STRAGENICS, INC. - FORM 10-K

Attached files

file	filename
EX-32.1 - CEO AND CFO CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT. - STRAGENICS, INC.	f10k2012ex32i_alleraydesab.htm
EX-21.1 - LIST OF SUBSIDIARIES - STRAGENICS, INC.	f10k2012ex21i_alleraydesab.htm
EX-10.1 - TERMINATION AGREEMENT TO ASSET ACQUISITION AGREEMENT BETWEEN THE COMPANY AND UTP HOLDINGS, LLC DATED APRIL 2, 2013. - STRAGENICS, INC.	f10k2012ex10i_alleraydesab.htm
EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO RULE 13A-14. - STRAGENICS, INC.	f10k2012ex31i_alleraydesab.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2012

o . TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ________ to ______

ALLERAYDE SAB, INC.

(Exact name of registrant as specified in its charter)

Florida	333-157565	26-4065800
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification Number)

	1 Meadow Road, New Balderton, Newark Nottinghamshire, UK NG243BP (Address of principal executive offices) 44-1636-613609 (Registrant’s Telephone Number)

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

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

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 o No x

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 o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes o No x

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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2012 was $304,500 based upon the price ($0.01) at which the common stock was last sold as of the last business day of the most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws. Our common stock is quoted on the OTC Pink under the symbol “ASAB”.

As of May 7, 2013, there were 89,005,250 shares of the issuer’s $0.0001 par value common stock issued and outstanding.

Documents incorporated by reference: None

Table of Contents

		Page
	PART I

Item 1	Business	4
Item 1A	Risk Factors	7
Item 1B	Unresolved Staff Comments	7
Item 2	Properties	7
Item 3	Legal Proceedings	8
Item 4	Mine Safety Disclosures	8

	PART II

Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	8
Item 6	Selected Financial Data	9
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	9
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	11
Item 8	Financial Statements and Supplementary Data	11
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	11
Item 9A	Controls and Procedures	11
Item 9B	Other Information	12

	PART III

Item 10	Directors and Executive Officers and Corporate Governance	13
Item 11	Executive Compensation	15
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	16
Item 13	Certain Relationships and Related Transactions	17
Item 14	Principal Accountant Fees and Services	17

	PART IV

Item 15	Exhibits, Financial Statement Schedules	18

Signatures		19

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:

●	The availability and adequacy of our cash flow to meet our requirements;

●	Economic, competitive, demographic, business and other conditions in our local and regional markets;

●	Changes or developments in laws, regulations or taxes in our industry;

●	Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities;

●	Competition in our industry;

●	The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;

●	Changes in our business strategy, capital improvements or development plans;

●	The availability of additional capital to support capital improvements and development; and

●	Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC.

This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Defined Terms

Except as otherwise indicated by the context, references in this Report to:

●	The “Company,” “we,” “us,” or “our,” are references to the combined business of the Company and Allerayde.

●	“UK” refer to the United Kingdom;

●	“Allerayde” refers to Allerayde SAB Limited, a limited liability company incorporated under the laws of UK.

●	“Pound” and “£” refers to the legal currency of the United Kingdom. According to the currency exchange website www.xe.com as of May 6, 2013, US$1.00= 1.55413£; 1 Pound = US $0.64345;

●	“U.S. dollar,” “$” and “US$” refer to the legal currency of the United States;

●	“Securities Act” refers to the Securities Act of 1933, as amended; and

●	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.

PART I

ITEM 1. BUSINESS

Overview

Allerayde SAB, Inc., formerly Resource Exchange of America Corp., (the “Company”), was incorporated under the laws of the State of Florida on January 15, 2009.

On February 22, 2010, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with UTP Holdings, LLC, a privately held Florida limited liability company (“UTP”). In accordance with the terms and provisions of the Purchase Agreement, the Company acquired one hundred percent of the assets of UTP. As a result of the Purchase Agreement transaction, our principal business became the business of UTP. We terminated the Purchase Agreement on April 2, 2013.

We dissolved two of our subsidiaries, Asset Recovery of America, LLC and Sea Lion Ocean Freight, LLC on September 23, 2011 and September 28, 2012, respectively. As of December 31, 2012, the Company did not own any subsidiary.

Description of Business

The Company is working to become a U.S. based scrap recycling powerhouse, combining demolition/asset recovery services with sorting, recycling, brokering and distribution. We intend to initially offer demolition services in Florida with plans to expand to other states in the Southeastern United States. The Company will sell ferrous and nonferrous metal to both U.S. buyers as well as buyers abroad. Our goal is to deliver reliable, high-quality services to all our clients, big and small, local, domestic and international.

The Company intends to take full advantage of the present economic climate to acquire a number of key pieces to realize its vision of becoming a scrap recycling powerhouse. Research indicates that rough economic periods can create good opportunities for companies to buy undervalued assets, thus, the Company has determined that this is potentially an excellent time to consolidate a number of demolition companies, metals processing yards, a recycling company and an international trading company specializing in trading ferrous and nonferrous metals.

Accordingly, we will seek to acquire companies with key personnel with either in-depth knowledge of sales to Brazil, Russia, India, China and Korea, or preferably with a General Administration for Quality Supervision Inspection Quarantine (“AQSIQ”) number, which allows for direct trade with China. If we are successful in rolling these individual companies into one single entity we will achieve significant economies of scale. Assets can be reused across divisions; newly purchased assets will have less idle time; stores can be combined; and administrative functions can be gathered, making it possible to vie for bigger demolition/asset recovery jobs due to bigger cash reserves, tools and manpower. With the current market situation, we believe that a consolidation process is the right strategic step, making it possible to grow the business significantly and capture a segment of the $30 billion recycling industry, of which 60% stems from recycling of ferrous and nonferrous metals.

We currently offer three main products in house or on a contract basis:

1. Demolition/Asset Recovery

2. Scrap Sorting, Processing, Shredding and Baling

3. Scrap brokering and sales

Business Strategy

We intend to fulfill our strategic goals by seeking to acquire underperforming companies within the scrap industry. The Company will seek to acquire companies at different stages of the scrap recycling process chain. We have come to the conclusion that in order to make an acceptable profit within the scrap and recycling business, it is better to make acquisitions at the bottom of the cycle, and to control the entire value chain, rather than only one or some of the phases (demolition/asset recovery, processing, sorting, selling and distribution).

The Company plans to acquire established dismantling and demolition/asset recovery companies with proven track records showing their ability to handle big and complex demolitions in a timely manner, with acceptable profit margins and impeccable safety records. These demolition companies will ensure a steady and viable inventory stream, which will itself be a source of income. Additionally, we plan to acquire one or more scrap processing yards with optimal locations between the demolition companies, major industrial centers and ports and rail. When identifying potential scrap processing yards, we will seek out companies that have the competencies and space to sort and bale all of the different kinds of scrap that the demolition companies can provide. Finally, the Company will attempt to locate a company that is both proficient in selling both ferrous and nonferrous scrap in the U.S. and also has in-depth knowledge of selling to major importers. This way, the Company will have control of the entire process and value chain.

