Providence expects to increase revenues within the next twelve months of operation subject to the successful realization of oil and gas production from its leasehold properties. However, Providence can provide no assurance that oil and gas exploration and development activities will ever produce revenue.
In the near term, Providence will not be able to generate sufficient cash flow from operations to sustain its business as lease development expenses increase and there can be no assurance that Providence will ever be able to generate sufficient cash flows to sustain operations. Providence’s business development strategy is prone to significant risks and uncertainties certain of which can have an immediate impact on its efforts to realize positive net cash flow and deter the prospect of revenue growth. Providence’s financial condition and results of operations will, in the near term, continue to depend on intercompany loans from the Corporation.
Revenue for the three month period ended June 30, 2006 was $9,989. Revenue for the six month period ended June 30, 2006 was $358,131. Revenue for the year ended December 31, 2005 was $369,515. Revenue in all periods can be attributed to the provision of oil and gas services for third party operators in Texas and equipment sales.
Cost of goods sold for the three month period ended June 30, 2006 was $116,387. Cost of goods sold for the six month period ended June 30, 2006 was $547,368. Cost of goods sold for the year ended December 31, 2005 was $694,382. Cost of goods sold in all periods can be primarily attributed to expenses associated with Providence’s oil and gas services. Cost of goods sold exceeded revenue because of high labor costs relating to the shortage of qualified personnel, equipment costs associated with the use of used equipment, and overhead costs associated with drilling operations. Providence intends to limit the provision of drilling services in future periods.
Net income for the three month period ended June 30, 2006, was $116,228. Net losses for the six month period ended June 30, 2006, were $247,103 and for the year ended December 31, 2005, were $778,764. Net income for the three month period can be attributed to a gain from the sale of a refurbished oil and gas equipment. The net losses in the six month period and the period ended December 31, 2005 can be primarily attributed to the high cost of sales, general and administrative expenses, and an interest expense.
Providence may operate at a loss through fiscal 2006 due to the nature of oil and gas exploration and development operations and cannot provide any assurance that it will continue to generate revenues from operations, unless successful in the production of oil and gas.
General and administrative expenses for the three month period ended June 30, 2006 were $111,503. General and administrative expenses for the six month period ended June 30, 2006 were $294,035 and for the year ended December 31, 2005, were $278,131. General and administrative expenses can be attributed to professional fees, depreciation, insurance, travel, automobile expenses and other expenses. Providence expects that general and administrative expenses will increase as Providence expands its operations.
Depreciation expenses for the three months ended June 30, 2006 were $3,744. Depreciation expenses for the six months ended June 30, 2006 were $43,524. Depreciation expenses for the year ended December 31, 2005 were $62,049.
Capital Expenditures
Providence spent $412,949 on property and equipment for the three months ended June 30, 2006. Providence spent $2,789,065 on property and equipment for the six months ended June 30, 2006 and $4,410,161 for the year ended December 31, 2005, which capital expenditures included oil and gas properties, drilling rigs and equipment, office furniture and equipment, and automotive equipment.
Income Tax Expense (Benefit)
Providence has an income tax benefit resulting from net operating losses that may offset any future operating profit.
Impact of Inflation
Providence believes that inflation has had an effect on operations since inception due to increased interest in oil and gas exploration which has increased prices for services and equipment. Providence believes that it can offset inflationary increases by improving operating efficiencies.
Liquidity and Capital Resources
Providence had current assets of $816,522 and total assets of $9,218,333 as of June 30, 2006. These assets included cash on hand of $33,047, promissory notes receivable totaling $78,665, inventory totaling $666,139, oil and gas leases totaling $7,828,849, and drilling rigs and equipment totaling $367,291. Member’s deficit in Providence was $1,515,321 at June 30, 2006.
Providence had current assets of $134,342 and total assets of $4,643,353 as of December 31, 2005. These assets included cash on hand of $22,060, and oil and gas leases totaling $3,136,273, and drilling rigs and equipment totaling $1,236,647. Net member’s equity in Providence was $243,764 at December 31, 2005.
