- Quarterly Report (10-Q)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2009

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

For the transition period from ________ to ____________

Commission file number 333-141505

		VOLCAN HOLDINGS, INC.
		(Exact Name of Registrant as Specified in Its Charter)
Delaware				98-0554790
(State or Other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)
	Level 34, 50 Bridge Street      Sydney, Australia		2000
	(Address of Principal Executive Offices)		(Zip Code)
	[phone]
	(Registrant’s Telephone Number, Including Area Code)
	(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ]  No [  ]

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]

(Do not check if a smaller reporting company)

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

As of May 20, 2009, 103,745,765 shares of the issuer’s common stock, $0.001 par value per share, were outstanding.

 

 

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VOLCAN HOLDINGS, INC.

Table of Contents

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations  (Unaudited)	2 -3
	Consolidated Statement of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 4T.	Controls and Procedures	16
PART II	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 6.	Exhibits	17

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PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

VOLCAN HOLDINGS, INC.

(An Exploration Stage Company)

Condensed Consolidated Balance Sheets

		December 31,				June 30
		2008			2008
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	96,937			$	96
Other receivables			88,056				130,624
Deposit			27,824				––
Total current assets			212,817				130,720
Intangible assets			1,124,238				1,101,027
TOTAL ASSETS		$	1,337,055			$	1,231,747
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable		$	1,056,762			$	1,449,905
Loans payable shareholder			74,188				––
Total current liabilities			1,130,950				1,449,905
Stockholders' Equity (Deficit):
Common stock: $0.001 par value; 300,000,000 shares authorized; 103,745,765 and 100,000,000 shares issued and outstanding, respectively			103,746				100,000
Additional paid-in capital			1,501,703				(99,904	)
Deficit accumulated during exploration stage			(1,276,222	)			(214,909	)
Accumulated other comprehensive income (loss):
Foreign currency translation gain (loss)			(123,122	)			(3,345	)
Total stockholder’s equity (deficit)			206,105				(218,158	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	1,337,055			$	1,231,747

See accompanying notes to the financial statements.

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VOLCAN HOLDINGS, INC.

(An Exploration Stage Company)

Condensed Consolidated Statements of Operations

 (Unaudited)

						For The
						Period From
		For The				June 11, 2008
		Three Months				(Inception)
		Ended				Through
		March 31,				March 31,
		2009			2009
Stock compensation		$	––			$	420,000
Professional fees			43,530				297,202
General and administrative			149,424				563,335
Total operating expenses			192,954				1,280,537
Other (income) expenses:
Loss on foreign exchange			(118,611	)			1
Interest (income)			(205	)			(4,316	)
Net loss		$	(74,138	)		$	(1,276,222	)
Net loss per common share - basic and diluted		$	(0.00	)		$	(0.01	)
Weighted average number of common shares outstanding – basic and diluted			103,667,000				102,266,626

See accompanying notes to the financial statements.

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VOLCAN HOLDINGS, INC.

(An Exploration Stage Company)

Condensed Consolidated Statements of Operations

 (Unaudited)

						For The
						Period From
		For The				June 11, 2008
		Nine Months				(Inception)
		Ended				Through
		March 31,				March 31,
		2009			2009
Stock compensation		$	420,000			$	420,000
Professional fees			972,202				297,202
General and administrative			348,426				563,335
Total operating expenses			1,065,628				1,280,537
Other (income) expenses:
Loss on foreign exchange			1				1
Interest (income)			(4,316	)			(4,316	)
Net loss		$	(1,061,313	)		$	(1,276,222	)
Net loss per common share - basic and diluted		$	(0.01	)		$	(0.01	)
Weighted average number of common shares outstanding – basic and diluted			102,423,800				102,266,626

See accompanying notes to the financial statements.

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VOLCAN HOLDINGS, INC.