Services and the Market Space

The Company will undertake demolition/asset recovery of obsolete housing quarters, refineries, processing plants, hotels, and any other kind of major structure that needs to be torn down by specialists. Depending on the size and kind of building, different kinds of demolition tactics will be employed. The different building materials will be cut down to size, sorted, and recycled depending on their type. Of particular interest to the Company will be metal plating, sheets, T- and I-beams and other structural pieces of metal, as well as nonferrous metals (copper, alloys, aluminum etc.) that are of widespread use in factories and processing plants.

Demolition is a blue-collar, labor-intensive job, and the average pay is 14% below the median for similar manual labor. As demolishing a building is a rather dangerous business, the Company will ensure that everyone at the demolition division is properly trained in safety measures and precautions. The safety record will in itself be used as a yardstick that the Company can measure its success by.

During the demolition/asset recovery process, the different materials are diligently sorted according to international specifications regarding grade, type and size. At major demolition sites, a mobile shredder could be used to cut the ferrous and nonferrous metals into smaller size. A mobile baler can create bales according to various ISRI specifications. The baler and mobile shredder can be taken to any location to bale ferrous and nonferrous metals on-site, which can then be put into containers that can be shipped directly to buyers. Baling and shredding allows for more weight to be put into ocean containers than if the material is loaded in loose weight. Having mobile equipment will allow the Company to optimize utilization of the equipment, acquire smaller processing facilities, and thereby increase overall profits.

Finally, the Company will provide a sales service, getting the best possible quotes for the ferrous and nonferrous metals acquired through demolition projects or purchased from others with excess stores. During 2010, the Company will seek to buy cheap stores of scrap metal to be sold later at a premium.

Market Analysis Summary

The US scrap industry is composed of approximately 8,000 companies with combined annual revenues of approximately $30 billion. The demolition and recycling business is unique in the sense that it is the only business with data covering almost two centuries. Analyzing this ancient data it has become evident that the scrap and recycling business is extremely cyclical. Basically, when times are booming, old factories, cars, trucks, equipment etc. are demolished and recycled, because businesses demand new and modernized factories, cars, trucks, equipment, which in-turn need new metal to be produced. Conversely, in a recession, the demand for new assets is so low that scrap metal prices plummet, and there is less business justification for demolishing anything.

Fortunately, the scrap and recycling business is counter-cyclical in other parts of the world: Even though the US scrap metal market has plummeted in the past year, the BRIC countries (Brazil, Russia, India and China) still show significant need for scrap metal for new projects. Despite the economic development in past years, there is an ever-increasing demand overseas for scrap metal due to the rapid growth and expansion of the BRIC countries, as well as in Korea, and this demand will continue to grow as the world becomes still more industrialized.

As the U.S. Scrap industry is extremely fragmented, with the top 50 companies holding only about 40% share of the market, the remaining 60% of the market space are struggling to make ends meet. There are approximately 7,950 companies in the U.S. scrap and recycling industry that are potential acquisition targets for the Company. Annually, the industry processes about 75 million tons of ferrous metals and 10 million tons of nonferrous metals. Ferrous and non-nonferrous metals account for 60% of the entire recycling industry.

The amount of metal being processed is highly demand-driven, so that, at the moment the amount of recycled metal is significantly less than just two years ago. U.S. demand for ferrous metal comes mainly from the U.S. steel industry, which is driven by the auto, machinery and construction industries. As the big three U.S. automotive companies have been taking some major hits in the past years, demand for metal has been heavily influenced. Fortunately, the markets abroad have more than outweighed this development.

Competition

The markets for scrap metal are highly competitive, both in the purchase of raw scrap and the sale of processed scrap. We will compete to purchase raw scrap with numerous independent recyclers, large public scrap processors and smaller scrap companies. Successful procurement of materials is determined primarily by the price and promptness of payment for the raw scrap and the proximity of the processing facility to the source of the unprocessed scrap. We may face competition for purchases of unprocessed scrap from producers of steel products, such as integrated steel mills and mini-mills, which have vertically integrated their operations by entering the scrap metal recycling business. Many of these producers have substantially greater financial, marketing and other resources. If we are unable to compete with these other companies in procuring raw scrap, our operating costs could increase.

We intend to operate with significant competitive advantages over other recycling and processing companies. Competition for sales of processed scrap is based primarily on the price, quantity and quality of the scrap metals, as well as the level of service provided in terms of consistency of quality, reliability and timing of delivery. To the extent that one or more of our competitors becomes more successful with respect to any key factor, our ability to attract and retain consumers could be materially and adversely affected. Our scrap metal processing operations will also face competition from substitutes for prepared ferrous scrap, such as pre-reduced iron pellets, hot briquetted iron, pig iron, iron carbide and other forms of processed iron. The availability of substitutes for ferrous scrap could result in a decreased demand for processed ferrous scrap, which could result in lower prices for such products.

Additionally, a demolition/asset recovery division brings in large quantities of material at discounted prices. Historically, demolition projects have produced scrap metal at a discount of up to 60% of the fair market value. This reduced cost of the scrap metal will allow the Company to offer more competitively priced material to buyers. The demolition division also brings in large quantities of scrap material.

Further, with the Company’s central location in Florida, several deep-water harbors are easily accessible, for instance in Tampa, Miami, Jacksonville and Savannah. The Company will seek to acquire demolition companies, which are proximately located to take advantage of these ports, and which have the experienced demolition bidding department and management skills necessary to carry out large demolition projects. Also, we will seek to have the heavy equipment needed to perform the demolition and the logistics and processing experience necessary to transport out the raw materials. The proximity to these ports also provides the Company with an opportunity to export material to overseas mills when domestic markets soften.

Finally, the Company will seek to have personnel with in-depth knowledge of clients in the BRIC countries and Korea. Preferably, it might be possible to acquire an AQSIQ number, which will allow for shipping directly to Chinese steel mills. AQSIQ numbers are very difficult to acquire and applications for them can take up to two years for approval. Being able to ship directly to Chinese mills will eliminate the brokerage network into China, which will increase sales margins by 3% to 10%. Already, the Company is establishing a diverse customer base to make these international sales. These competitive advantages will keep the Company profitable even during an economic downturn.

Advertising and Marketing

Our marketing strategy will begin with word of mouth, which will always be our most important means of promotion. If we generate sufficient revenues, we intend to implement an advertising and marketing campaign to increase awareness of the Company and to acquire new customers through multiple channels, including traditional and online advertising. We believe that the use of multiple marketing channels reduces reliance on any one source of customers, maximizes product awareness and promotes customer acquisition.

