UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
  FORM
10-Q
 
 xQUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For the
quarterly period ended December 31, 2009
 
 oTRANSITION 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)+61-2-8216-0777(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 o
 
 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 o No x
 
 As of
February 16, 2010, 103,995,765 shares of the issuer’s common stock, $0.001
par value per share, were outstanding.
 
  
 
 
 VOLCAN
HOLDINGS, INC.
 
 Table
of Contents
 
 PagePART
      I
              FINANCIAL
      INFORMATIONItem 1.
              Financial
      Statements
              1Condensed Consolidated Balance
      Sheets
              1Condensed Consolidated Statements of
      Operations  (Unaudited)
              2Consolidated Statement of Stockholders’
      Equity
              3Condensed Consolidated Statements of Cash
      Flows
              4Notes to Condensed Consolidated Financial
      Statements (Unaudited)
              5Item 2.
              Management’s Discussion and Analysis of Financial
      Condition and Results of Operations
              19Item 4T.
              Controls and Procedures
              25PART
      II
              OTHER
      INFORMATIONItem 2.
              Unregistered Sales of Equity Securities and Use of
      Proceeds
              25Item 6.
              Exhibits
              26
 
 
 
 
 
 PART
I – FINANCIAL INFORMATION
 
 Item
1.     Financial Statements.
  VOLCAN
HOLDINGS, INC.
 (An
Exploration Stage Company)
 Consolidated
Balance Sheets
 
 December
      31, 2009
                
                
                June
      30, 2009(Unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                
                $
                31,794
                
                
                $
                92,062General
      sales tax receivables
                
                
                188,343
                
                
                
                131,602Deposit
                
                
                128,646
                
                
                
                115,080Total
      current assets
                
                
                348,783
                
                
                
                338,744Intangible
      assets
                
                
                2,054,266
                
                
                
                1,473,189TOTAL
      ASSETS
                
                $
                2,403,049
                
                
                $
                1,811,933LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                
                $
                1,973,732
                
                
                $
                1,564,199Advances
      from stockholder
                
                
                133,193
                
                
                
                86,258Common
      stock to be issued
                
                
                13,300
                
                
                
                13,300Total
      current liabilities
                
                
                2,120,225
                
                
                
                1,663,757Stockholders'
      Equity:Common
      stock: $0.001 par value; 300,000,000 shares authorized; 103,995,765 shares
      issued and outstanding,
                
                
                103,996
                
                
                
                103,996Additional
      paid-in capital
                
                
                1,588,953
                
                
                
                1,588,953Deferred
      compensation
                
                
                -
                
                
                
                (87,500
                )Deficit
      accumulated during the exploration stage
                
                
                (1,419,490
                )
                
                
                (1,433,240
                )Accumulated
      other comprehensive income (loss):Foreign
      currency translation gain (loss)
                
                
                9,365
                
                
                
                (24,033
                )Total
      stockholder’s equity
                
                
                282,824
                
                
                
                148,176TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                2,403,049
                
                
                $
                1,811,933
  See
accompanying notes to the financial statements.
 1




VOLCAN
HOLDINGS, INC.
 (An
Exploration Stage Company)
 Consolidated
Statements of Operations
 (Unaudited)
  For
      ThePeriod
      FromFor
      The
              
              
              For
      The
              
              
              June
      11, 2008Six
      Months Ended
              
              
              Six
      Months Ended
              
              
              (Inception)
      ThroughDecember
      31, 2009
              
              
              December
      31, 2008
              
              
              December
      31, 2009Stock-based
      compensation
              
              $
              87,500
              
              
              $
              420,000
              
              
              $
              507,500Professional
      fees
              
              
              241,048
              
              
              
              253,672
              
              
              
              775,462General
      and administrative
              
              
              108,245
              
              
              
              199,002
              
              
              
              596,173Total
      operating expenses
              
              
              436,792
              
              
              
              872,674
              
              
              
              1,879,135Other
      (income) expenses:(Gain)
      loss on foreign exchange
              
              
              (2,670
              )
              
              
              118,612
              
              
              
              (6,214
              )Interest
      income
              
              
              (2,723
              )
              
              
              (4,111
              )
              
              
              (8,281
              )Option
      fee income
              
              
              (445,150
              )
              
              
              -
              
              
              