(An Exploration Stage Company)

Consolidated Statement of Stockholders’ Equity

For the Period from June 11, 2008 (Inception) through March 31, 2009

																		Other Comprehensive Income (Loss)
		Common Shares			Amount			Additional Paid-in Capital			Deficit Accumulated During Exploration Stage			Foreign Currency Translation Gain (Loss)			Total
Balance, June 11, 2008 (inception)			5,620,000			$	5,620			$	19,380			$	––			$	––			$	25,000
Effect of 1 for 6.1728395 forward stock split			29,071,358				29,071				(29,071	)											––
Issuance of common stock in connection with reverse acquisition			90,000,000				90,000				(114,904	)											(24,904	)
Cancellation of common stock in connection with reverse acquisition			(24,691,358	)			(24,691	)			24,691												––
Comprehensive loss
Net loss															(214,909	)							(214,909	)
Foreign currency translation loss																			(3,345	)			(3,345	)
Total comprehensive loss																							(218,254	)
Balance June 30, 2008			100,000,000				100,000				(99,904	)			(214,909	)			(3,345	)			(218,158	)
Issuance of common stock and warrants for cash (net of costs of $125,666)			3,745,765				3,746				1,145,038												1,148,784
Issuance of warrants in connection with common stock											36,569												36,569
Options issued for services											420,000												420,000
Comprehensive loss
Net loss															(1,061,313	)							(1,061,313	)
Foreign currency translation gain																			(119,777	)			(119,777	)
Total comprehensive loss																							(1,181,090	)
Balance, March 31, 2009			103,631,428			$	103,746			$	1,501,703			$	(1,276,222	)		$	(123,122	)		$	206,105

See accompanying notes to the financial statements.

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VOLCAN HOLDINGS, INC.

(An Exploration Stage Company)

 

Condensed Consolidated Statements of Cash Flows

						For The
						Period From
		For The				June 11, 2008
		Nine Months				(Inception)
		Ended				Through
		March 31,				March 31,
		2009			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,061,313	)		$	(1,276,222	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Stock compensation			420,000				420,000
Changes in operating assets and liabilities
Deposit			(27,824	)			(27,824	)
Other receivables			42,568				(88,056	)
Accounts payable			(393,143	)			1,056,762
Net Cash Provided By (Used In) Operating Activities			(1,019,712	)			84,660
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and prospecting			(23,211	)			(1,124,238	)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock, net of costs			1,185,353				1,185,449
Loan payable shareholder			74,188				74,188
Net Cash Provided By Financing  Activities			1,259,541				1,259,637
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(119,777	)			(123,122	)
NET INCREASE IN CASH			96,841				96,937
CASH AT BEGINNING OF YEAR			96				––
CASH AT END OF YEAR		$	96,937			$	96,937

See accompanying notes to the financial statements.

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VOLCAN HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2008

(UNAUDITED)

NOTE – 1

NATURE OF OPERATIONS

The Company is an exploration stage company and its principal operation is the conducting of exploration for Bauxite and other minerals in Australia via its wholly owned subsidiary company Volcan Australia Corporation Pty Ltd. The current focus is on the exploration for Bauxite and other mineral deposits on tenements near Inverell in the northwestern region of New South Wales, Australia. The Company has not determined whether these tenements contain reserves that are economically recoverable. The recoverability of costs incurred for acquisition and exploration of the property will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interests in the underlying properties, the ability of the Company to obtain the necessary financing to satisfy the expenditure requirements and to complete the development of the property and upon future production or proceeds for the sale thereof.

NOTE – 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim financial statements for the three and nine month periods ended March 31, 2009, and the period from June 11, 2008 (Inception) through December 31, 2008 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations realized during an interim period are not necessarily indicative of results to be expected for a full year. These financial statements should be read in conjunction with the information filed as part of the Company’s Report on Form 8-K which filed on September 17, 2008.