Insurance

We currently carry a one million dollar D&O liability insurance policy and intend to acquire and maintain insurance appropriate to our new activities in the future on such terms that management shall deem to be commercially reasonable.

Intellectual Property

Although limited, we will depend on our ability to develop and maintain the proprietary aspects of our technology to distinguish our services from our competitors’. To protect our proprietary technology and services, we will rely primarily on a combination of confidentiality procedures. It is our policy to require employees and consultants to execute confidentiality agreements and invention assignment agreements upon the commencement of their relationship with us. These agreements provide that confidential information developed or made known during the course of a relationship with us must be kept confidential and not disclosed to third parties except in specific circumstances and for the assignment to us of intellectual property rights developed within the scope of the employment relationship.

Costs and Effects of Compliance with Government Regulation and Environmental Laws

The nature of our business and previous operations by others at facilities owned or operated by us make us subject to significant government regulation, including stringent environmental laws and regulations. Among other things, these laws and regulations impose comprehensive statutory and regulatory requirements concerning, among other matters, the treatment, acceptance, identification, storage, handling, transportation and disposal of industrial by-products, hazardous and solid waste materials, waste water, storm water effluent, air emissions, soil contamination, surface and ground water pollution, employee health and safety, operating permit standards, monitoring and spill containment requirements, zoning, and land use, among others.

Various laws and regulations set prohibitions or limits on the release of contaminants into the environment. Such laws and regulations also require permits to be obtained and manifests to be completed and delivered in connection with the operations of our businesses, and in connection with any shipment of prescribed materials so that the movement and disposal of such material can be traced and the persons responsible for any mishandling of such material can be identified. Violation of such laws and regulations may and do give rise to significant liability, including fines, damages, fees and expenses, and closure of a site. Generally, the governmental authorities are empowered to act to clean up and remediate releases and environmental damage and to charge the costs of such cleanup to one or more of the owners of the property, the person responsible for the release, the generator of the contaminant and certain other parties or to direct the responsible party to take such action. These authorities may also impose a penalty or other liens to secure the parties’ reimbursement obligations.

Environmental legislation and regulations have changed rapidly in recent years, and it is possible that we will be subject to even more stringent environmental standards in the future. For these reasons, future capital expenditures for environmental control facilities cannot be predicted with accuracy; however, if environmental control standards become more stringent, our compliance expenditures could increase substantially. We cannot predict whether any such future inquiries or claims will in fact arise or what the outcome will be of such matters.

Moreover, environmental legislation has been enacted, and may in the future be enacted, to create liability for past actions that were lawful at the time taken but that have been found to affect the environment and to create public rights of action for environmental conditions and activities. If damage to persons or the environment has been caused, or is in the future caused, by hazardous materials’ activities of us or our predecessors, we may be fined and held liable for such damage. In addition, we may be required to remedy such conditions and/or change procedures. Thus, liabilities, expenditures, fines and penalties associated with environmental laws and regulations might be imposed on us in the future, and such liabilities, expenditures, fines or penalties might have a material adverse effect on our results of operations and financial condition.

We are subject to potential liability and may also be required from time to time to clean up or take certain remedial action with regard to sites currently or formerly used in connection with our operations. Furthermore, we may be required to pay for all or a portion of the costs to clean up or remediate sites we never owned or on which we never operated if we are found to have arranged for transportation, treatment or disposal of pollutants or hazardous or toxic substances on or to such sites. We are also subject to potential liability for environmental damage that our assets or operations may cause nearby landowners, particularly as a result of any contamination of drinking water sources or soil, including damage resulting from conditions existing prior to the acquisition of such assets or operations. Any substantial liability for environmental damage could materially adversely affect our operating results and financial condition, and could materially adversely affect the marketability and price of our stock.

Employees

As of December 31, 2013, we did not have any other employees. We frequently use consultants to assist in the completion of various projects. Our consultants are instrumental to keep the development of projects on time and on budget. We anticipate that our eventual staff of personnel will be composed of employees and independent contractors involved in demolition/asset recovery at one end, and in the market for sorted, processed, and baled ferrous and nonferrous metal at the other end of the value chain.

Recent Development

On March 21, 2013, the Company entered into a Share Exchange Agreement with Allerayde and Mike Rhodes, the sole member of Allerayde (the “Allerayde Stockholder”) (the “Share Exchange Agreement”), where the Allerayde Stockholder transferred 100% of the membership interests of Allerayde held by him, in exchange for an aggregate of 75,872,411 newly issued shares of our Common Stock (the “Share Exchange Transaction). As a result of the Share Exchange Transaction, Allerayde became a wholly-owned subsidiary of the Company, and the Company is engaged in the business of developing and manufacturing allergy management products in the United Kingdom and other countries such as the U.S. and Canada. On April 30, 2013, the Company changed its name to “Allerayde SAB, Inc.” with the trading symbol “ASAB.”

Allerayde was incorporated on January 13, 2012 in United Kingdom by Michael Rhodes and was 100% owned by Mr. Rhodes. Mr. Rhodes is the Chief Executive Officer of Allerayde.

The following diagram sets forth the structure of the Company as of the date of this Report herein:

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company owns an office for its research and development activities at European Space Agency Business Incubation Center, Harwell, Oxford, United Kingdom. Additional space may be required as we expand our business activities. We do not foresee any significant difficulties in obtaining any required additional facilities.

ITEM 3. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

PART II

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

Common Stock

Our Common Stock was currently quoted on the OTC Pink under the trading symbol “RXAC.PK," and since April 30, 2013, the Company’s trading symbol was changed to “ASAB.” Because we are quoted on OTC Pink, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange. The reported high and low bid and ask prices for the common stock are shown below for the year ended December 31, 2011 and 2012.

	Bid
	High		Low
2012 Fiscal Year
First Quarter	$	0.01	$	0.00
Second Quarter	$	0.01	$	0.00
Third Quarter	$	0.01	$	0.00
Fourth Quarter	$	0.02	$	0.00

	Bid
	High		Low
2011 Fiscal Year
First Quarter	$	0.12	$	0.05
Second Quarter	$	0.10	$	0.02
Third Quarter	$	0.04	$	0.00
Fourth Quarter	$	0.00	$	0.00

Record Holders

As of the date of this Report, an aggregate of 89,005,250 shares of our common stock were issued and outstanding and were owned by approximately 11 holders of record, based on information provided by our transfer agent.

Recent Sales of Unregistered Securities

Other than those previously reported, none.

Re-Purchase of Equity Securities

None.

Dividends

We have not paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future.

Securities Authorized for Issuance Under Equity Compensation Plans

None.

