which Twenty Million (20,000,000) shares shall be Preferred Stock, par value $0.000001 per share , and One Billion (1,000,000,000) shares shall be Common Stock, par value $0.000001 per share.

On March 30, 2012, the stockholders of the Company approved by written consent (i) a 1,000-for-1 reverse stock split with respect to the Company’s common stock (the “Reverse Stock Split”), (ii) an amendment to the Company’s Amended and Restated Certificate of Incorporation to change the amount of authorized capital stock to 270,000,000 shares, consisting of 250,000,000 shares of common stock, par value $.000001 per share, and 20,000,000 shares of preferred stock, par value $.000001 per share, notwithstanding the effect of the Reverse Stock Split, and (iii) an amendment to the Company’s Amended and Restated Certificate of Incorporation to change the Company’s name to “Southern USA Resources Inc.”

The stockholders’ equity section has been retrospectively restated to reflect the 1,000 for 1 reverse stock split.

Common Stock

On August 23, 2010, the Company entered in to a consulting agreement for advisory services, which provided for payments of $6,000 per month together with the issuance of up to a total of 50,000 shares of the Company’s common stock. The consulting agreement was terminated on September 17, 2010. For this termination, the Company issued the consultant 25,000 shares of common stock and paid the consultant $6,000 pursuant to the consulting agreement, resulting in consulting expense of $46,000 for the year ended December 31, 2010.

In September 2010, the Company settled a $4,000 outstanding balance with a vendor for certain public relations services by issuing the vendor 2,500 shares of the Company’s common stock.

Stock Options

The Company estimated the fair value of each option granted, estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions:

F-21

	December 31, 2010

Risk-free interest rate		3.00	%

Dividend yield		0.00	%

Expected volatility		100	%

Expected option life (years)		5.00

In February 2010, the Company’s stockholders approved the Atlantic Green Power Holding Company Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan went into effect on February 3, 2010. Ten million (10,000,000) shares of the Company’s common stock were reserved for issuance under the Incentive Plan.

On February 5, 2010, the Company granted under the Incentive Plan a nonqualified option to purchase 200,000 shares of its common stock to Rania Pontikos, Director of Technology and Strategic Planning of the Company. The nonqualified option was granted as compensation for services to the Company. The nonqualified option granted to Ms. Pontikos has an exercise price of $.25 per share and expires on February 4, 2015. The shares underlying the nonqualified option are fully vested.

On March 8, 2010, the Company granted under the Incentive Plan a nonqualified option to purchase 20,000 shares of its common stock to Daniel Schohl. The nonqualified option was granted as compensation for services to the Company. The nonqualified option granted to Mr. Schohl had an exercise price of $.25 per share and was scheduled to expire on March 7, 2015. On August 20, 2010, Mr. Schohl’s employment with the Company terminated and the entire nonqualified option granted to him was cancelled as of the date of termination.

The aggregate fair value of the nonqualified stock options granted in February and March 2010 under the Incentive Plan using the Black-Scholes Option Pricing Model was $41,602 at the dates of grant. For the three months ended March 31, 2012 and March 31, 2011, the Company recorded stock-based compensation of $0 and $3,151, respectively for shares vested.

The table below summarizes the Company’s Incentive Plan stock option activities through March 31, 2012:

	Number of Option Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Weighted Average Remaining (in years) Contractual Term		Intrinsic Value (in thousands)

Balance, January 1, 2010		---	$	---	$	---			$	---

Granted		220,000	$	0.25	$	0.25		5	$	41,602

Cancelled		(20,000)	$	---	$	---			$	(3,782)

Balance, December 31, 2010		200,000	$	0.25		0.25		4.10	$	37,820

Granted		-

Cancelled		-

Balance, December 31, 2011		200,000	$	0.25	$	0.25		3.10	$	37,820

Granted		-

Cancelled		-

Vested and Exercisable March 31, 2012		200,000	$	0.25	$	0.25		2.85	$	37,820

F-22

The following table summarizes information concerning outstanding and exercisable stock options as of March 31, 2012:

		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable	Average Remaining Contractual Life (in years)	Weighted Average Exercise Price

$	0.25		200,000	2.85	$	0.25	200,000	2.85	$	0.25

At March 31, 2012, 9,800,000 shares of common stock remained available for issuance under the Incentive Plan.

Note 10 – Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. As of March 31, 2012, a majority of the Company’s cash and cash equivalents was held by two major financial institutions located in the United States, the balance of those accounts may at times exceed the amount insured by the Federal Deposit Insurance Corp. However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

Note 11 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date through the date when the consolidated financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent events to be disclosed as follow.