 

Development Stage Company

The Company is a development stage company as defined by Statement of Financial Accounting Standards No. 7 “Accounting and Reporting by Development Stage Enterprises” (“SFAS No. 7”).  The Company has recognized no revenue, is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

Exploration Stage Company

The Company complies with Financial Accounting Standards Board Statement No. 7 and its characterization of the Company as an exploration stage enterprise.

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

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Impairment of Long-lived Assets

Long-lived assets, which include intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable or the useful life is shorter than originally estimated.

The Company assesses the recoverability of its assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If assets are determined to be recoverable, but the useful lives are shorter than originally estimated, the net book value of the assets is depreciated over the newly determined remaining useful lives. The Company determined that there was no impairment based on management’s evaluation at December 31, 2008.

Fair Value of Financial Instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.  The carrying amounts of financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments.

 

Revenue Recognition

The Company has not recognized any income from its operations since inception.

Net Loss per Common Share

Net loss per common share is computed pursuant to Statement of Financial Accounting Standards No. 128.  "Earnings per Share" ("SFAS No. 128").  Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were 20,000,000 options outstanding as of December 31, 2008, which were excluded from the calculation because their effect would be antidilutive.

Foreign Currency Translation

Transactions and balances originally denominated in U.S. dollars are presented at their original amounts.  Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards No. 52 “Foreign Currency Translation” (“SFAS No. 52”) and are included in determining net income or loss.

The financial records of the Company are maintained in their local currency, the Australian Dollar, which is the functional currency.  Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the combined and consolidated financial statements.  Foreign currency translation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the combined and consolidated statement of stockholders’ equity.

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Recently Issued Accounting Pronouncements

In June 2003, the Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-8934 on June 26, 2008. Commencing with its annual report for the fiscal year ending December 31, 2009, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement

·

of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;

·

of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and

·

of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting.

Furthermore, in the following fiscal year, it is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.

In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007) “Business Combinations” (“SFAS No. 141(R)”), which requires the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting.  SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending December 31, 2008 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) will have on the financial results of the Company.

In December 2007, the FASB issued FASB Statement No. 160 “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No. 160”), which causes noncontrolling interests in subsidiaries to be included in the equity section of the balance sheet.  SFAS No. 160 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented.  The Company will adopt this standard at the beginning of the Company’s fiscal year ending December 31, 2008 for all prospective business acquisitions.  The Company has not determined the effect that the adoption of SFAS No. 160 will have on the financial results of the Company.

In March 2008, the FASB issued FASB Statement No. 161 “Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133” (“SFAS No. 161”), which changes the disclosure requirements for derivative instruments and hedging activities.  Pursuant to SFAS No. 161, Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. SFAS No. 161 encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption.  In years after initial adoption, this Statement requires comparative disclosures only for periods subsequent to initial adoption.  The Company does not expect the adoption of SFAS No. 161 to have a material impact on the financial results of the Company.

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NOTE – 3

STOCKHOLDERS’ EQUITY

Common Stock

On September 11, 2008, the shareholders of the Company authorized a 1 for 6.1728395 forward stock split. All share and per share data in the financial statements and related notes have been restated to give retroactive effect to the reverse stock split.

Issuance of Common Stock for Financing

On September 12, 2008, the Company completed a private placement, pursuant to which 3,631,430 shares of common stock and five-year warrants to purchase 3,631,430 shares of common stock were issued at an initial exercise price of $1.00 per share for aggregate net proceeds of $1,271,000 (the Private Placement”). All costs associated with the Share Exchange, other than financing related costs in connection with Private Placement, were expensed as incurred.

On March 3, 2009, the Company entered into a subscription agreement with Eliezer Labkowsky pursuant to which the Company sold Mr. Labkowsky (i) 31,429 shares of common stock and (ii) a five-year warrant to purchase 31,429 shares of common stock at an exercise price of $1.00 per share in exchange for aggregate gross proceeds of $11,000.

