PETRO USA, INC. - Quarter Report: 2010 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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All State Properties Holdings, Inc.

 (Exact name of registrant as specified in its charter)

6465 N. Quail Hollow Rd., Ste. 200, Memphis, TN  38120

(Address of Principal Executive Office) (Zip Code)

(901) 271-3779

(Registrant’s telephone number, including area code)

360 Main Street, Washington, VA  22747

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

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Securities registered pursuant to Section 12(b) of the Act:   

133,466,488

Title of Class: Common Stock, $.0001 par value per share

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

Indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES  x    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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  x   NO ¨

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. YES ¨  NO x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

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

YES  ¨    NO ¨

The aggregate market value of the common stock held by non-affiliates of Registrant was $ 2,196,134, as of May 14, 2010 based on the last sale price of $.09 for each share of common stock on such date.  As of May 14, 2010, there were 133,466,488 shares outstanding.

All State Properties Holdings, Inc.

FORM 10-Q QUARTERLY REPORT

March 31, 2010

INDEX

1

Organization, Description of Business, and Basis of Accounting

Business Organization

All-State Properties Holding, Inc., a corporation (the “Company”) was organized under the state of Nevada on April 24, 2008 to conduct business formerly carried on by its predecessor partnership, All-State Properties L.P. (the “Partnership”). The Partnership merged with the Company on May 29, 2008. The Company acquired all of the assets and assumed all of the liabilities and obligations of the Partnership. At May 29, 2008 each unit, par value $0.001 per share of the Partnership was converted into one issued and outstanding share of par value $0.0001 common stock of the Corporation.

The Company’s fiscal year end is June 30th. The company re-entered the development stage July 1, 2007 when revenue generation ceased and the Company refocused its’ activities to raising capital. In accordance with the current accounting guidance, it is considered a Development Stage Company.  

Accounting Basis

These financial statements have been prepared on the accrual basis of accounting following generally accepted accounting principles of the United States of America consistently applied.

Recently Adopted Accounting Pronouncements

Effective June 30, 2009, the Company adopted a new accounting standard issued by the FASB related to the disclosure requirements of the fair value of the financial instruments. This standard expands the disclosure requirements of fair value (including the methods and significant assumptions used to estimate fair value) of certain financial instruments to interim period financial statements that were previously only required to be disclosed in financial statements for annual periods. In accordance with this standard, the disclosure requirements have been applied on a prospective basis and did not have a material impact on the Company’s financial statements.

In June 2009, the Financial Accounting Standards Board ("FASB") established the FASB Accounting Standards Codification ( the "Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP.  Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  The introduction of the Codification does not change GAAP and other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the our consolidated financial statements.

Recently Issued Accounting Standards

In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective for the Company on January 1, 2011.

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective for the Company on January 1, 2011.

2.

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  However, the Company has incurred significant losses and is dependent on obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain the necessary funding it could cease operations as a new enterprise.  This raises substantial doubt about the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments that might result from this uncertainty.

3.

   Capital Stock

The Company has 10,000,000 shares of Preferred Stock authorized at a par value of $0.0001 and none has been issued at March 31, 2010 and June 30, 2009.

On September 8, 2009, the Company increased the authorized Common Stock from 100,000,000 to 200,000,000 shares. These shares had an authorized par value of $0.0001.  

In conjunction with the conversion to a corporation, occurring during fiscal 2008, the company issued 3,118,065 shares on a one for one basis for each partnership unit.  Concurrent with that transaction

129,950 shares were retired.  Additionally, 5,021,000 Founder’s shares were issued in conjunction with the change in control of the Company.

Capital Stock (Cont.)

Also occurring during fiscal 2008, the Company issued 800,000 shares of its’ common stock in exchange for a note payable from a related party. No gain or loss was recorded on the settlement of this note due to its’ related party nature.

