SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-QSB

 

Act of 1934

 

 

o Transition Report Under Section 13 or 15(d) of the Securities Exchange

Act of 1934

 

 

Commission File Number 1-32522

 

Trafalgar Resources, Inc.

(Name of Small Business Issuer in its charter)

 

(State or other jurisdiction of (I.R.S. Employer I.D. No.)

incorporation or organization)

 

--------------------------------------------------------------------------

 

(801) 748-1114

(Registrant's telephone number, including area code)

 

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.

 

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

 

Indicate the number of shares outstanding of each of the issuer's classes

of common stock, as of the latest practicable date.

 

------------------------------------------- ---------------------------- Title of Class Number of Shares Outstanding as

of February 15, 2008

PART I FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Trafalgar Resources, Inc.

FINANCIAL STATEMENTS

(UNAUDITED)

 

Company, without audit, pursuant to the rules and regulations of the

Securities and Exchange Commission. Certain information and footnote

disclosures normally included in financial statements prepared in accordance

with generally accepted accounting principles have been condensed or omitted.

However, in the opinion of management, all adjustments (which include only

normal recurring accruals) necessary to present fairly the financial position

and results of operations for the periods presented have been made. These

financial statements should be read in conjunction with the accompanying

notes, and with the historical financial information of the Company.

TRAFALGAR RESOURCES, INC.

 

BALANCE SHEET

UNAUDITED

 

<pre>

December 31,

ASSETS

 

CURRENT ASSETS

 

 

 

LIABILITIES AND  

SHAREHOLDERS' (DEFICIT)  

 

CURRENT LIABILITIES

 

 

 

 

SHAREHOLDERS' (DEFICIT)

 

 

 

</pre>

TRAFALGAR RESOURCES, INC.

 

STATEMENTS OF OPERATIONS

UNAUDITED

 

<pre>

 

 

 

 

 

 

 

(LOSS) PER COMMON SHARE

Basic and fully diluted loss per weighted

 

Weighted average number of common

 

</pre>

TRAFALGAR RESOURCES, INC.

 

STATEMENTS OF CASH FLOWS

UNAUDITED

 

<pre>

re-entering

 

OPERATING ACTIVITIES

Adjustments to reconcile net (loss)

 

Changes in operating assets and

liabilities:

 

FINANCING ACTIVITIES

 

 

 

 

 

 

</pre>

TRAFALGAR RESOURCES, INC.

 

Notes to Financial Statements (Unaudited)

 

Note 1: Summary of Significant Accounting Policies

 

Development stage enterprise

 

Trafalgar Resources, Inc. (the "Company") was incorporated under the laws of the State of Utah on October 25, 1972. The Company is considered a development stage enterprise as defined in SFAS 7 because since October 1, 2003, it has not commenced operations that have resulted in significant revenue and the Company's efforts have been devoted primarily to activities related to raising capital and attempting to acquire an operating entity.

 

Unaudited information

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB and Item 310 of Regulation SB of the United States Securities and Exchange Commission. Accordingly, they do not include all of the information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles.

 

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements for the three months ended December 31, 2007, should be read in conjunction with the accompanying notes and with the historical financial information of the Company, and are not necessarily indicative of the results that may be expected for the year ending September 30, 2008.

 

Use of estimates

 

These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and require that management make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. The use of estimates and assumptions may also affect the reported amounts of revenues and expenses. Actual results could differ from those estimates or assumptions.

 

Net loss per share of common stock

 

The loss per share of common stock is computed by dividing the net loss during the period presented by the weighted average number of shares outstanding during that same period.

 

Income taxes

 

The Company has not had any income in prior periods and therefore, no income taxes were paid. Management has determined that future taxable income may not be allowed to offset prior losses and therefore has not established a deferred tax asset.

 

Revenue recognition

 

The Company has not had any realizable sources of revenue and consequently, has not established a policy for the recognition of revenue.

TRAFALGAR RESOURCES, INC.

 

Notes to Financial Statements (Unaudited)

 

New accounting pronouncements

 

In December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB Statements No.141 (revised 2007), “Business Combinations” (“FAS 141(R)”) and No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“FAS 160”). These standards aim to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. The provisions of FAS 141 (R) and FAS 160 are effective for the fiscal year beginning June 1, 2009. We are currently evaluating the provisions of FAS 141(R) and FAS 160.

 

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment to FASB Statement No. 115”. This statement permits companies to choose to measure many financial instruments and other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement of accounting for financial instruments. This statement applies to all entities, including not for profit. The fair value option established by this statement permits all entities to measure eligible items at fair value at specified election dates. This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.The Company is currently assessing the impact adoption of SFAS No. 159 will have on its financial statements.

 

In December 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset. The provisions are effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of the statement.