On March 3, 2009, the Company entered into a subscription agreement with Schneur Z. Schapiro pursuant to which the Company sold Mr. Schapiro (i) 35,714 shares of common stock and (ii) a five-year warrants to purchase 35,714 shares of common stock at an exercise price of $1.00 per share in exchange for aggregate gross proceeds of $12,500.

In addition to the sales of the Company’s common stock and warrants on March 3, 2009, the Company sold an additional 47,194 shares of common stock for $16,518.

Stock Options

On September 12, 2008, stockholders of the Company approved, by majority written consent, the adoption of the 2008 Stock Incentive Plan (the “Plan”). Under the Plan, 40,000,000 shares of common stock are reserved for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The purpose of the plan is to provide an incentive to attract and retain officers, consultants, advisors and employees whose services are considered valuable, as well as to stimulate an active interest of such persons into our development and financial success.

On September 12, 2008, Holdings granted to Australian Gemstone Mining Services Pty Ltd, its management services company ("AGM"), immediately vesting five-year options to purchase an aggregate of 20,000,000 shares of Holdings' common stock, at an exercise price of $1.00 per share, under such plan. In addition, Holdings has agreed to grant to L'Hayyim Pty Ltd warrants (the "Management Incentive Warrants") to purchase up to an aggregate of 100,000,000 shares of Holdings' common stock upon achieving certain major milestones. The Management Incentive Warrants shall vest, with respect to 20% of the shares, upon independent verification of inferred resources of at least 100 million, 200 million, 300 million, 400 million and 500 million tons of bauxite at VAC's tenement in accordance with standards prescribed in Australia by the Joint Ore Reserves Committee ("JORC"). To the extent vested, the Management Incentive Warrants will be exercisable for five years after the applicable vesting date at an exercise price of $1.00 per share.

The fair value of the options issued to AGM, valued using the Black-Scholes valuation model, on the date of issuance, was $420,000.

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NOTE – 4

COMMITMENTS AND CONTINGENCIES

The Company has an obligation to pay the vendors of Volcan Australia Pty Ltd an amount of $1,500,000 as additional consideration in relation to the acquisition of that entity.

The Company acquired Volcan Australia Pty Ltd in exchange for  90,000,000 newly issued shares of common stock together with Volcan’s right to receive $1,500,000 in cash at the end of any fiscal quarter in which the Company has cash on hand of at least $5,000,000.

Management Services Agreement

The Company has entered into a Management Services Agreement with Australian Gemstone Mining Services Pty Ltd, a company owned and controlled by Pnina Feldman, a member of the Board.

The Management Services Agreement was entered into as of 1 July 2008, pursuant to which 4 individuals (each a key person) provide executive and corporate services, including geological and technical expertise, to the Company.

During the term of the Management Services Agreement the Company will pay a retainer of $175,000 per annum with respect to each key person, being the two chief geoscientists and the two executive directors for an aggregate amount of $700,000 per annum. However, the directors of Australian Gemstone Mining Services Pty Ltd have agreed not to take any payment for the two executive directors until further funds are raised and the Project has an independently verified resource statement completed.

The Company is not required to pay any additional fees, including director’s fees, to Australian Gemstone Mining Services Pty Ltd or the key persons personally with respect to the services to be provided by the key persons.

The Agreement also requires that Australian Gemstone Mining Services Pty Ltd provides the Company with suitable fully serviced   offices. The Company has obtained rights to shared office space for an amount of $14,500 per month. The directors have agreed to accept only 50% of this amount per month until further funds are raised and the Project has an independently verified resource statement verified.

Australian Gemstone Mining Services Pty Ltd may also provide additional administrative services to the Company, such as secretarial, accounting and office management services. These services will be provided on reasonable arm's-length terms as approved by the Company's independent directors.

During the quarter the following amounts have been paid, or are  payable to, Australian Gemstone Mining Services Pty Ltd in  accordance with the Agreement:

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Item 2.