Cash flows used by operating activities were $1,216,043 for the six month period ended June 30, 2006, which included a net loss of $247,103, an adjustment on the sale of assets totaling $519,831, and a change in inventory totaling $666,139. Cash flows used in operating activities were $590,916 for the period from inception until December 31, 2005, which included a net loss of $778,764.
Cash flows used by investing activities were $1,499,401 for the six month period ended June 30, 2006, which included the purchase of property and equipment totaling $2,789,065 minus the proceeds from the sale of oil and gas equipment totaling $1,336,000. Cash flows used in investing activities were $4,592,310 for the period from inception until December 31, 2005, which included the purchase of property and equipment totaling $4,410,161.
Cash flows from financing activities were $2,726,431 for the six month period ended June 30, 2006, comprised of notes payable of $3,017,776 less a payment against the notes of $291,345. Cash flows from financing activities were $5,205,286 for the period from inception until December 31, 2005, which included notes payable of $4,825,000. Of these amounts, Providence has a note payable at 7% interest to the Corporation, secured by oil and gas leases and due on December 1, 2006, totaling $5,242,776. The note payable is characterized as an intercompany loan.
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Providence believes its current assets are insufficient to conduct its minimum plan of operation over the next twelve (12) months and as a result Providence will have to seek additional funding through the Corporation. No assurances can be given that additional funding as needed to explore and develop Providence’s lease interests will be available to the Corporation on acceptable terms or available at all. Providence’s inability to obtain additional funding would have a material adverse affect on Providence’s operations.
Providence has no current plans for the purchase or sale of any plant or equipment.
Providence has no current plans to make any changes in the number of employees.
Going Concern
Providence’s audit expressed substantial doubt as to Providence’s ability to continue as a going concern as a result of insufficient revenue generating activities and a working capital deficit of $4,048,158 as of December 31, 2005, which increased to $9,399,489 at June 30, 2006. A significant portion of this deficit can be attributed to an intercompany loan from the Corporation. The continuation of Providence’s operations is dependent upon the continuing financial support of the Corporation and achieving profitability. These conditions and dependencies raise substantial doubt about Providence’s ability to continue as a going concern.
Management’s plan to address Providence’s ability to continue as a going concern includes: (i) successfully developing the oil and gas operations; (ii) raising additional funds through the Corporation to capitalize the operations of Providence in the form of debt or equity; and (iii) converting outstanding debt to equity. The successful outcome of these activities cannot be determined at this time, and there is no assurance that, if achieved, management would then have sufficient funds to execute its intended business plan or generate positive operating results.
Critical Accounting Policies
In the notes to the audited consolidated financial statements for Providence for the year ended December 31, 2005, the company discussed those accounting policies that are considered to be significant in determining the results of operations and financial position. The company believes that their accounting principles conform to accounting principles generally accepted in the United States of America.
The preparation of financial statements requires management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, Providence evaluates its estimates, including those related to bad debts, inventories, intangible assets, warranty obligations, product liability, revenue, and income taxes. Providence bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Providence generated limited revenues during 2006 from service fees generated from its drilling rigs. Revenues are recorded upon the completion of the services, with the existence of an agreement and where collectability is reasonably assured. Oil and natural gas production revenue will be recognized at the time and point of sale after the product has been extracted from the ground.
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Recent Accounting Pronouncements
In December 2004, FASB issued a revision to SFAS 123 (R) “Share-Based Payment”. This Statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This Statement does not change the accounting guidance for share-based payment transactions with parties other than employees provided in Statement 123 as originally issued and EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” This Statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans. The Company does not believe adoption of this revision will have a material impact on the Company’s consolidated financial statements.
In June 2005, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements” (“SFAS 154”). The Statement applies to all voluntary changes in accounting principle, and changes the requirements for accounting for and reporting of a change in accounting principle. SFAS 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impracticable. SFAS 154 requires that a change in method of depreciation, amortization, or depletion for long-lived, non-financial assets be accounted for as a change in accounting estimate that is affected by a change in accounting principle. Opinion 20 previously required that such a change be reported as a change in accounting principle. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not believe this pronouncement will have a material impact in our financial results.