 

 

At December 31, 2007 the Company owes $377 of interest and $10,000 to its President. The note bears interest at 4.5% per year. Interest of $450 per year is due on February 27, 2008 and 2009. Interest and principal of $10,450 are due on February 27, 2010.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management. Statements in this periodic report that are not historical facts are hereby identified as "forward-looking statements.(

 

Business of the Company

 

The Company was incorporated under the laws of the state of Utah on October 25, 1972, under the name of Electronic Agricultural Machinery Development Corporation. In 1974, the Company changed its name to Zenith Development Corporation. In 1980, the Company changed its name to Alternative Energy Resources, Inc. In 2004, the Company changed its name to Trafalgar Resources, Inc.

 

Initially, the Company sought to develop and market inventions, including an asparagus harvester, a hot water saving device and a gas alert signal. Ultimately, none of the inventions were successful and they were abandoned. The Company ceased to conduct any business and has not conducted any business during the last three years.

 

Currently, the Company is in the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit to the Company. Such involvement may take many forms, including the acquisition of an existing business or the acquisition of assets to establish subsidiary businesses. All risks inherent in new and inexperienced enterprises are inherent in the Company(s business.

 

The selection of a business opportunity in which to participate is complex and risky. Additionally, as the Company has only limited resources, it may be difficult to find good opportunities. There can be no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its stockholders. The Company will select any potential business opportunity based on management's business judgment.

 

The activities of the Company are subject to several significant risks which arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which potentially could act without the consent, vote,

or approval of the Company's stockholders. The risks faced by the Company are further increased as a result of its lack of resources and its inability to provide a prospective business opportunity with significant capital.

 

Discussion and Analysis of Financial Condition and Results of Operations

 

The Company is in the process of looking for potential business ventures.

As the Company possesses limited funds, the Company will be extremely limited in its attempts to locate potential business situations for investigation. The Company intends to commence, on a limited basis, the process of investigating possible merger and acquisition candidates, and believes that the Company(s status as a publicly-held corporation will enhance its ability to locate such potential business ventures. No assurance can be given as to when the Company may locate suitable business opportunities and such opportunities may be difficult to locate; however, the Company intends to actively search for potential business ventures for the foreseeable future. The Company(s management does not expect to remain involved as management of any acquired business.

 

Management anticipates that due to its lack of funds, and the limited amount of its resources, the Company may be restricted to participation in only one

potential business venture. This lack of diversification should be considered a substantial risk because it will not permit the Company to offset potential losses from one venture against gains from another.

 

Business opportunities, if any arise, are expected to become available to the Company principally from the personal contacts of its officers and directors. While it is not expected that the Company will engage professional firms specializing in business acquisitions or reorganizations, such firms may be retained if funds become available in the future, and if deemed advisable. Opportunities may thus become available from professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and other sources of unsolicited proposals. In certain circumstances, the Company may agree to pay a finder(s fee or other form of compensation, including perhaps one-time cash payments, payments based upon a percentage of revenues or sales volume, and/or payments involving the issuance of securities, for services provided by persons who submit a business opportunity in which the Company shall decide to participate, although no contracts or arrangements of this nature presently exist. The Company is unable to predict at this time the cost of locating a suitable business opportunity.

 

The analysis of business opportunities will be undertaken by or under the supervision of the Company(s management, none of whom is a professional analyst and none of whom have significant general business experience. Among the factors which management will consider in analyzing potential business opportunities are the available technical, financial and managerial resources; working capital and financial requirements; the history of operations, if any; future prospects; the nature of present and anticipated competition; potential for further research, developments or exploration; growth and expansion potential; the perceived public recognition or acceptance of products or services; name identification, and other relevant factors.

 

It is not possible at present to predict the exact manner in which the Company may participate in a business opportunity. Specific business opportunities will be reviewed and, based upon such review, the appropriate legal structure or method of participation will be decided upon by management. Such structures and methods may include, without limitation, leases, purchase and sale agreements, licenses, joint ventures; and may involve merger, consolidation or reorganization. The Company may act directly or indirectly through an interest in a partnership, corporation or reorganization. However, it is most likely that any acquisition of a business venture the Company would make would be by conducting a reorganization involving the issuance of the Company(s restricted securities. Such a reorganization may involve a merger (or combination pursuant to state corporate statutes, where one of the entities dissolves or is absorbed by the other), or it may occur as a consolidation, where a new entity is formed and the Company and such other entity combine assets in the new entity. A reorganization may also occur, directly or indirectly, through subsidiaries, and there is no assurance that the Company would be the surviving entity. Any such reorganization could result in loss of control of a majority of the shares. The Company(s present directors may be required to resign in connection with a reorganization.