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

Recent Events

On September 12, 2008, we completed a share exchange, pursuant to which we acquired all of the capital stock of Volcan Australia Corporation Pty Ltd, an Australian proprietary company ("VAC"), and VAC became our wholly owned subsidiary (the “Share Exchange”). In connection with the Share Exchange, we discontinued our former business and succeeded to the business of VAC as our sole line of business. For financial reporting purposes, VAC, and not us, is considered the accounting acquiror. Accordingly, the historical financial statements presented and the discussion of financial condition and results of operations herein are those of VAC and only include our financial results since September 12, 2008.

In connection with the Share Exchange, on September 12, 2008, we completed a private placement, pursuant to which we issued 3,631,430 shares of common stock and five-year warrants to purchase 3,631,430 shares of common stock at an initial exercise price of $1.00 per share for aggregate net proceeds of $1,271,000 (the “Private Placement”). All costs associated with the Share Exchange, other than financing related costs in connection with Private Placement, were expensed as incurred.

The Share Exchange has been accounted for as a reverse acquisition and recapitalization. VAC is the acquirer for accounting purposes and Volcan Holdings, Inc is the acquired company. Accordingly, VAC’s historical financial statements for periods prior to the acquisition become those of the registrant (Volcan Holdings, Inc.) retroactively restated for and giving effect to, the number of shares received in the Share Exchange. The accumulated deficit of VAC is carried forward after the acquisition. Operations reported for periods prior to the Share Exchange are those of VAC.

In the first quarter of 2009 we sold to investors (i) 114,337 shares of common stock and (ii) five-year warrants to purchase 114,337 shares of common stock at an exercise price of $1.00 per share in exchange for aggregate gross proceeds of $40,018.   

Overview

We are a mineral exploration company that intends to explore prospective bauxite deposits in New South Wales, Australia. We are in the exploration stages with no revenue being generated now or in the near future.

Critical Accounting Policies

The discussion and analysis of our financial condition presented in this section is based upon our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, consider these to be our critical accounting policies. On an ongoing basis, we will evaluate our estimates and judgments and the related financial statement impact.

Among the estimates we have made in the preparation of the financial statements is an estimate of our cash flows in making the disclosures about our liquidity in this report. As an exploration stage company, many variables may affect our estimates of cash flows that could materially alter our view of our liquidity and capital requirements as our business develops.

Use of Estimates.  The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

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Going Concern Consideration. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern. Our audited financial statements have been prepared assuming we are a “going concern”. We will continue to implement our business plan, attempt to raise debt and/or equity based capital from related parties and/or third parties and seek out the most efficient processes that will allow for the generation of positive cash flows. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Income Taxes. We account for income taxes under the liability method in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “ Accounting for Income Taxes ”. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

We adopted the provisions of the Financial Accounting Standards Board (the “FASB”) Interpretation No. 48; “ Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109 ” (“FIN 48”). FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments. At March 31, 2009, we did not record any liabilities for uncertain tax positions.

Exploration Stage Company. Guide 7 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” requires that mining companies in the exploration stage should not refer to themselves as development stage companies in their financial statements, even though such companies should comply with FASB No. 7, if applicable. We are an exploration stage company under Guide 7 of the Exchange Act and accordingly, we have not been referred to as a development stage company in our financial statements. The balance sheet, statement of operations, statement of equity and statement of cash flows are all presented as those of an exploration stage company at March 31, 2009 and for the period from June 11, 2008 (inception) to March 31, 2009.

Accounting for Mineral Rights, Mineral Claim Payments and Exploration Costs. We are primarily engaged in the acquisition, exploration and development of mineral properties. Mineral property acquisition costs are initially capitalized as tangible assets when purchased. At each fiscal quarter end, we intend to assess these carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, capitalized costs will be depleted using the units-of-production method over the estimated life of the probable reserve.