Amendments to Articles of Incorporation or Bylaws

Effective April 23, 2012, Atlantic Green Power Holding Company (the “Company”) effectuated a 1,000-to-1 reverse stock split with respect to its outstanding shares of common stock, par value $.000001 per share (the “Reverse Stock Split”), and amended and restated its certificate of incorporation to (i) change its corporate name to “Southern USA Resources Inc.,” (ii) change the number of authorized shares of capital stock to 270,000,000, consisting of 250,000,000 shares of common stock and 20,000,000 shares of preferred stock, and (iii) provide that the par value per share, the amount of stated capital of the Company and the amount of paid-in surplus of the Company will not be increased or decreased due to the Reverse Stock Split. Prior to the Reverse Stock Split, there were 43,527,248 shares of the Company’s common stock outstanding, and after the Reverse Stock Split, there were 43,528 shares of the Company’s common stock outstanding.

Now that the Reverse Stock Split has been effectuated, the Company will move forward with the distribution of all of the outstanding shares of common stock of Atlantic Green Power Corporation, the Company’s wholly-owned subsidiary, to the Company’s stockholders (the “Distribution”) and plans to move forward with the closing of the Southern Real Estate Sales Contract between the Company and John Hancock Life Insurance Company (U.S.A.) and the Real Estate Sales Contract between the Company and David E. Riley, pursuant to which the Company will acquire certain real property located in the state of Alabama.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On April 25, 2012, Charles Merchant, Sr. was appointed a director of the Company. On April 26, 2012, Mr. Merchant was appointed Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer of the Company.

On April 27, 2012, the Company entered into an employment agreement with Mr. Merchant. The term of the Employment Agreement is one year renewable automatically for an additional year unless either party provide a 30-day advance written notice of non-renewal. Mr. Merchant will be paid an annual salary of $91,000.

F-23

On April 26, 2012, Messrs. Robert Demos, Jr., R. Scott Byrne and Edward Stella, Jr. resigned as directors of the Company. Resignations of Messrs. Demos, Byrne and Stella were not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On April 26, 2012, Mr. Demos resigned as President and CEO of the Company, Mr. Byrne resigned as COO and Secretary, and Mr. Stella resigned as Vice President of Project Development. Frank D’Agostino, Jr. resigned as Chief Financial Officer and Director of Business Development.

Entry Into a Material Definitive Agreement

Notes Offering

On April 27, 2012 (the “Closing Date”), Southern USA Resources, Inc., a Delaware corporation (the “Company”), entered into and consummated the sale to certain accredited investors pursuant to the Subscription Agreement (the “Subscription Agreement”) of Secured Convertible Promissory Notes due April 27, 2014 (the “Notes”) in the aggregate principal amount of $1,920,000.

The Notes were issued at an original issue discount of 20% and bear no additional interest. The Notes are convertible into shares of the Company’s common stock, par value $.000001 per share (“Common Stock”), at a conversion price of $0.25 per share. The conversion price is subject to adjustment for certain events, including the dividends, distributions or split of Common Stock, the Company’s consolidation, merger or reorganization, or in the event of the Company’s issuance of securities at a price lower than the per share conversion price then in effect.

The Company's obligations under the Subscription Agreement and the Notes are secured by all assets of the Company pursuant to a Security Agreement, dated as of April 27, 2012.

Registration Rights

Under the Subscription Agreement, the Company agreed to file a registration statement within 60 days after receipt of a written demand from the investors representing not less than 50% of the shares issuable upon conversion of the Notes (the “Conversion Shares”), and to have it declared effective within 120 days after its filing. The Company is not obligated to file such registration statement before June 18, 2012 and the total number of the demand registration statements that the Company is obligated to file is limited to one. The Company also granted to the investors unlimited piggy-back registration rights for their Conversion Shares if the Company proposes to register any of its securities under the Securities Act of 1933, as amended (the “Act”), except with respect to registration statements on Forms S-4 and S-8.

The Company will incur liquidated damages if it fails to file the registration statement or have it declared effective within a required period of time or fails to respond to the comments of the U.S. Securities and Exchange Commission within 15 business days after their receipt.

Right of First Refusal and MFN Provisions

Pursuant to the Subscription Agreement, the investors will be entitled to a right of first refusal, which will be valid for two years after the Closing Date, with respect to certain proposed sales of the Company’s securities.

The Company also agreed that if at any time while the Notes are outstanding, the Company issues its securities at a price which is less than the conversion price of the Notes, then the conversion price shall be reduced to such other lower price.