 

The Company may choose to enter into a venture involving the acquisition of or merger with a company which does not need substantial additional capital but desires to establish a public trading market of its securities. Such a company may desire to consolidate its operations with the Company through a merger, reorganization, asset acquisition, or other combination, in order to avoid possible adverse consequences of undertaking its own public offering. (Such consequences might include expense, time delays or loss of voting control.) In the event of such a merger, the Company may be required to issue significant additional shares, and it may be anticipated that control over the Company(s affairs may be transferred to others.

 

As part of their investigation of acquisition possibilities, the Company(s management may meet with executive officers of the business and its personnel; inspect its facilities; obtain independent analysis or verification of the information provided, and conduct other reasonable measures, to the extent permitted by the Company(s limited resources and management(s limited

expertise. Generally, the Company intends to analyze and make a determination based upon all available information without reliance upon any single factor as controlling.

 

In all likelihood, the Company(s management will be inexperienced in the areas in which potential businesses will be investigated and in which the Company may make an acquisition or investment. Thus, it may become necessary for the Company to retain consultants or outside professional firms to assist management in evaluating potential investments. The Company can give no assurance that it will be able to find suitable consultants or managers. The Company has no policy regarding the use of consultants, however, if management, in its discretion, determines that it is in the best interests of the Company, management may seek consultants to review potential merger or acquisitions candidates. There are currently no contracts or agreements between any consultant and any companies that are searching for (shell( companies with which to merge.

 

It may be anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention, and substantial costs for accountants, attorneys and others. Should a decision thereafter be made not to participate in a specific business opportunity, it is likely that costs already expended would not be recoverable. It is likely, in the event a transaction should eventually fail to be consummated, for any reason, that the costs incurred by the Company would not be recoverable. The Company(s officers and directors are entitled to reimbursement for all expenses incurred in their investigation of possible business ventures on behalf of the Company, and no assurance can be given that if the Company has available funds they will not be depleted in such expenses.

 

Based on current economic and regulatory conditions, management believes that it is possible, if not probable, for a company like the Company, without assets or many liabilities, to negotiate a merger or acquisition with a viable private company. The opportunity arises principally because of the high legal and accounting fees and the length of time associated with the registration process of (going public(. However, should any of these conditions change, it is very possible that there would be little or no economic value for anyone taking over control of the Company.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of December 31, 2007, the Company had $3,664 in cash and liabilities of $1,174. The Company has only incidental ongoing expenses primarily associated with maintaining its corporate status and maintaining the Company(s reporting obligations to the Securities and Exchange Commission. Current management has indicated a willingness to help support the Company(s ongoing expenses through the purchase of securities of the Company.

 

For the three months ended December 31, 2007, the Company had $2,810 in expenses related to maintaining its corporate status, paying accounting and legal fees. Management anticipates only nominal continuing expenses related to investigating business opportunities and legal and accounting cost. For the three months ended December 31, 2007, the Company had a net loss of $2,810 compared to a loss of approximately $3,200 for the three months ended December 31, 2006.

 

Since inception the Company has not generated significant revenue, and it is unlikely that any revenue will be generated until the Company locates a business opportunity with which to acquire or merge. Management of the Company will be investigating various business opportunities. These efforts may cost the Company not only out of pocket expenses for its management but also expenses associated with legal and accounting costs. There can be no guarantee that the Company will receive any benefits from the efforts of management to locate business opportunities.

Management does not anticipate employing any employees in the future until a merger or acquisition can be accomplished. Management will continue to rely on outside consultants to assist in its corporate filing requirements.

 

RESULTS OF OPERATIONS

 

The Company has not had any significant revenue since reentering the development stage. The Company continues to suffer a small loss related to maintaining its corporate status and reporting obligations. The Company does not anticipate any revenue until it locates a new business opportunity.

 

ITEM 3. CONTROLS AND PROCEDURES

 

 

The Company(s principal executive officers, including principal accounting officers have reviewed the disclosure controls and procedures (as defined in section 240.13a-149c and 240.15d-14c) in place to assure the effectiveness of such controls and procedures. This review occurred within 90 days of this 10QSB being filed. Based on this review, the principal executive officers and accounting officers believe Trafalgar(s disclosure controls and procedures are adequate.

 

 

There were no significant changes in Trafalgar(s internal controls, or other factors, that could significantly affect the Company(s controls subsequent to the date of the evaluations performed by the executive officers of the Company. No deficiencies or material weaknesses were found that would require corrective action.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

 

ITEM 5. OTHER INFORMATION

 

 

ITEM 6. EXHIBITS

 

 

 

 

 

 

 

* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the Commission, SEC file no. 0-23502.

 

SIGNATURES

 

registrant has duly caused this report to be signed on its behalf by the

undersigned thereunto duly authorized.

 

 

 

 

 

By:_/s/ Anthony Coletti

Anthony Coletti, Principal Accounting