DESCRIPTION OF PROPERTY
Providence maintains office space at 100 Crescent Court, 7th Floor, Dallas, Texas, 75201, and a warehouse in Young County, Texas. Providence’s office and warehouse space are under operating leases which expire October 1, 2007. Providence paid rent of $6,276 for the three months ended June 30, 2006, $7,753 for the three months ended March 31, 2006, and $6,429 for the year ended December 31, 2005. Providence believes that its office space and warehouse will be adequate for the foreseeable future.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth certain information concerning the ownership of the Corporation’s common stock as of September 29, 2006, with respect to: (i) each person known to the Corporation to be the beneficial owner of more than five percent of the Corporation’s common stock; (ii) all directors; and (iii) directors and executive officers of the Corporation as a group.
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- ------------------------------------------------------------------------------------------------------
Title of Class Name and Address Number of Shares % of Class
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Common Nora Coccaro, chief executive officer,
chief financial officer, director
1066 - 2610 West Hastings St. 353,500 0.74%
Vancouver, British Columbia
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Common Markus Mueller, director 7,184,384 14.98%
Rossenweidstrasse 12
CH-8966 Zurich, Switzerland
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Common Nicolas Mathys 2,700,002 5.63%
Weinberghohe 17
6340 Baar, Switzerland
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Common Bo Thorwald Berglin 2,658,759 5.54%
Splugenstrasse 12
CH-8002 Zurich, Switzerland
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Common Officer and Directors as a Group 7,537,884 15.72%
- ------------------------------------------------------------------------------------------------------
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONSThe Corporation’s officers and directors who will serve until the next annual meeting, or until their successors are elected or appointed and qualified, are as follows:
------------------------- ---------------- ----------------------- -------------------------------------
Name Age Year Appointed Position(s) and Office(s)
------------------------- ---------------- ----------------------- -------------------------------------
------------------------- ---------------- ----------------------- -------------------------------------
Nora Coccaro 49 1999 Chief Executive Officer, Chief
Financial Officer, Principal
Accounting Officer, and Director
------------------------- ---------------- ----------------------- -------------------------------------
------------------------- ---------------- ----------------------- -------------------------------------
Markus Mueller 47 2003 Director
------------------------- ---------------- ----------------------- -------------------------------------
Nora Coccaro was appointed to the Corporation’s board of directors on November 16, 1999, and currently serves as a director, and as our president and chief financial officer. Ms. Coccaro will serve as a director until the next annual meeting of the Corporation’s shareholders and until such time as a successor is elected and qualified. Ms. Coccaro attended medical school at the University of Uruguay before becoming involved in the management of public entities. Ms. Coccaro serves as an officer and director (December 2005 to present) of Newtech Resources, Inc., an OTC:BB quoted company without operations, an officer and director (February 2004 to present) of Solar Energy Limited an OTC: BB quoted company involved in the development of alternative sources of energy, an officer and director (from January 15, 2000 to present) of Sona Development Corp., an OTC: BB quoted company without current operations, and as an officer (October 2003 to present) and a director (October 2003 to November 2003) of ASP Ventures Corp., an OTC: BB quoted company without current operations. Ms. Coccaro has also served as an officer and director (February 2000 to January 2004) of OpenLimit, Inc., an OTC: BB quoted company involved in credit card encryption technology, as a director (1998 until May 1999) of Americana Gold & Diamond Holdings, Inc. an OTC: BB quoted company without current operations, and as an officer and director (1997 until 1999) of Black Swan Gold Mines, a Toronto Senior Listing company with diamond exploration activities in Brazil. Since September 1998 Ms. Coccaro has also acted as the Consul of Uruguay to Western Canada.