Equipment Contribution Agreement

On April 27, 2012, the Company entered into and consummated transactions pursuant to the Equipment Contribution Agreement with Charles H. Merchant, Sr. whereby Mr. Merchant contributed certain mining equipment to the Company in consideration of the issuance of 29,000,000 shares of Common Stock.

Completion of Acquisition or Disposition of Assets

On April 27, 2012, the Company consummated acquisition of two real estate properties of approximately 52 acres located in the Clay County, Alabama. The acquisition is part of the Company’s new business strategy of exploitation of mineral mining rights with respect to the acquired properties.

Material Modification to Rights of Security Holders

On April 27, 2012, in connection with the closing of the Notes offering, the Company entered into the Third Consent and Waiver Agreement with several accredited investors, which are the holders of the notes and warrants previously issued by the Company (the “Existing Noteholders”) whereby the Existing Noteholders among others waived their right of first refusal and consented to creation of a security interest in the Company’s assets in connection with the issuance of the Notes.

F-24

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company was incorporated in the state of Delaware on October 31, 2006 under the name “Lodestar Mining, Incorporated.” From its inception until January 28, 2010, the Company was an exploration stage company with plans to search for mineral deposits or reserves.

On February 3, 2010, the Company acquired all of the issued and outstanding shares of common stock of Atlantic Green Power Corporation (“Atlantic”) pursuant to the Share Exchange, and Atlantic became a wholly-owned subsidiary of the Company. The Company issued an aggregate of 38,099,250 shares of common stock to the former shareholders of Atlantic, and the Company changed its corporate name to “Atlantic Green Power Holding Company.” As a result of the Share Exchange, the Company ceased its prior operations and commenced the operation of Atlantic as its sole line of business. Atlantic is a renewable energy company primarily focused on the location and development of utility-scale solar energy generation projects in the Mid-Atlantic United States, with a particular focus on the development of solar projects in southern New Jersey.

On February 27, 2012, the Company entered into (i) an Assignment of Mineral Lease with Gerald Short, Carolyn Short and Charles H. Merchant, Sr., (ii) a Southern Real Estate Sales Contract with John Hancock Life Insurance Company (U.S.A.) and (iii) a Real Estate Sales Contract with David E. Riley (each a “Real Estate Contract” and collectively, the “Real Estate Contracts”), whereby the Company agreed to acquire certain real property located in the state of Alabama (the “Land Purchase”). The Land Purchased was closed on April 27, 2012. Following the foregoing transactions, the Company changed the direction of its business. Since February 3, 2010, the Company has engaged in the development of utility-scale solar energy generation projects in the Mid-Atlantic region of the United States through its wholly-owned subsidiary, Atlantic. Following the closing of the Land Purchase, the Company changed its business strategy to the exploitation of mineral mining rights with respect to the acquired real estate properties. The Company is currently in the process of distributing all of the issued and outstanding shares of Atlantic’s common stock to the holders of the Company’s common stock.

Effective April 23, 2012, the Company effectuated a 1,000-to-1 reverse stock split with respect to its outstanding shares of common stock, par value $.000001 per share (the “Reverse Stock Split”), and amended and restated its certificate of incorporation to (i) change its corporate name to “Southern USA Resources Inc.,” (ii) change the number of authorized shares of capital stock to 270,000,000, consisting of 250,000,000 shares of common stock and 20,000,000 shares of preferred stock, and (iii) provide that the par value per share, the amount of stated capital of the Company and the amount of paid-in surplus of the Company will not be increased or decreased due to the Reverse Stock Split.

On April 27, 2012, to finance the Land Purchase the Company consummated a private placement to accredited investors of Secured Convertible Promissory Notes due April 27, 2014 in the aggregate principal amount of $1,920,000 that were issued at an original issue discount of 20% and bear no additional interest.

Concurrently with the closing of the debt financing, the Company entered into and consummated transactions pursuant to the Equipment Contribution Agreement with Charles H. Merchant, Sr. whereby Mr. Merchant contributed certain mining equipment to the Company in consideration of the issuance of 29,000,000 shares of Common Stock.

Results of Operations

	For the Three Months Ended March 31,						September 17, 2009 (inception) through March 31,
	2012			2011			2012
Net revenues	$	-		$	-		$	-
Operating expenses	$	97,812		$	144,212		$	1,953,421
Loss from operations	$	(97,812	)	$	(144,212	)	$	(1,953,421	)
Other income (expense)	$	1,921,060		$	(174,878	)	$	310,105
Net income (loss)	$	1,823,248		$	(319,090	)	$	(2,263,526	)
Income (loss) per common share – basic and diluted	$	41.89		$	(7.35	)	$	-

For the Three Months Ended March 31, 2012 and 2011

Revenue

We did not have any revenues for the three months ended March 31, 2012 and 2011.