Transfer Agent

The transfer agent for the Company's common stock is Vstock Transfer, LLC, 77 Spruce Street, Suite 201, Cedarhurst, NY 11516.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital

	December 31,			December 31,
	2012 $			2011 $
Current Assets		4,000			-
Current Liabilities		2,597,387			2,751,817
Working Capital Deficit		(2,593,387	)		(2,751,817	)

Cash Flows

	Year Ended December 31, 2012 $		Year Ended December 31, 2011 $
Cash Flows provided by (used in) Operating Activities		-		(155,055	)
Cash Flows provided by Investing Activities		-		4,110
Cash Flows provided by (used in) Financing Activities		-		(16,783	)
Net Increase (decrease) in Cash During Period		-		(167,728	)

Operating Revenues

Operating revenues for the year ended December 31, 2012 were $-.

Operating revenues for the year ended December 31, 2011 were $49,257-.

Operating Expenses and Net Loss

Operating expenses for the year ended December 31, 2012 were $86,676, which is comprised of professional fees.

Operating expenses for the year ended December 31, 2011 were $330,730 and are comprised of depreciation of $75, selling, general, and administrative of $52,288 and professional fees of $278,367.

Net income for the year ended December 31, 2012 was $158,430 which is mainly attributed to the $331,373 gain on change in fair value of derivative liabilities.

Net loss for the year ended December 31, 2011 was ($543,892) which is mainly attributed to the $693,548 gain on change in fair value of derivative liabilities, offset by the accretion of discount on convertible debt of $860,816 and loss from operations of $322,101 due to the winding down of business activities.

Liquidity and Capital Resources

As at December 31, 2012 and 2011, the Company’s cash balance was $0. As at December 31, 2012 the total asset balance was $4,000.

As at December 31, 2012, the Company had total liabilities of $2,597,387 compared with total liabilities of $2,751,817 as at December 31, 2011. The decrease in total liabilities is mainly attributed to the decrease in derivative liabilities.

As at December 31, 2012, the Company had a working capital deficit of $2,593,387 compared to a deficit of $2,751,817 as at December 31, 2011.

Cashflows from Operating Activities

During the year ended December 31, 2012, the Company used $0 of cash for operating activities compared to $155,055 of cash used by operating activities during the year ended December 31, 2011.

Cashflows from Investing Activities

During the year ended December 31, 2012, the Company received $0 of cash from investing activities compared to $4,110 for the year ended December 31, 2011.

Cashflows from Financing Activities

During the year ended December 31, 2012, the Company used $0 of cash in financing activities compared to $16,783 for the year ended December 31, 2011.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Off-Balance Sheet Arrangements

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

Future Financings

We will continue to rely on debt and equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's consolidated financial statements, together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at page F-1.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, we are required to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based on the Company’s evaluation, management concluded that the Company’s disclosure controls and procedures were not effective at a reasonable assurance level such that the information relating to us and our consolidated subsidiary required to be disclosed in our Exchange Act reports (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure as of December 31, 2012.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including the Chief Executive Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 using the criteria established in “ Internal Control - Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2012, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

	1.	We have limited segregation of duties. – We have limited segregation of duties within our accounting and financial reporting functions. Segregation of duties within our company is limited due to the small number of employees that are assigned to positions that involve the processing of financial information.

	2.	We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.

	3.	We did not maintain appropriate cash controls – As of December 31, 2012, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts.

	4.	We did not implement appropriate information technology controls – As at December 31, 2012, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors.

Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2012 based on criteria established in Internal Control—Integrated Framework issued by COSO.

Continuing Remediation Efforts to address deficiencies in Company’s Internal Control over Financial Reporting

Our Board of Directors, in particular and in connection with the aforementioned deficiencies, intend to establish the following remediation measures:

	1.	Our Board of Directors will nominate an audit committee or a financial expert on our Board of Directors in fiscal year 2013.

	2.	We will appoint additional personnel to assist with the preparation of the Company’s monthly financial reporting, including preparation of the monthly bank reconciliations.

Changes in Internal Control over Financial Reporting

On December 12, 2012, Mr. Michael Rhodes resigned from all his positions as the Company’s sole officer and director, and Mr. Mark Dresner was appointed as the Company’s CEO and director. On March 21, 2013, Mr. Mark Dresner resigned from all of his positions with the Company and Mr. Michael Rhodes was appointed as the CEO, President, Treasurer, Secretary and director of the Company. Except for the foregoing, there has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2012, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.

Identification of Directors and Executive Officers

Our current sole director and executive officer is as follows:

Name and Age	Position(s) Held	Tenure	Other Public Company Directorships
Michael J. Rhodes, 58	CEO, President, and Director	From May 1 to Dec 12, 2012	None

Below are our former director and officer during the fiscal year 2012:

Name and Age	Position(s) Held	Tenure	Other Public Company Directorships
Mark Dresner, 56	CEO and Director	From Dec 12, 2012 to March 21, 2013	None

Background and Business Experience

Michael J. Rhodes has over 30-year experience in pharmaceutical, medical diagnostic and consumer healthcare industry, specializing in the field of allergy. He worked with Pharmacia for over 10 years, and becoming Divisional Director ultimately responsible to the Swedish parent company for the management of a division of over 50 people and a turnover of over £13 million. His experience includes the introduction of Epipen in the early 1990s and subsequently developing the Anapen adrenaline auto-injector. He was instrumental in creating the market for adrenaline auto-injectors in the UK and Ireland in the early 1990’s and went on to initiate the marketing of adrenaline pens via Anapen in the majority of Europe with great success in France, Holland, Germany, Scandinavia, Portugal and Greece. He has been successful in selling to the medical profession and the setting up of distributors in Europe and North America. He sold his interest in Anapen in February 2000.

Director Qualifications

When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Board of Directors focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a director.

We believe Mr. Michael Rhodes is well suited to sit on our board of directors based on his extensive experience in the field of anaphylaxis pen and allergy prevention. He led the development of the third generation anaphylaxis pen, AAAPen®, and the concept of a communicator device following extensive research. He identified the market need for allergen avoidance as early as 1989 and he researched the market and pioneered barrier covers as a key product area. In 1990 he established Allerayde UK Limited to supply barrier covers and associated allergy prevention products in the U.K. and Ireland and created and developed the allergen avoidance market in the U.K. by working closely with leading allergy clinicians. Through ongoing product development, product range additions and developing products locally or by sourcing them from around the world, he has ensured that Allerayde products continue to be among the very best and most effective in the marketplace.

Term of Office

The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors. Each of our officers serves until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation or removal by the Board of Directors. At the present time, members of the board of directors are not compensated for their services to the board. Each Director shall hold office until the next annual meeting of stockholders and until his/her successor shall have been duly elected and qualified.

Identification of Significant Employees

During fiscal year 2012, there were no other significant employees other than Michael Rhodes and Mark Dresner during their respective terms in office. Currently, other than Michael J. Rhodes, we do not have any significant employees.