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Markus Mueller was appointed to the Corporation’s board of directors on May 28, 2003, and currently serves as a director. Mr. Mueller currently acts as a director of Scherrer & Partner Portfolio Management AG Zurich and of First Equity Securities AG Zurich. He has held these positions since August of 2000. Both companies are involved in asset management for private clients and manage investment funds. Prior to Mr. Mueller’s current engagements, he acted as a director of Jefferies (Switzerland) AG Zurich and as the managing director of Jefferies Management AG Zug (Switzerland) from 1995 until 2000. The Jefferies companies are also involved in asset management for private clients.
Code of Ethics
The Corporation has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-B of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions. The Corporation has incorporated a copy of its Code of Ethics by reference as Exhibit 14 to this Form 8-K. Further, the Corporation’s Code of Ethics is available in print, at no charge, to any security holder who requests such information by contacting the Corporation.
EXECUTIVE COMPENSATION
The following table provides summary information for the years 2005, 2004, and 2003 concerning cash and non-cash compensation paid or accrued by the Corporation to or on behalf of (i) the chief executive officer at the year ended December 31, 2005, and (ii) any other employees to receive compensation in excess of $100,000.
Summary Compensation Table
- --------------------------- ------------------------------------- ----------------------------------------------------------
Annual Compensation Long Term Compensation
- --------------------------- ------------------------------------- ----------------------------------------------------------
- ----------------------------------------------------------------- ------------------------------ ---------------------------
Awards Payouts
- ----------------------------------------------------------------- ------------------------------ ---------------------------
- -------------------- -------- ---------- -------- --------------- ---------------- ------------- ---------- ----------------
Year Salary Bonus Other Annual Restricted Securities LTIP All Other
Name and Principal ($) ($) Compensation Stock Award(s) Underlying payouts Compensation
Position ($) ($) Options ($) ($)
SARs(#)
- -------------------- -------- ---------- -------- --------------- ---------------- ------------- ---------- ----------------
- -------------------- -------- ---------- -------- --------------- ---------------- ------------- ---------- ----------------
Nora Coccaro, 2005 43,331 - - 25,000 - - -
President, Chief 2004 32,000 - - - - - -
Financial Officer 2003 32,100 - - - - - -
and Director
- -------------------- -------- ---------- -------- --------------- ---------------- ------------- ---------- ----------------
Compensation of Directors
The Corporation’s directors are not currently compensated for their services as directors of the Corporation. Directors currently are not reimbursed for out-of-pocket costs incurred in attending meetings.
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Board of Directors Committees
The board of directors has not established an audit committee or a compensation committee. An audit committee typically reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the recommendations and performance of independent auditors, the scope of the annual audits, fees to be paid to the independent auditors, and internal accounting and financial control policies and procedures. Certain stock exchanges currently require companies to adopt a formal written charter that establishes an audit committee that specifies the scope of an audit committee’s responsibilities and the means by which it carries out those responsibilities. In order to be listed on any of these exchanges, we will be required to establish an audit committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 29, 2006, the board of directors of the Corporation authorized the issuance of 2,160,949 shares of common stock valued at $0.11 per share or $242,511, to Markus Mueller, a director of the Corporation, pursuant to the Note Exchange Agreement.
On April 26, 2006, the board of directors of the Corporation authorized the issuance of 300,000 shares of common stock valued at $1.20 per share or $360,000, to Nora Coccaro, a director and the chief executive officer of the Corporation, for consulting services (see below).
On October 25, 2005, the board of directors of the Corporation authorized the issuance of 2,092,293 shares of common stock valued at $0.10 per share or $209,229, to Markus Mueller, a director of the Corporation, pursuant to an agreement for the cancellation of debt from consulting fees, loans made to the Corporation, and interest.
On October 25, 2005, the board of directors of the Corporation authorized the issuance of 50,000 shares of common stock valued at $0.25 per share or an aggregate of $25,000, to Nora Coccaro, officer and a director of the Corporation, for services rendered.