              (445,150
              )Income
      (loss) before income taxes
              
              
              13,750
              
              
              
              (987,175
              )
              
              
              (1,419,490
              )Income
      tax
              
              
              -
              
              
              
              -
              
              
              
              -Net
      income (loss)
              
              $
              13,750
              
              
              $
              (987,175
              )
              
              $
              (1,419,490
              )Net
      loss per common share - basic and diluted
              
              $
              (0.00
              )
              
              $
              (0.01
              )
              
              $
              (0.01
              )Weighted
      average number of common shares outstanding – basic and
      diluted
              
              
              103,995,765
              
              
              
              102,190,698
              
              
              
              103,197,859
  See
accompanying notes to the financial statements.
 
  2
  VOLCAN
HOLDINGS, INC.
 (An
Exploration Stage Company)
 Consolidated
Statements of Operations
 (Unaudited)
  For
      The
                
                
                For
      TheThree
      Months Ended
                
                
                Three
      Months EndedDecember
      31, 2009
                
                
                December
      31, 2008Professional
      fees
                
                $
                142,459
                
                
                $
                64,302General
      and administrative
                
                
                73,821
                
                
                
                93,233Total
      operating expenses
                
                
                216,280
                
                
                
                157,535Other
      (income) expenses:(Gain)
      loss on foreign exchange
                
                
                (7,268
                )
                
                
                122,797Interest
      income
                
                
                (1,659
                )
                
                
                (2,160
                )Option
      fee income
                
                
                (445,150
                )
                
                
                -Income
      (loss) before income taxes
                
                
                237,797
                
                
                
                (278,172
                )Income
      tax
                
                
                -
                
                
                
                -Net
      loss
                
                $
                237,797
                
                
                $
                (278,172
                )Net
      loss per common share - basic and diluted
                
                $
                (0.00
                )
                
                $
                (0.00
                )Weighted
      average number of common shares outstanding – basic and
      diluted
                
                
                103,995,765
                
                
                
                103,631,428
 See
accompanying notes to the financial statements.
  3
  VOLCAN
HOLDINGS, INC.
 (An
Exploration Stage Company)
 
 Consolidated
Statement of Stockholders’ Equity (Deficit)
 For the
Period from June 11, 2008 (Inception) through December 31, 2009
 (Unaudited)
  Other
                  Comprehensive
                  Income
      (Loss)Common
                  Shares
                
                
                Amount
                
                
                Additional
      Paid-in Capital
                
                
                Deferred
                  Compensation
                
                
                Deficit
                  Accumulated
                  During
      the
                  Exploration
                  Stage
                
                
                Foreign
                  Currency
                  Translation
                  Gain
      (Loss)
                
                
                Total
      Stockholders’ Equity (Deficit)Balance,
      June 11, 2008 (inception)
                
                
                5,620,000
                
                
                $
                5,620
                
                
                $
                19,380
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                25,000Effect
      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
      lossNet
      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 for cash (net of costs of $125,666)
                
                
                3,745,765
                
                
                
                3,746
                
                
                
                1,145,038
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,148,784Issuance
      of warrants in connection with common stock
                
                
                
                
                
                
                
                
                
                
                36,569
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                36,569Options
      issued for services
                
                
                
                
                
                
                
                
                
                
                420,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                420,000Common
      stock issued for
                  Future
      services
                
                
                250,000
                
                
                
                250
                
                
                
                87,250
                
                
                
                (87,500
                )
                
                
                
                
                
                
                
                
                
                
                -Comprehensive
      lossNet
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,218,331
                )
                
                
                
                
                
                
                (1,218,331
                )Foreign
      currency translation loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (20,688
                )
                
                
                (20,688
                )Total
      comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,239,019
                )Balance,
      June 30, 2009
                
                
                103,995,765
                
                
                
                103,996
                
                
                
                1,588,953
                
                
                
                (87,500
                )
                
                
                (1,433,240
                )
                
                
                (24,033
                )
                
                
                148,176Amortization
      of deferred
                  compensation
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                87,500
                
                
                
                
                
                
                
                
                
                
                
                87,500Comprehensive
      incomeNet
      income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                13,750
                
                
                
                
                
                
                
                13,750Foreign
      currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                33,398
                
                
                