Family Relationships

There are no family relationships among our officers, directors or persons nominated for such positions.

Involvement in Certain Legal Proceedings

During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:

(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

ii. Engaging in any type of business practice; or

iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

i. Any Federal or State securities or commodities law or regulation; or

ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Audit Committee and Audit Committee Financial Expert

The Company does not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.

The Company intends to establish an audit committee of the board of directors, which will consist of independent directors. The audit committee’s duties will be to recommend to the Company’s board of directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.

Nominating Committee

The Company does not have a separately designated nominating committee. The Company does not have such a committee because we currently believe that given our small size, the fact that a majority of the members of our Board are not currently considered “independent”, and because no Company securities are traded on a stock exchange, that such a committee is not currently necessary. Unless and until the Company establishes a separate nominating committee, when a board vacancy occurs, the remaining board members will participate in deliberations concerning director nominees. In the future the Company may determine that it is appropriate to designate a separate nominating committee of the board of directors comprised solely of independent directors.

To date, the Board of Directors has not adopted a formal procedure by which stockholders may recommend nominees to the board of directors. However, our bylaws set forth the procedure by which eligible stockholders may nominate a person to the Board of Directors, which in relevant part provides that:

The Board of Directors shall nominate candidates to stand for election as directors; and other candidates also may be nominated by any Corporation stockholder, provided that such other nomination(s) are submitted in writing to the Secretary of the Corporation no later than 90 days prior to the meeting of stockholders at which such directors are to be elected, together with the identity of the nominator and the number of shares of the Corporation's stock owned, directly or indirectly, by the nominator. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.4 of the Bylaws, and each director elected shall hold office until such director's successor is elected and qualified or until the director's earlier death, resignation or removal. Directors need not be stockholders.

Code of Ethics

Our Board of Directors anticipate to adopt a new code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The new code will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code.

Compliance with Section 16(a) of the Exchange Act

We do not yet have a class of equity securities registered under the Securities Exchange Act of 1934, as amended. Hence, compliance with Section 16(a) thereof by our officers and directors is not required.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our executive officers during the years ending December 31, 2012 and 2011.

Summary Compensation Table

Name and

principal position

Year

Salary ($)

Bonus

($)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings ($)

All Other Compensation ($)

Total

($)

Michael J. Rhodes, President, CEO and Director (1)

2012

nil

Mark Dresner

Former President, CEO (2)

2012

nil

Kenneth McBride

2012

nil

Former President, CEO (3)

2011

nil

Dana Pekas

2012

nil

Former President, CEO, CFO, Secretary and Director(4)

2011

nil

(1) Michael Rhodes was appointed as the Company’s CEO, President and director on May 1, 2012 but he resigned from all positions on December 12, 2012. He was re-elected as the Company’s CEO, President and director on March 21, 2013.

(2) Mark Dresner was the Company’s CEO and director from December 12, 2012 through March 21, 2013.

(3) Kenneth McBride served as the Company’s CEO, President and director from October 21, 2011 through May 1, 2012.

(4) Dana Pekas resigned as CEO, President and director of the Company on October 21, 2011. During the fiscal year 2011, a company controlled by Dana Pekas was compensated for his services rendered as an officer of the Company which is being deferred until such time as the Company has sufficient funds to initiate payment.

Narrative Disclosure to Summary Compensation Table

There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

Outstanding Equity Awards at Fiscal Year-End

No named executive officer received any equity awards, or holds exercisable or unexercisable options, as of the years ended December 31, 2012 and 2011.

Compensation of Directors

Our directors who are also our employees receive no extra compensation for their service on our board of directors.

Compensation Committee

We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

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

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of the date of this Annual Report by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.

As of date of this Annual Report, there were 89,005,250 shares of common stock issued and outstanding.

Name and Address of Beneficial Owner(1)	Amount, Nature and Percentage of Beneficial Ownership (2)
(Officers and Directors)
Michael Rhodes (Chairman and CEO)	75,872,411 shares (voting)	85.24	%

All Directors and Officers, as a Group	75,872,411 shares (voting)	85.24	%

(5% Securities Holders)
Michael Rhodes (Chairman and CEO)	75,872,411 shares (voting)	85.24	%

(1)	The address for the sole officer and director is at 1 Meadow Road, New Balderton, Newark, Nottinghamshire, NG24 3BP, UK.

(2)

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this Report, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on as of the date of this Annual Report (89,005,250 shares), and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Related Party Transactions

During the fiscal year ended December 31, 2012, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.

With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:

● Disclosing such transactions in reports where required;

● Disclosing in any and all filings with the SEC, where required;

● Obtaining disinterested directors consent; and

● Obtaining shareholder consent where required.

Director Independence

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTC Pink on which shares of Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. According to the NASDAQ definition, Michael J. Rhodes is not deemed as an independent director of the Company.

Review, Approval or Ratification of Transactions with Related Persons

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

	Year Ended December 31, 2012		Year Ended December 31, 2011
Audit fees	$	38,500	$	13,500
Audit-related fees	$	nil	$	nil
Tax fees	$	nil	$	nil
All other fees	$	nil	$	nil
Total	$	38,500	$	13,500

Audit Fees

We incurred $38,500 and $13,500 in fees to our principal independent accounting firm for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2012 and 2011, respectively.

Audit-Related Fees

The aggregate fees billed during the years ended December 31, 2012 and 2011 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A) was $nil and $nil, respectively.

Tax Fees

The aggregate fees billed during the years ended December 31, 2012 and 2011 for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning was $nil and $nil, respectively.

All Other Fees

The aggregate fees billed during the years ended December 31, 2012 and 2011 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A was $nil and $nil, respectively.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit Number	Description of Exhibit	Filing Reference
3.01	Articles of Incorporation	Filed with the SEC on February 27, 2009 as part of our Registration Statement on Form S-1.
3.01(a)	Amended Articles of Incorporation	Filed with the SEC on February 25, 2010 as part of our Current Report on Form 8-K.
3.01(b)	Amended Articles of Incorporation	Filed with the SEC on May 4, 2012 as part of our Current Report on Form 8-K.
3.01(c)	Amendment to Articles of Incorporation	Filed with the SEC on January 31, 2013 as part of our Current Report on Form 8-K.
3.01(d)	Amendment to Articles of Incorporation	Filed with the SEC on May 1, 2013 as part of our Current Report on Form 8-K.
3.02	Bylaws	Filed with the SEC on February 27, 2009 as part of our Registration Statement on Form S-1.
10.01	Termination Agreement to Asset Acquisition Agreement between the Company and UTP Holdings, LLC dated April 2, 2013.	Filed herewith
21.01	List of Subsidiaries	Filed herewith.
31.01	Certification of Principal Executive and Financial Officer Pursuant to Rule 13a-14.	Filed herewith.
32.01	CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act.	Filed herewith.