On December 5, 2004, the board of directors of the Corporation authorized the issuance of 2,931,142 shares of common stock to Mr. Mueller valued at $0.07 per share, for settlement of loans to the Corporation of $138,680 and consulting services rendered to the Corporation of $66,500.
On July 1, 2003, the board of directors of the Corporation entered into a consulting agreement with Markus Mueller, a director and significant shareholder of the Corporation. The agreement has an automatic renewal provision unless terminated by either party. During the six months ended June 30, 2006 and 2005, the Corporation recognized consulting expense of $28,500 and $21,000 respectively.
On March 16, 2000, the board of directors of the Corporation entered into a consulting agreement with Ms. Coccaro, one of the Corporation’s directors and sole officer. The agreement has an automatic renewal provision unless terminated by either party. During the six months ended June 30, 2006 and 2005, the Corporation recognized consulting expense of approximately $388,500 and $20,981 respectively. Of the current year charge, $360,000 relates to the deemed value of 300,000 shares of common stock issued to the chief executive officer on April 26, 2006.
DESCRIPTION OF SECURITIES
Common Stock
The Corporation is the sole shareholder of 100% of the membership units of Providence.
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As of September 29, 2006, there were approximately 233 stockholders of record holding a total of 47,949,627 shares of the Corporation’s common stock of the 100,000,000 common shares authorized.. The board of directors believes that the number of beneficial owners is substantially greater than the number of record holders because a portion of our outstanding common stock is held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.
Preferred Stock
As of September 29, 2006, there were no shares issued and outstanding of the 25,000,000 shares of preferred stock authorized. The Corporation’s preferred stock may have such rights, preferences and designations and may be issued in such series as determined by the board of directors.
Convertible Promissory Note
On March 30, 2006, Providence issued Global Mineral Solutions, L.P., a promissory note for $1,924,800, with an interest rate of 5%, to be convertible into 3,500,000 shares of the Corporation’s common stock within 30 days of the Corporation’s acquisition of Providence.
Additionally, the Corporation has (i) $4,481,000 plus 7% accrued interest in debt convertible into common shares at $0.35 per share at any time until November 30, 2010, and (ii) $250,000 plus 10% accrued interest in debt convertible into common shares at $0.10 per share at any time until May 6, 2010.
Warrants
The Corporation has (i) 315,114 common share purchase warrants exercisable at $0.30 per share at any time until November 30, 2010, (ii) 6,643,310 common share purchase warrants exercisable at $1.00 per share at any time until July 25, 2009, and (iii) approximately 327,000 common share purchase warrants exercisable at $0.72 per share at any time until July 25, 2009.
Transfer Agent and Registrar
The Corporation’s transfer agent and registrar is Stacie Banks at Interwest Transfer, 1981 E Murray-Holladay Road, Holladay, Utah, 84117 – 5164, (801) 272 9294.
PART II
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERSThe Corporation’s common stock is quoted on the Over the Counter Bulletin Board, a service maintained by the National Association of Securities Dealer, Inc. under the symbol, “HHBR”. Trading in the common stock over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. These prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions. The high and low bid prices for the common stock for the quarters ended June 30 and March 31, 2006, and each quarter of the years ended December 31, 2005 and 2004 are as follows:
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- --------------- ---------------------------------------- ----------------- ----------------
QUARTER ENDED HIGH LOW
YEAR
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2006 June 30 $2.50 $0.96
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2006 March 31 $0.96 $0.48
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2005 December 31 $0.85 $0.15
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2005 September 30 $0.25 $0.15
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2005 June 30 $0.23 $0.20
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2005 March 31 $0.26 $0.20
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2004 December 31 $0.20 $0.09
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2004 September 30 $0.12 $0.09
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2004 June 30 $0.32 $0.12
- --------------- ---------------------------------------- ----------------- ----------------
- --------------- ---------------------------------------- ----------------- ----------------
2004 March 31 $0.75 $0.30
- --------------- ---------------------------------------- ----------------- ----------------
Dividends
Providence has not declared any cash dividends since inception and does not anticipate paying any dividends in the foreseeable future. The payment of dividends is within the discretion of the board of directors and will depend on Providence’s earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit Providence’s ability to pay dividends on its common stock other than those generally imposed by applicable state law.