Currently, we expense all costs as incurred related to the acquisition and exploration of mineral properties in which we have secured exploration rights prior to establishment of proven and probable reserves. These costs include general exploration costs and costs to maintain rights and leases associated with any properties under exploration. To date, we have not established the commercial feasibility of any exploration prospects; therefore, all costs are being expensed.

Emerging Issues Task Force (“EITF”) No. 04-2, “ Whether Mineral Rights are Tangible or Intangible Assets, ” establishes mineral rights as tangible assets, whereby the aggregate carrying amount of such mineral rights should be reported as a separate component of property, plant and equipment. At March 31, 2009, we had no such tangible assets nor any related depletion expense. The term mineral rights is defined as the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits.

Environmental Remediation Costs. Environmental remediation costs are accrued based on estimates of known environmental remediation exposure. Such accruals are recorded even if significant uncertainties exist over the ultimate cost of the remediation. It is reasonably possible that our estimates of reclamation liabilities, if any, could change as a result of changes in regulations, extent of environmental remediation required, means of reclamation or cost estimates. Ongoing environmental compliance costs, including maintenance and monitoring costs, are expensed as incurred. There were no environmental remediation costs accrued at March 31, 2009.

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Financial Statement Impact of these Critical Accounting Policies and Estimates. We are still in the exploration stage and have had nominal operations to date. These critical policies and estimates have not materially impacted our financial statements given our limited operations.

There has been no change in any critical policies or estimates since our inception.

Results of Operations

Period Ended March 31, 2009

Revenues . For the three and nine months ended March 31, 2009, we did not recognize any revenue.

Expenses . For the three months ended March 31, 2009, we incurred $192,954 in expenses, which consisted of $43,530 of professional fees related to executive services and $149,424 of general and administrative matters, which consisted primarily of payments related to rent and investor relations expenses. In contrast, for the nine months ended March 31, 2009, we incurred $1,065,628 in expenses, which consisted of $420,000 of stock compensation, $297,202 of professional fees and $348,426 of general and administrative matters, which consisted primarily of payments related to rent, travel, investor relations expenses.

Income Tax Expense . For the three and nine months ended March 31, 2009, we did not recognize any income tax expense.

Accounts Payable . At March 31, 2009, we had accounts payable of $1,056,762, consisting of amounts due to Australian Gemstone Mining Services Pty Ltd (“AGM”), VAC’s management services company and a related party, for the purchase of exploration and prospecting information and administration services. These amounts largely relate to work done by the geological team in making this current discovery and in identifying this opportunity for VAC. The reimbursement of these amounts is important to retain the geological expertise that is currently available to VAC for VAC's future development of these projects, which require specialist expert knowledge of this particular area and geology. The geological team is mindful of the current cash position of VAC and therefore has agreed to a staggered payment plan as detailed below that the directors believe will not materially affect the ability of VAC to carry out its initial objectives in securing an independent verification of inferred JORC resources on VAC's tenement. It is the view of the directors, that such a resource statement should in normal market conditions make VAC eligible for larger institutional funding.

Liquidity and Capital Resources

At March 31, 2009, we had cash and cash equivalents of $96,937. Based on our cash flow projections, we believe that we have sufficient cash to satisfy our cash needs for approximately three months. We will need to raise additional capital of at least $500,000 to enable us to have sufficient capital liquidity to complete the initial field program to a level where we should be able to secure an independent resource statement to JORC standard, which should in ordinary market conditions make VAC eligible for larger institutional funding. If we are unable to raise additional funds on a timely basis or at all, any progress with respect to our exploration activities may be adversely affected.

Over the next twelve months, we intend to use our cash on hand, together with any cash we are able to raise in the future, on exploring the geology of our tenement holdings through:

Drilling, sampling and sub-surface mapping . We intend to spend approximately $1.5 million to perform drilling and sampling of bauxite deposits that we identify on our tenement holdings.