                33,398Total
      comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                47,148Balance,
      December 31, 2009
                
                
                103,995,765
                
                
                $
                103,996
                
                
                $
                1,588,953
                
                
                $
                -
                
                
                $
                (1,419,490
                )
                
                $
                9,365
                
                
                $
                282,824
 
 See
accompanying notes to the financial statements.
   4
   VOLCAN
HOLDINGS, INC.
 (An
Exploration Stage Company)
 December
31, 2009 and 2008
 Notes
to the Financial Statements
 (Unaudited)
 
 NOTE
1 - ORGANIZATION AND OPERATIONS
 
 Volcan
Holdings, Inc. (formerly Dunn Mining, Inc.) (the “Company”) was incorporated on
April 4, 2006 in the State of Nevada, for the purpose of acquiring and exploring
mineral properties for economically recoverable reserves. On September 11, 2008,
Dunn Mining was merged with and into Volcan Holdings, Inc., a Delaware
corporation, for the purpose of changing its state of incorporation to Delaware
from Nevada, changing its name and effectuating a 1-for-6.1728395 forward
stock-split, all pursuant to a Certificate of Ownership and Merger and Articles
of Merger, each dated September 11, 2008 and approved by stockholders on
September 11, 2008.
  On
September 12, 2008, the Company entered into a Share Exchange Agreement (the
"Exchange Agreement") by and among the Company, Volcan Australia Corporation Pty
Ltd, an Australian proprietary company ("VAC"), and L'Hayyim Pty Ltd as trustee
for The L'Hayyim Trust, the holder of all of the outstanding capital stock of
VAC (the "VAC Shareholder"). Upon closing of the transaction contemplated under
the Exchange Agreement (the "Share Exchange"), on September 12, 2008, the VAC
Shareholder transferred all of the issued and outstanding capital stock of VAC
to the Company in exchange for 90,000,000 newly issued shares of common stock of
the Company and a 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. Such Share
Exchange caused VAC to become a wholly owned subsidiary of the
Company.
  Following
the Share Exchange, under the terms of an Agreement of Conveyance, Transfer and
Assignment of Assets and Assumption of Obligations, the Company transferred all
of its pre-Share Exchange assets and liabilities to its wholly owned subsidiary,
Dunn Mining Holdings, Inc., a Delaware corporation ("SplitCo"). Thereafter,
pursuant to a stock purchase agreement, the Company transferred all of the
outstanding capital stock of SplitCo to its former president in exchange for
cancellation of an aggregate of 24,691,358 shares of the Company’s common stock
held by such person (the "Split-Off").
  As
a result of the ownership interest of the former shareholder of VAC, for
financial statement reporting purposes, the merger between the Company and VAC
has been treated as a reverse acquisition with VAC deemed the accounting
acquirer and the Company deemed the accounting acquiree under the purchase
method of accounting in accordance with paragraph 805-40-05-2 of the FASB
Accounting Standards Codification.  The reverse merger is deemed a
capital transaction and the net assets of VAC (the accounting acquirer) are
carried forward to the Company (the legal acquirer and the reporting entity) at
their carrying value before the combination.  The acquisition process
utilizes the capital structure of the Company and the assets and liabilities of
VAC which are recorded at historical cost.  The equity of the Company
is the historical equity of VAC retroactively restated to reflect the number of
shares issued by the Company in the transaction.
   5
   VAC
is an exploration stage company and its principal operation is the conducting of
exploration for Bauxite and other minerals in Australia. The current focus is on
the exploration for bauxite and other mineral deposits on tenements near
Inverell and Cooma in New South Wales, Australia. VAC 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 VAC’s interests in the underlying properties, the ability of VAC
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.
  As
a result of the Share Exchange and Split Off, the Company succeeded to the
business of VAC as its sole line of business.
  NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis
of presentation
  The
accompanying unaudited interim financial statements and related notes 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 rules and regulations of the United States Securities and Exchange
Commission (“SEC”) to Form 10-Q and Article 8 of Regulation
S-X.  Accordingly, they do not include all of the information and
footnotes required by U.S. GAAP for complete financial
statements.  The unaudited interim financial statements furnished
reflect all adjustments (consisting of normal recurring accruals) which are, in
the opinion of management, necessary to a fair statement of the results for the
interim periods presented.  Unaudited interim results are not
necessarily indicative of the results for the full year.  These
unaudited interim financial statements should be read in conjunction with the
financial statements of the Company for the fiscal year ended June 30, 2009 and
notes thereto contained in the information filed as part of the Company’s Annual
Report on Form 10-K filed on August 7, 2009.
 