LEGAL PROCEEDINGS
Providence is currently not a party to any legal proceedings.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Providence has had no changes in or disagreements with its accountants as to accounting or financial disclosure over the two most recent fiscal years.
RECENT SALES OF UNREGISTERED SECURITIES
On July 12, 2005, Providence authorized the issuance of 2,286,330 membership units to Abram Janz and 2,000,000 membership units to Shirley Janz.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article XIV of our Articles of Incorporation requires us to indemnify and hold harmless our officers and directors to the fullest extent authorized by the Texas Business Corporation Act against any and all liability, loss and expense incurred in connection with a legal matter. This right to indemnification is a contract right and includes the right to have us pay for expenses incurred in defending any proceeding in advance of the proceeding’s final disposition. Our Articles of Incorporation also provide for the elimination of personal monetary liability of directors and officers to the fullest extent permissible under law. Our Articles of Incorporation also permit us to indemnify any of our employees or agents to the extent authorized from time to time by the Board of Directors.
Furthermore, Ms. Coccaro’s consulting agreement requires us to indemnify her against all claims arising out of actions reasonably taken by her in the performance of her duties.
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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Corporation pursuant to the foregoing provisions, the Corporation understands that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
PART F/S
See “Item 9.01 Financial Statements and Exhibits” below.
PART III
See “Item 9.01 Financial Statements and Exhibits” below.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On September 29, 2005 the board of directors of the Corporation authorized the issuance of 4,286,330 shares of restricted common stock to membership unit-holders of Providence on a pro rata basis in exchange for 1,250,000, or 100%, of the outstanding membership units of Providence. The Corporation relied on exemptions provided by Section 4(2) of the Securities Act. No sales commissions were paid in connection with this transaction.
The Corporation made these offering based on the following factors: (1) the issuance was an isolated private transaction by the Corporation which did not involve a public offering; (2) there were only two offerees who were issued the Corporation’s stock in exchange for the outstanding membership units in Providence; (3) the offerees stated their intention not to resell the stock; (4) there were no subsequent or contemporaneous public offerings of the stock; (5) the stock was not broken down into smaller denominations; and (6) the negotiations that lead to the issuance of the stock took place directly between the offerees and the Corporation.
On September 29, 2005 the board of directors of the Corporation authorized the issuance of 12,213,670 shares of restricted common stock to holders of the promissory notes issued by Providence in exchange for the assignment of said promissory notes. The Corporation relied on exemptions provided by Regulation S of the Securities Act. No sales commissions were paid in connection with this transaction.
Regulation S provides generally that any offer or sale that occurs outside of the United States is exempt from the registration requirements of the Securities Act, provided that certain conditions are met. Regulation S has two safe harbors. One safe harbor applies to offers and sales by issuers, securities professionals involved in the distribution process pursuant to contract, their respective affiliates, and persons acting on behalf of any of the foregoing (the “issuer safe harbor”), and the other applies to resales by persons other than the issuer, securities professionals involved in the distribution process pursuant to contract, their respective affiliates (except certain officers and directors), and persons acting on behalf of any of the forgoing (the “resale safe harbor”). An offer, sale or resale of securities that satisfied all conditions of the applicable safe harbor is deemed to be outside the United States as required by Regulation S. The distribution compliance period for shares sold in reliance on Regulation S is one year.
The Corporation complied with the requirements of Regulation S by having no directed selling efforts made in the United States, by selling only to a purchaser who was outside the United States at the time the subscription originated, and ensuring that the subscriber is a non-U.S. person with an address in a foreign country.