Pursuant to the agreement with MB Consulting Services, LLC (hereinafter “MB Consulting”) through which MB Consulting would acquire fifty and one one-thousandth percent (50.001%) of the anti-dilutive capital stock of the Company, was issued  9,180,885 shares and later issued an additional 90,821,115 shares of anti-dilutive Restricted Common Stock. Also, on September 22, 2009, the Company, in accordance with the agreement, issued 2,488,014 Shares of anti-dilutive Restricted Common Stock to Belmont Partners, LLC. The Company absorbed $298,250 in liabilities at its acquisition by MB Consulting on August 27, 2009, which created value to the Company as a result of continued services by creditors and key employees.  Common Stock of the Company was given in satisfaction of this liability, resulting in no cash outlay by the Company

On August 28, 2009, the Company executed a promissory note for $12,250 and pledged 12,250,000 shares of Unrestricted Common Stock as a result of transaction structure legal fees which occurred previously, and for which the Company was obligated.  This obligation was satisfied on October 21, 2009 ( See Footnote No. 6 Subsequent Events).

On September 10, 2009, the Company issued 5,000,000 Shares of anti-dilutive Restricted Common Stock in contractual obligations to the key officers of the Company and 250,000 Shares of Restricted Common Stock in satisfaction of $20,000 to creditors.

On September 16, 2009, the Company issued 3,325,000 shares of Unrestricted Common Stock in satisfaction of $266,000 of additional obligations of the Company.

In October, 2009, the Company issued 12,250,000 shares of Unrestricted Common Stock as satisfaction of a promissory note payable.

On December 29, 2009, the Company issued 993,000 Shares of anti-dilutive Restricted Common Stock in contractual obligations to the key officers of the Company and 349,359 Shares of Restricted Common Stock as part of the purchase agreement with Belmont Partners.

At March 31, 2010 and June 30, 2009, the company had 133,466,488 and 8,809,115 common shares issued and outstanding, respectively.

The Company has no other classes of shares authorized for issuance. At March 31, 2010 and June 30, 2009, there were no outstanding stock options or warrants.

4.

   Corporate Acquisition History

On August 27, 2009 the Company entered into an agreement with MB Consulting Services, LLC and Belmont Partners, LLC through which MB Consulting would acquire approximately 50.001% (fifty and one one-thousandth percent) of the capital stock of the Company. The Company anticipates pursuing the acquisition of certain material oil and gas related assets. This transaction had no impact on the financials of the Company, but did result in a change of ownership of the majority of the outstanding shares.

On August 24, 2009, the majority shareholders of the Company terminated Mr. Mark Kinser as Director, President and Secretary of the Company.  Mr. Joseph Meuse, who currently served as a Director of the Company, was appointed as interim President and Secretary of the Company.

On August 27, 2009, Belmont entered into an agreement with MB Consulting Services, LLC (hereinafter “MB Consulting”) through which MB Consulting would acquire fifty and one one-thousandth percent (50.001%) of the anti-dilutive capital stock of the Company, under which MB Consulting was initially conveyed 9,180,885 shares and later issued an additional 90,821,115 shares of anti-dilutive Restricted Common Stock. Also, on September 22, 2009, the Company, in accordance with the agreement, issued 2,488,014 Shares of anti-dilutive Restricted Common Stock to Belmont Partners, LLC.

Additionally, the Company absorbed the $298,250 in liabilities at its acquisition by MB Consulting on August 27, 2009, which created value to the Company as a result of continued services by creditors and key employees.  Common Stock of the Company was given in satisfaction of much of this liability, resulting in no cash outlay by the Company

On August 28, 2009, the Company executed a promissory note for $12,250 and pledged 12,250,000 shares of Unrestricted Common Stock as a result of transaction structure legal fees which occurred previously, and for which the Company was obligated.  Because financing took longer than originally anticipated, the Company and creditor agreed that the shares securing the debt would be issued in return for an erasure of the debt and consent default.

On September 8, 2009, the Company increased the authorized Common Stock from 100,000,000 to 200,000,000 shares.

On September 10, 2009, the Company issued 5,000,000 Shares of anti-dilutive Restricted Common Stock in contractual obligations to the key officers of the Company and 250,000 Shares of Restricted Common Stock in satisfaction of $20,000 to creditors.

On September 16, 2009, the Company issued 3,325,000 shares of anti-dilutive Unrestricted Common Stock in satisfaction of $266,000 of additional obligations of the Company.

5.