SIGNATURES

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

	ALLERAYDE SAB, INC. (f.k.a RESOURCE EXCHANGE OF AMERICA CORP.)
Dated: May 7, 2013
	/s/ Michael J. Rhodes
	By: Michael J. Rhodes
	Title: President, CEO,, Secretary and Treasurer

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Dated: May 7, 2013
	/s/ Michael J. Rhodes
	Michael J. Rhodes, Director

ALLERAYDE SAB, INC.

Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

	Index

Consolidated Balance Sheets	F–2

Consolidated Statements of Operations	F–3

Consolidated Statement of Stockholders’ Deficit	F–4

Consolidated Statements of Cash Flows	F–5

Notes to the Consolidated Financial Statements	F–7

Bobbitt, Pittenger & Company, P.A.

Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Allerayde SAB, Inc. (formerly Resource Exchange of America Corp.)

We have audited the accompanying consolidated balance sheets of Allerayde SAB, Inc. (formerly Resource Exchange of America Corp.) as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended. Allerayde SAB, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficit and has an accumulated deficit since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Certified Public Accountants

Sarasota, Florida

May 7, 2013

F-1

ALLERAYDE SAB, INC.

Consolidated Balance Sheets

(Expressed in US Dollars)

	December 31,			December 31,
	2012			2011
	$			$

ASSETS

Current Assets

Accounts Receivable		4,000			-

Total Current Assets		4,000			-

Total Assets		4,000			-

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable		32,000			28,033
Accrued liabilities		75,500			75,500
Accrued interest payable		144,373			87,030
Due to related parties (Note 3)		431,061			405,345
Loans payable (Note 4)		30,555			30,555
Convertible debt (Note 5)		1,517,978			1,428,061
Derivative liabilities (Note 6)		365,920			697,293

Total Liabilities		2,597,387			2,751,817

Stockholders’ Deficit
Preferred Stock Authorized: 100,000,000 preferred shares. No shares issued and outstanding at December 31, 2012 and 2011
Common Stock Common Stock Authorized: 400,000,000 common shares, $0.0001 par value Issued and outstanding: 786,328 shares		79			79
Additional paid-in capital		53,300			53,300
Accumulated deficit		(2,646,766	)		(2,805,196	)

Total Stockholders' Deficit		(2,593,387	)		(2,751,817	)

Total Liabilities and Shareholders' Deficit		4,000			-

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

F-2

ALLERAYDE SAB, INC.

Consolidated Statements of Operations

(Expressed in US Dollars)

	Year Ended			Year Ended
	December 31,			December 31,
	2012			2011
	$			$


Revenues		-			49,257

Cost of revenues		-			40,628

Gross Profit		-			8,629

Operating Expenses

Depreciation		-			75
Selling, general, and administrative		-			52,288
Professional fees		86,676			278,367

Total Expenses		86,676			330,730

Loss from Operations		(86,676	)		(322,101	)

Other Income (Expense)
Debt Forgiveness		-			29,732
Accretion of discounts on convertible debt		(3,208	)		(860,816	)
Gain on change in fair value of derivative liabilities		331,373			693,548
Interest expense		(83,059	)		(84,255	)

Total Other Income (Expense)		245,106			(221,791	)

Net Income (Loss) for the Period		158,430			(543,892	)

Net Income (Loss) Per Share, Basic		0.20			(0.71	)

Net Income (Loss) Per Share, Diluted		0.03			(0.03	)

Weighted Average Shares Outstanding		786,328			765,014

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

F-3

ALLERAYDE SAB, INC.

Consolidated Statement of Stockholders’ Deficit

(Expressed in US Dollars)

					Additional
	Shares(1)				Paid-in		Accumulated
			Amount		Capital		Deficit			Total
	#		$		$		$			$

Balance, December 31, 2010		750,000		75		19,504		(2,261,304	)		(2,241,725	)

Conversion of debt to equity		36,328		4		33,796					33,800

Net loss								(543,892	)		(543,892	)

Balance, December 31, 2011		786,328		79		53,300		(2,805,196	)		(2,751,817	)

Net income								158,430			158,430

Balance, December 31, 2012		786,328		79		53,300		(2,646,766	)		(2,593,387	)

(1)	Shares have been restated, as appropriate, to reflect the one for one hundred stock split effected January 31, 2013.

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

F-4

ALLERAYDE SAB, INC.

Consolidated Statements of Cash Flows

(Expressed in US Dollars)


	Year Ended			Year Ended
	December 31,			December 31,
	2012			2011
	$			$
Operating Activities

Net income for the period		158,430			(543,892	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discounts on convertible debt		3,208			860,816
Depreciation		-			75
Professional fees paid through issuance of convertible debt		73,176			-
Fixed assets exchanged for settlement of legal expenses		-			1,233
Note Receivable exchanged for settlement of legal expenses		-			14,563
Gain on change in fair value of derivative liabilities		(331,373	)		(693,548	)
Gain on forgiveness of debt		-			(29,732	)
Changes in operating assets and liabilities:
Prepaid expenses		-			2,249
Accounts payable		13,500			18,894
Accrued liabilities		-			10,500
Accrued interest payable		57,343			58,139
Due to related parties		25,716			145,648

Net Cash Used In Operating Activities		-			(155,055	)

Investing Activities

Proceeds from note receivable		-			4,110

Net Cash Provided By Investing Activities		-			4,110

Financing Activities

Repayments of loans payable		-			(183,232	)
Proceeds from loans payable		-			45,964
Proceeds from convertible debt		-			125,000
Repayment of convertible debt		-			(4,515	)

Net Cash Used in Financing Activities		-			(16,783	)

Change in Cash		-			(167,728	)

Cash, Beginning of Period		-			167,728

Cash, End of Period		-			-

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

F-5

ALLERAYDE SAB, INC.

Consolidated Statements of Cash Flows (Continued)

(Expressed in US Dollars)

Supplemental Disclosures:
Non-cash Financing Activities
Professional fees paid through issuance of convertible debt	73,176
Account receivable established through issuance of convertible debt	4,000
Payment of accounts payable through issuance of convertible debt	9,533
Interest paid	-	32,636
Income taxes paid	-	–
Inventory acquired through loan payable	-	20,268
Inventory transferred to an outside party for full satisfaction of loan payable	-	(20,268	)

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

F-6

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

1. Nature of Operations and Continuance of Business

Allerayde SAB, Inc., formerly known as Mobieyes Software, Inc. (the “Company”) was incorporated under the laws of the State of Florida on January 15, 2009. On February 23, 2010, the Company changed its name to Resource Exchange of America Corp. Effective April 30, 2013, the Company changed its name to Allerayde SAB, Inc. The Company’s prior business was a mobile enterprise software company aimed at improving productivity of field service organizations. Upon completion of the acquisition of assets from UTP Holdings, LLC on February 22, 2010, the Company adopted the business of UTP Holdings, LLC. The Company is now engaged in the business of recycling ferrous and nonferrous metals to customers in the United States and abroad.