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ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS
On April 10, 2006, our board of directors approved amendments to our Amended and Restated Articles of Incorporation, recommending to our shareholders a change in name to “Providence Resources, Inc.” and an increase in the number of shares of common stock authorized for issuance to 100,000,000 shares. On September 29, 2006 shareholders representing the requisite number of votes necessary to approve the amendments to our Amended and Restated Articles of Incorporation took action at a special meeting, approving both amendments. We have filed the amendments with the Secretary of State of the State of Texas.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS
Pursuant to the acquisition of Providence, as disclosed in Item 2.01 of this current report, the Corporation ceased being a shell company on September 29, 2006. Reference is made to the disclosures set forth in Item 2.01 of this current report, which disclosures are incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
The financial tables and notes that follow present Providence’s financial statements and the Corporation’s pro forma disclosure, which should be read together with Providence’s “Management’s Discussion and Analysis” and “Results of Operations” as included elsewhere in this report. Providence’s financial data for the year ended December 31, 2005 is comprised of audited financial statements. The financial data for the three and six months ended June 30, 2006 is comprised of unaudited, interim financial statements.
Financial Statements of the Business Acquired
Providence’s Financial Statements for the period ended June 30, 2006
Providence’s Financial Statements for the year ended December 31, 2005
Pro Forma Financial Information
The Corporation’s Pro Forma Consolidated Financial Statements for the period ended June 30, 2006
The Corporation’s Pro Forma Consolidated Financial Statements for the period ended December 31, 2005
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Exhibits
The following exhibits are filed herewith or incorporated by reference:
Exhibit No. | | Description |
3(i)(a) | | Articles of Incorporation of the Company (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000) |
3(i)(b) | | Amendment to Articles of Incorporation of the Company (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000) |
3(i)(c) | | Amendment to Articles of Incorporation of the Company (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000) |
3(i)(d) | | Amended and Restated Articles of Incorporation of the Company (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000) |
3(i)(e) | | Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from the Form 10-QSB filed with the Commission on November 17, 2003). |
3(i)(f) | | Amendment to the Amended and Restated Articles of Incorporation, attached herewith. |
3(ii) | | Bylaws of the Company (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000) |
10(i) | | The 2004 Benefit Plan of Healthbridge, Inc. dated May 24, 2004 (incorporated by reference from the Form S-8 filed with the Commission on May 26, 2004). |
10(ii) | | Joint Venture Agreement between Providence and Harding Company, dated October 1, 2005, attached herewith. |
10(iii) | | Extension of the Term of Series "A" Convertible Debenture Certificate with Max Fugman (incorporated by reference from the Form 10-KSB/A filed with the Commission on October 11, 2005). |
10(iv) | | Extension of the Term of Series "A" Convertible Debenture Certificate with Global Convertible Megatrend Ltd. (incorporated by reference from the Form 10-KSB/A filed with the Commission on October 11, 2005) |
10(v) | | Agreement for Purchase and Sale between Providence and Global Mineral Solutions, L.P., dated February 22, 2006, attached herewith. |
10(vii) | | Securities Agreement dated April 10, 2006, between the Corporation, Providence and the membership unit holders of Providence (filed on Form 8-K with the Securities and Exchange Commission on April 14, 2006). |
10(viii) | | Note Agreement dated April 10, 2006, between the Corporation and the holders of certain promissory notes issued by Providence (filed on Form 8-K with the Securities and Exchange Commission on April 14, 2006). |
10(ix) | | Amendment to the Terms of the Securities Exchange Agreement dated effective as of May 26, 2006, between the Corporation, Providence and the membership unit holders of Providence (filed on Form 8-K with the Securities and Exchange Commission on July 3, 2006). |
10(x) | | Amendment to the Terms of the Note Exchange Agreement dated effective as of May 26, 2006, between the Corporation and the holders of certain promissory notes issued by Providence (filed on Form 8-K with the Securities and Exchange Commission on July 3, 2006). |
14 | | Code of Ethics, adopted as of March 1, 2004 (incorporated by reference from the form 10QSB filed with the Commission on November 17, 2004) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Healthbridge, Inc. Date
By:/s/ Nora Coccaro September 29, 2006
Name: Nora Coccaro
Title: Chief Executive Officer
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