Operating Expenses

Total operating expenses for the three months ended March 31, 2012 were $97,812, which consisted of $60,198 in professional fees, $17,131 in compensation and $20,483 in general and administrative expenses, as compared to total operating expenses of $144,212 for the three months ended March 31, 2011, which consisted of $44,581 in professional fees, $55,111 in compensation and $44,520 in general and administrative expenses.

Income (Loss) from Operations

Loss from operations for the three months ended March 31, 2012 was $(97,812), as compared to loss from operations for the three months ended March 31, 2011 of $(144,212). The decrease in loss from operations was primarily attributable to the changes in operating expenses as detailed above.

Other Income (Expense)

Net other income (expense) for the three months ended March 31, 2012 were $1,921,060, which consisted of $3 in interest income, $(15,252) in interest expense, $(83,333) in interest expense related to amortization of discount on notes and $2,019,642 of income related to the change in fair value of derivative liabilities, as compared to net other income (expense) of $(174,878) for the three months ended March 31, 2011, which consisted of $367 in interest income, $(2,506) in interest expense, $(148,089) in interest expense related to amortization of discount on notes and $(24,650) expense related to the change in fair value of derivative liabilities.

Net Income (Loss)

Net income (loss) for the three months ended March 31, 2012 was $1,823,248, as compared to net income (loss) for the three months ended March 31, 2011 of $(319,090). The change in net income (loss) was primarily attributable to the $2,019,642 of income recorded during the three months ended March 31, 2012 related to the change in fair value of derivative liabilities.

Inflation did not have a material impact on the Company’s operations for the period. Other than the foregoing, management knows of no trends, demands, or uncertainties that are reasonably likely to have a material impact on the Company’s results of operations.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at March 31, 2012 and December 31, 2011.

	March 31, 2012			December 31, 2011
Current Assets	$	34,006		$	58,165
Current Liabilities	$	953,277		$	2,760,074
Working Capital Deficit	$	(919,271	)	$	(2,701,909	)

At March 31, 2012 we had a working capital deficit of $(919,271), as compared to a working capital deficit of $(2,701,909), at December 31, 2011, a decrease of $1,782,638. The decrease is primarily related to a decrease in the fair market value of derivative liabilities offset by an increase in notes payable.

For the Three Months Ended March 31, 2012 and March 31, 2011

Net cash used in operating activities for the three months ended March 31, 2012 and three months ended March 31, 2011 was $(51,883) and $(134,116), respectively. The net income (loss) for the three months ended March 31, 2012 and three months ended March 31, 2011 was $1,823,248 and $(319,090), respectively. Cash used in operating activities for the three months ended March 31, 2012 consisted approximately of $18,900 for legal and professional fees, $17,100 for compensation and $15,200 in general and administrative expenses as compared to approximately $34,900 for legal and professional fees, $59,500 for compensation and $37,000 in general and administrative expenses for the three months ended March 31, 2011.

Net cash used through all investing activities for the three months ended March 31, 2012 and three months ended March 31, 2011, was $(40,610) and $(51,036), respectively. Cash used through investing activities for the three months ended March 31, 2012 and three months ended March 31, 2011 consisted of deposits on real estate contracts and land development costs incurred during the periods.

Net cash obtained through all financing activities for the three months ended March 31, 2012 and three months ended March 31, 2011, was $60,000 and $248,790, respectively. Cash obtained through financing activities for the three months ended March 31, 2012 consisted of net proceeds from short-term notes entered into during the period. Cash obtained through financing activities for the three months ended March 31, 2011 consisted of net proceeds from short-term notes entered into during the period.

On the Company’s Annual Report on Form 10-K, filed on March 30, 2012, our auditors have expressed their substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our management has no formal plan in place to address this concern but considers that we will be able to obtain additional funds by equity or debt financing and/or related party advances; however there is no assurance of additional funding being available.

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and the Company’s Chief Financial Officer, who concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that: (i) information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure by the Company; and (ii) information required to be disclosed in reports that filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s President and Chief Executive Officer and Chief Financial Officer and Director of Business Development, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6.

Exhibits

(a) The following exhibits are filed herewith:

31.1	Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	Interactive Data Files.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Southern USA Resources Inc. Registrant

Date: May 11, 2012	By:	/s/ Charles H. Merchant, Sr.
		Charles H. Merchant, Sr.
		Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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