Payment to Shareholder . Pursuant to the terms of the Share Exchange, we have agreed to pay $1.5 million to L'Hayyim Pty Ltd as trustee for The L'Hayyim Trust, our principal shareholder, at the end of the first fiscal quarter in which we have cash on hand of at least $5 million. It is unlikely for this to be achieved over the next twelve months, and therefore unlikely that any such payment will be made in this initial period.

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Related Party Transaction . We used approximately $500,000 of our Private Placement proceeds to repay our obligations in the amount of $1.4 million to AGM, arising out of the purchase of exploration and prospecting information and administration services. The remaining funds will be repaid when more funds are raised, and/or when our liquidity allows.

Other expected uses of proceeds . Our other expected uses of cash during the next twelve months are for our general and administrative expenses, including $440,000 of payments to AGM pursuant to our Management Services Agreement for rent, the wages of the expert geological team and their basic office expenses. In addition, we are obligated to pay AGM an additional $350,000 for the services of our executive officers. Finally, we are obligated to make payments to one of our directors in the amount of $50,000 per year. To date, in light of our current financial situation, AGM has agreed to defer any payments to it with respect to the services of our officers and directors. In addition, our director has agreed to defer any payments owed to him until our liquidity situation improves.

To the extent our cash on hand, together with any cash we are able to raise in the future, does not cover the amount of our planned expenditures above, the expenditures listed above will be reduced pro rata.

We do not expect any purchases of plant and equipment we make during fiscal 2009 to be material. Nor do we intend to engage in any material sales and marketing efforts during such period. As our prospects are in the early exploration phase, we do not anticipate generating any revenues from operations for several years, if ever. We may also consider selling the project if management determines that an appropriate price can be obtained.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (the “FASB”) issued Statements of Financial Accounting Standards (“SFAS”) No. 157, “ Fair Value Measurements ”, which clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. It also defines fair value and established a hierarchy that prioritizes the information used to develop assumptions. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 157 is not expected to have a material effect on our financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “ The Fair Value Option for Financial Assets and Financial Liabilities ”, which permits entities to choose to measure many financial instruments and certain other items at fair value. The unrealized gains and losses on items for which the fair value option has been elected should be reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, should be applied to an entire instrument and is irrevocable. Assets and liabilities measured at fair values pursuant to the fair value option should be reported separately in the balance sheet from those instruments measured using other measurement attributes. SFAS No. 159 is effective as of the beginning of our 2008 fiscal year. The adoption of SFAS No. 159 is not expected to have a material effect on our financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No 51 ”. SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The adoption of SFAS No. 160 is not expected to have a material effect on our financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141R, “ Business Combinations ”, which replaces FASB SFAS 141, “ Business Combinations ”. This Statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. SFAS No. 141R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves

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control. SFAS No. 141R will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition. SFAS No. 141R will require an entity to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, at their fair values as of that date. This compares to the cost allocation method previously required by SFAS No. 141. SFAS No. 141R will require an entity to recognize as an asset or liability at fair value for certain contingencies, either contractual or non-contractual, if certain criteria are met. Finally, SFAS No. 141R will require an entity to recognize contingent consideration at the date of acquisition, based on the fair value at that date. This Statement will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption of this standard is not permitted and the standards are to be applied prospectively only. Upon adoption of this standard, there would be no impact to our results of operations and financial condition for acquisitions previously completed. The adoption of SFAS No. 141R is not expected to have a material effect on our financial position, results of operations or cash flows.