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. As at December 31, 2012, the Company has a working capital deficit of $2,593,387 and has an accumulated deficit of $2,646,766 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

F-7

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

2. Summary of Significant Accounting Principles (continued)

Basis of Presentation

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The consolidated financial statements include the financial statements of the Company and its’ wholly-owned subsidiary, Sea Lion Ocean Freight, LLC through September 28, 2012. All inter-company transactions and balances have been eliminated upon consolidation.

Use of Estimates

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

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances and are unsecured. Management provides for probable uncollectible amounts through bad debt expense. Management believes the outstanding balance in accounts receivable at December 31, 2012 is fully collectible, therefore no allowance for uncollectible accounts is deemed necessary.

F-8

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

2. Summary of Significant Accounting Principles (continued)

Revenue Recognition

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

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

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

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

F-9

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

2. Summary of Significant Accounting Principles (continued)

Foreign Currency Translation

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

Earnings Per Share

The Company computes net income per share in accordance with ASC 260, "Earnings The Company computes net income per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS includes the effects of dilutive convertible debt shares. On January 31, 2013, the Company implemented a 1 for 100 shares reverse split of its issued and outstanding common stock. All share and per share amounts have been retroactively adjusted to reflect the reverse stock split. Basic and diluted earnings per share have been computed as follows:

	December 31, 2012		December 31, 2011

Numerator for earnings per share - net income (loss)	$	158,430	$	(543,892)

Denominator:
Denominator for basic earnings per share – weighted
average shares		786,328		765,014
Effect of dilutive securities:
Convertible debt shares		4,305,020		16,138,322
Denominator for diluted earnings per share		5,091,348		16,903,336

Earnings (loss) per share - basic	$	0.20	$	(0.71)
Earnings (loss) per share - diluted	$	0.03	$	(0.03)

F-10

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

2. Summary of Significant Accounting Principles (continued)

Comprehensive Income

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2012 and 2011, the Company had no items representing comprehensive income.

Income Taxes

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

Financial Instruments and Fair Value Measures

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

Level 1

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

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active

F-11

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

2. Summary of Significant Accounting Principles (continued)

Financial Instruments and Fair Value Measures (continued)

markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

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

The Company’s financial instruments consist principally of accounts payable, accrued liabilities, accrued interest payable, loans payable, and convertible debt. Pursuant to ASC 820, the fair value of of derivative liabilities is determined based on “Level 2” inputs, which consists of inputs (volatility, risk free rate, conversion price, quoted market price) that are observable or can be derived principally from, or corroborated by, observable market data which are used in the Black-Scholes calculation. The recorded values of accounts receivable and accounts payable, accrued liabilities and loans payable approximate their current fair values because of their nature and respective maturity dates or durations. The carrying amount of the convertible debt approximates fair value because they are priced at interest rates consistent with the Company’s current borrowing rates on similar debt based on the security underlying the debt or the conversion features associated with the debt.

Recent Accounting Pronouncements

In June 2011, the FASB issued new guidance on the presentation of comprehensive income. Specifically, the new guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this update did not have an impact on the financial statements.

F-12

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

3. Related Party Transactions

(a) During the year ended December 31, 2012, the Company incurred $nil (2011 - $3,610) for an automobile leased by the former President of the Company

(b) During the year ended December 31, 2012, the Company incurred $nil (2011 - $14,000) in rent to a company controlled by the former President of the Company.

(c) During the year ended December 31, 2012, the Company incurred $nil (2011 - $200,000) in consulting fees to a company controlled by the former President of the Company.

(d) As at December 31, 2012, the Company owed $1,781 (December 31, 2011 - $1,781) to the former President of the Company, which is non-interest bearing, unsecured, and due on demand.

(e) As at December 31, 2012 and 2011, the Company owed a total of $395,385 to companies controlled by the former President of the Company. The amount owed is unsecured and due on demand.

(f) During the year ended December 31, 2011 the company defaulted on a line of credit with the bank. A company owned by the former President of the Company was required to make the payments on behalf of the Company. The total paid as of December 31, 2012 is $33,895.

4. Loans Payable

(a) As at December 31, 2012, the Company owed $30,555 (December 31, 2011 - $30,555) to a non-related party which is non-interest bearing, unsecured, and due on demand.

F-13

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

5. Convertible Debt

(a) On February 22, 2010, the Company issued a $250,000 promissory note to the President of the Company. The note bears interest at 10% per annum, is unsecured, and was due on December 31, 2011. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversions feature of $175,081 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of December 31, 2012 is $250,000. During the year ended December 31, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $150,981 and as of December 31, 2012, the fair value of the conversion option derivative liability was $nil.

(b) On April 13, 2010, the Company entered into a $250,000 draw down promissory note agreement with a non-related party. Amounts drawn on this credit facility bear interest at 8% per annum, are unsecured, and were due on April 13, 2011. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the thirty trading days immediately preceding the conversion date. On October 14, 2010, the conversion price was changed to be fixed at $0.45 per share.

F-14

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

5. Convertible Debt (continued)

As of December 31, 2012, the outstanding balance is $250,000. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $147,140 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of December 31, 2012 is $250,000. As of December 31, 2012, the fair value of the conversion option derivative liability was $nil.

(c) Effective January 31, 2005, the President of the Company entered into a line of credit agreement with a financial institution allowing for borrowings of up to $800,000 with annual interest at prime to be used to fund the operations of the Company. The line of credit is secured by the principal residence of the President of the Company. Monthly interest-only payments are required. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal and interest outstanding at any time on the line of credit. The President of the Company may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date. The maturity date was December 31, 2011.

As of December 31, 2012, the outstanding balance is $788,469 (December 31, 2011 - $788,469). The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $592,991 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of December 31, 2012 is $788,469. During the year ended December 31, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $402,315 and as of December 31, 2012, the fair value of the conversion option derivative liability was $nil.

F-15

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

5. Convertible Debt (continued)

On August 18, 2011 the company defaulted on the payments owed to the financial institution. As a result, UTP Holdings LLC was obligated to make the monthly bank payments on behalf of the company. UTP Holdings LLC notified the company of the default and the payments. The company is recording the additional amounts due to UTP holdings as a current liability.

(d) Effective March 18, 2010, the Company entered into a line of credit agreement with a company owned by the President of the Company allowing for borrowings of up to $150,000 bearing interest at 8% per annum. The line of credit is unsecured and all borrowings plus interest are due on demand. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal outstanding at any time on the line of credit. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date.