   Related Party Transactions

During fiscal 2008, funds were advanced to the Company by a former officer for working capital needs in the amount of $43,659.  The amounts were non-interest bearing, unsecured, with no stated terms for repayment. Additionally, 800,000 shares of the Company’s Common Stock was issued in exchange for a related party note payable in the amount of $26,577.

In fiscal 2009, an additional $16,692 was advanced to the Company from related parties and $1,470 was repaid. The remaining advances and accrued interest, which totaled $35,372 were forgiven together which

resulted in additional paid in capital. There was no gain or loss recorded on this debt forgiveness since it was with a related party.

During the quarter ended, March 31, 2010, funds were advanced to the Company by an officer for working capital needs in the amount of $41,610.  The amounts were non-interest bearing, unsecured, with no stated terms for repayment.

6.

   Notes Payable Officers

During the quarter ended March 31, 2010, the Company transferred the accrued officer’s salaries to a promissory note payable in the amount of $298,900.  This note payable bears interest at 12% and is unsecured and due on demand.

All State Properties Holdings, Inc.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations

The following discussion and analysis of our financial condition, results of operations, liquidity and capital resources should be read in conjunction with our financial statements and notes thereto.

NINE MONTHS ENDED MARCH 31, 2010 COMPARED TO NINE MONTHS ENDED MARCH 31, 2009

The Company had no active operations for the nine months ended March 31, 2010. The net loss was $1,448,234 and $25,339 for the nine months ended March 31, 2010 and 2009, respectively.

OPERATION AND ADMINISTRATIVE EXPENSES

Operating expenses increased from $23,030 in the nine months ended March 31, 2009 to $1,439,007 in the nine months ended March 31, 2010. Operating expenses primarily consist of Officer’s Salaries, Professional fees, and Investor Relations Expenses that are paid to the current officers, accountants and attorneys, and investment relations firms throughout the year for performing various tasks, and office expenses. Officers’ Salaries increased from zero in the nine months ended March 31, 2009 to $1,243,990 in the nine months ended March 31, 2010, due primarily to guaranteed salaries accrued, and shown as current accruals and promissory notes on these financial statements, in order to retain qualified personnel. Professional fees increased from $22,974 in the nine months ended March 31, 2009 to $122,767 in the nine months ended March 31, 2010.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2010 and June 30, 2009, we had $163 and $0 cash on hand respectively. We believe that we will continue to need investing and financing activities to fund operations. Our primary liquidity and capital resource needs are to finance the costs of our operations. During the nine months ended March 31, 2010 and March 31, 2009, cash used in operations was $46,086 and $27,451, respectively, primarily for the payment of current officer’s salaries and legal and accounting expenses. Whenever possible, the management continues to utilize common stock of the Company to fund such expenditures in order to minimize the cash required.  The Company will actively seek alternative sources of funding to continue as a going concern.

Net cash provided by investing activities remained at $0 and $0 during the nine month periods ending March 31, 2010 and 2009.

Net cash provided by financing activities for the nine month period ending March 31, 2010 was $46,249 compared with net cash provided in financing activities of $27,351 for the nine months ended March 31, 2009, as the Company increased borrowings on related party notes during 2010.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

None.

ITEM 4. Controls and Procedures

The Company's Director and Chief Executive Officer, E. Robert Gates is responsible for establishing and maintaining disclosure controls and procedures for the Company.

An evaluation was performed under the supervision and with the participation of our management of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of period covered by this report. Based on that evaluation, the management concluded that these disclosure controls and procedures were not effective. The Company did not have sufficient segregation of duties due to the limited resources available. There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. - OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1.A Risk Factors

There have been no material changes from the risk factors disclosed in All State Properties Holdings, Inc. Form 10K/A for the year ended June 30, 2009.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter covered by this report.

ITEM 3. Defaults upon Senior Securities

None.

ITEM 4. Submission of Matters to Vote of Security Holders

No matters were submitted during the quarter covered by this report to a vote of stockholders. However, the Articles of Incorporation were amended to provide for Indemnification of Officers and Directors that was considered necessary to retain qualified talent.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

All State Properties Holdings, Inc.

SIGNATURES

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