In January 2008, the Securities and Exchange Commission released Staff Accounting Bulletin (“SAB”) No. 110, which amends SAB No. 107 which provided a simplified approach for estimating the expected term of a “plain vanilla” option, which is required for application of the Black-Scholes option pricing model (and other models) for valuing share options. At the time, the Securities and Exchange Commission acknowledged that, for companies choosing not to rely on their own historical option exercise data (i.e., because such data did not provide a reasonable basis for estimating the term), information about exercise patterns with respect to plain vanilla options granted by other companies might not be available in the near term; accordingly, in SAB No. 107, the Securities and Exchange Commission permitted use of a simplified approach for estimating the term of plain vanilla options granted on or before December 31, 2007. The information concerning exercise behavior that the Securities and Exchange Commission contemplated would be available by such date has not materialized for many companies. Thus, in SAB No. 110, the Securities and Exchange Commission continues to allow use of the simplified rule for estimating the expected term of plain vanilla options until such time as the relevant data becomes widely available. We do not expect the adoption of SAB No. 110 to have a material impact on our financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161 “ Disclosures about Derivative Instruments and Hedging Activities—An Amendment of FASB Statement No. 133 .” SFAS No. 161 establishes the disclosure requirements for derivative instruments and for hedging activities with the intent to provide financial statement users with an enhanced understanding of the entity’s use of derivative instruments, the accounting of derivative instruments and related hedged items under Statement 133 and its related interpretations, and the effects of these instruments on the entity’s financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. We do not expect the adoption of SFAS No. 161 to have a material impact on our financial position, results of operations or cash flows.

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, “ Determination of the Useful Life of Intangible Assets ”. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “ Goodwill and Other Intangible Assets ”. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141R. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. We are currently evaluating the impact of FSP 142-3, but do not expect the adoption of this pronouncement will have a material impact on our financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles ”. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board’s amendments to AU section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We are currently evaluating the impact of SFAS No. 162, but do not expect the adoption of this pronouncement will have a material impact on our financial position, results of operations or cash flows.

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Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

Certain Risks and Uncertainties

Certain statements in this Quarterly Report on Form 10-Q, including certain statements contained in “Management’s Discussion and Analysis,” constitute forward-looking statements.  The words or phrases “can be,” “may,” “could,” “would,” “expects,” “believes,” “seeks,” “estimates,” “projects” and similar words and phrases are intended to identify such forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties.  Any forward-looking information provided by us or on our behalf is not a guarantee of future performance. Our actual results could differ materially from those anticipated by such forward-looking statements due to a number of factors, some of which are beyond our control. All such forward-looking statements are current only as of the date on which such statements were made. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

Item 4T.

Controls and Procedures.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Treasurer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Treasurer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On February 1, 2009, we entered into a subscription agreement with Quality Housing LLC pursuant to which we sold (i) 47,194 shares of common stock and (ii) a five-year warrant to purchase 47,194 shares of common stock at an exercise price of $1.00 per share in exchange for aggregate gross proceeds of $16,518.

The shares of common stock and warrants sold to Quality Housing LLC were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act, and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. Quality Housing LLC was an “accredited investor” as such term is defined in Regulation D under the Securities Act.

Use of Proceeds

We intend to use the proceeds from this transaction for general corporate purposes.

Item 6.

Exhibits.

Exhibit No.

Description

31.1*	Section 302 Certification by the Principal Executive Officer
31.2*	Section 302 Certification by the Principal Accounting Officer
32.1*	Section 906 Certification by the Principal Executive Officer
32.2*	Section 906 Certification by the Principal Accounting Officer

________________________
* Filed herewith

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SIGNATURES

Pursuant to the requirements 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.

		VOLCAN HOLDINGS, INC.
Date:	May 20, 2009	By:	/s/ Pnina Feldman
			Pnina Feldman
			President and Chief Executive Officer
			(Principal Executive Officer)
Date:	May 20, 2009	By:	/s/ Sholom Feldman
			Sholom Feldman
			Treasurer and Secretary
			(Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.

Description

31.1*	Section 302 Certification by the Principal Executive Officer
31.2*	Section 302 Certification by the Principal Accounting Officer
32.1*	Section 906 Certification by the Principal Executive Officer
32.2*	Section 906 Certification by the Principal Accounting Officer

________________________
* Filed herewith