The balance on the line of credit as of December 31, 2012 is $50,300. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $11,523 with an equivalent discount on the convertible debt. During the year ended December 31, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $27,752 and as of December 31, 2012 the fair value of the conversion option derivative liability was $nil.

(e) On January 20, 2011, the Company issued an 8% convertible note for proceeds of $32,500 which matured on October 24, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date. On July 28, August 2, and August 8, 2011 the holder of this note opted to convert the outstanding amount, including interest, to 3,632,792 shares common stock.

F-16

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

5. Convertible Debt (continued)

(f) On February 23, 2011, the Company issued an 8% convertible note for proceeds of $37,500 which matured on November 28, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $37,500 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of December 31, 2012 is $37,500. During the year ended December 31, 2012, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $101,928 and as of December 31, 2012, the fair value of the conversion option derivative liability was $149,417.

(g) On March 24, 2011, the Company issued an 8% convertible note for proceeds of $27,500 which matured on December 28, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $27,500 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of December 31, 2012 is $27,500. During the year ended December 31, 2012, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $74,323 and as of December 31, 2012, the fair value of the conversion option derivative liability was $108,928.

F-17

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

5. Convertible Debt (continued)

(h) On May 25, 2011 the Company issued an 8% convertible note for proceeds of $27,500 which matured on February 27, 2012. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $27,500 with an equivalent discount on the convertible debt. During the year ended December 31, 2012, $3,208 has been accreted increasing the carrying value of the convertible debt to $27,500. During the year ended December 31, 2012, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $73,424 and as of December 31, 2012, the fair value of the conversion option derivative liability was $107,575.

(i) On August 31, 2012 the Company issued a 6% convertible note for proceeds of $20,000 which matures on August 30, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days.

(j) On November 16, 2012 the Company issued a 6% convertible note for proceeds of $66,709 which matures on November 16, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days.

In May 2012, the Company increased the authorized shares to 500,000,000 consisting of two classes to be designated as common stock and preferred stock. The total number of common stock shares authorized was increased to 400,000,000 and preferred stock shares totaling 100,000,000 were authorized.

F-18

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

6. Derivative Liabilities

The conversion options of the convertible debt disclosed in Note 5 are required to record derivatives at their estimated fair values on each balance sheet date with changes in fair values reflected in the statement of operations.

For the convertible debt that has matured but has not yet been satisfied, the debt holders still have the option to convert the debt into common shares. These derivative liabilities are measured at intrinsic value as the related options have no expected life because the related debt is beyond the contracted maturity date.

7. Segmented Information

The Company is organized into segments based on operations. These operating segments have been aggregated into two reportable business segments: sales and ocean freight export services. The reportable segments were determined in accordance with the way that management of the Company develops and executes the Company’s operations.

In accordance with ASC 280, “Segment Reporting”, for purposes of business segment performance measurement, the Company does not allocate to the business segments items that are of a non-operating nature or corporate organizational and functional expenses of a governance nature. Corporate expenses consist of corporate office expenses including compensation, automobile, occupancy, depreciation, and other administrative costs.

For the year ended December 31, 2012:

	Sales $		Export Services $		Corporate and Other $			Total $

Revenues		–		-		–			-
Operating net income (loss)		–		-		(86,676	)		(86,676	)
Interest expense		–		–		83,059			83,059
Depreciation		–		–		-			-
Total assets		-		-		4,000			4,000

F-19

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

For the year ended December 31, 2011:

Sales

Export

Services

Corporate and Other

Total

Revenues

–

49,257

–

49,257

Operating net income (loss)

–

12,724

(334,825

)

(322,101

)

Interest expense

–

84,255

Depreciation

–

Total assets

–

8. Income Taxes

The Company has tax losses which may be applied against future taxable income subject to limitations. The potential tax benefits arising from these losses carried forward expires beginning in 2031 and are offset by a valuation allowance due to the uncertainty of profitable operations in the future. The net operating losses carried forward were $1,423,347 at December 31, 2012. The valuation allowance increased $57,710 and $128,052 during the years ended December 31, 2012 and 2011, respectively. The significant components of the deferred income tax asset as at December 31, 2012 and 2011 are as follows:

	2012			2011
	$			$

Net operating losses carried forward		483,938			426,228

Valuation allowance		(483,938	)		(426,228	)

Net deferred income tax asset		-			-

F-20

ALLERAYDE SAB, INC.

Notes to the Consolidated Financial Statements

December 31, 2012

(Expressed in US dollars)

9. Subsequent Events

On January 31, 2013, the Company amended its Articles of Incorporation to increase the total authorized shares of common stock, par value $.0001 per share from 250,000,000 shares to 400,000,000 shares and to additionally authorize a total of 100,000,000 shares of preferred stock, par value $.0001 per share which may be issued by the Company.

On January 31, 2013, the Company implemented a 1 for 100 shares reverse split of its issued and outstanding common stock. All share and per share amounts have been retroactively adjusted to reflect the reverse stock split.

On March 21, 2013, the Company entered into a Share Exchange Agreement with Allerayde SAB Limited (“Allerayde”) and Mike Rhodes, the sole member of Allerayde (the “Allerayde Stockholder”) (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, on March 21, 2013 the Allerayde Stockholder transferred 100% of the membership interests of Allerayde held by him, in exchange for an aggregate of 75,872,411 newly issued shares of our Common Stock. The shares of the Company’s Common Stock acquired by the Allerayde Stockholders in this transaction constitute approximately 98.97% of the Company’s issued and outstanding Common Stock on a fully-diluted basis giving effect to the share exchange. The acquisition was accounted for as a recapitalization effected by a share exchange. Allerayde is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of Allerayde, the acquired entity, have been brought forward at their book value and no goodwill has been recognized. After the consummation of the Share Exchange Transaction, Allerayde became a wholly-owned subsidiary of the Company, and the Company is engaged in the business of developing and manufacturing allergy management products in the United Kingdom and other countries such as the U.S. and Canada.

Allerayde was incorporated on January 13, 2012 in United Kingdom. The Company is engaged in the business of developing and manufacturing an innovative anaphylaxis pen product and other consumer health care products for allergy and eczema patients.

On April 30, 2013, Allerayde SAB, Inc. (f/k/a Resource Exchange of America Corp., the “Company”) amended its Articles of Incorporation (the “Amendment”) to change its name from “Resource Exchange of America Corp.” to “Allerayde SAB, Inc.” (the “Name Change”). As a result of the Name Change, the Company’s trading symbol is changed to “ASAB.” The Amendment became effective on April 30, 2013 upon approval from the Financial Industry Regulatory Authority (“FINRA”).

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STRAGENICS, INC. - FORM 10-K - May 7, 2013

Attached files

STRAGENICS, INC. Reports