 Exploration
stage company
  The
Company is an exploration stage company as defined by section 915-10-20 of the
FASB Accounting Standards Codification. The Company 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 exploration stage
activities.
   6
   Use of
estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.
  Fiscal
year end
  The
Company elected June 30 as its fiscal year ending date.
  Cash
equivalents
  The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.
  Mineral
property and related mineral rights - bauxite claims
  The
Company follows topic 930 and subtopic 720-15 of the FASB Accounting Standards
Codification for its mineral property and related mineral rights - bauxite
claims.  Mineral property and related mineral rights acquisition costs
are capitalized pending determination of whether the drilling has found proved
reserves.  If a mineral ore body is discovered, capitalized costs will
be amortized on a unit-of-production basis following the commencement of
production.  Otherwise, capitalized acquisition costs are expensed
when it is determined that the mineral property has no future economic
value.  Exploration costs, including rights of access to lands for
geophysical work and salaries, equipment, and supplies for geologists and
geophysical crews are expensed as incurred.  When it is determined
that a mining deposit can be economically and legally extracted or produced
based on established proven and probable reserves, further exploration costs and
development costs as well as interest costs relating to exploration and
development projects that require greater than six (6) months to be readied for
their intended use incurred after such determination will be
capitalized.  The establishment of proven and probable reserves is
based on results of final feasibility studies which indicate whether a property
is economically feasible.  Upon commencement of commercial production,
capitalized costs will be transferred to the appropriate asset categories and
amortized on a unit-of-production basis.  Capitalized costs, net of
salvage values, relating to a deposit which is abandoned or considered
uneconomic for the foreseeable future will be written off.  Upon
becoming fully amortized, the related cost and accumulated amortization are
removed from the accounts.  The sale of a partial interest in a proved
property is accounted for as a cost recovery and no gain or loss is recognized
as long as this treatment does not significantly affect the unit-of-production
amortization rate.  A gain or loss will be recognized for all other
sales of proved properties and will be classified in other operating
revenues.  Maintenance and repairs are charged to expense, and
renewals and betterments are capitalized to the appropriate property and
equipment accounts.
   7
  
 The
provision for depreciation, depletion and amortization (“DD&A”) of mineral
properties is calculated on a property-by-property basis using the
unit-of-production method.  Taken into consideration in the
calculation of DD&A are estimated future dismantlement, restoration and
abandonment costs, which are net of estimated salvage values.
  Impairment
of long-lived assets
  The
Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards
Codification for its long-lived assets.  The Company’s long-lived
assets, which include mineral property and related mineral rights, are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
  The
Company assesses the recoverability of its long-lived assets by comparing the
projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful 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 long-lived assets are determined to be recoverable,
but the newly determined remaining estimated useful lives are shorter than
originally estimated, the net book values of the long-lived assets are
depreciated over the newly determined remaining estimated useful
lives.
  The
Company periodically reviews its proved mineral properties for impairment
whenever events and circumstances indicate a decline in the recoverability of
their carrying value may have occurred.  The Company estimates the
expected undiscounted future cash flows of its mineral properties and compares
such undiscounted future cash flows to the carrying amount of the mineral
properties to determine if the carrying amount is recoverable.  If the
carrying amount exceeds the estimated undiscounted future cash flows, the
Company will adjust the carrying amount of the mineral properties to fair
value.  The factors used to determine fair value include, but are not
limited to, recent sales prices of comparable properties, estimates of proved
reserves, future commodity pricing, future production estimates, anticipated
capital expenditures, and a discount rate commensurate with the risk associated
with realizing the expected cash flows projected.
  Unevaluated
properties are assessed periodically on a property-by-property basis and any
impairment in value is charged to expense.  If the unevaluated
properties are subsequently determined to be productive, the related costs are
transferred to proved mineral properties.  Proceeds from sales of
partial interests in unproved leases are accounted for as a recovery of cost
without recognizing any gain until all costs are recovered.
  The
Company determined that there were no impairments of long-lived assets as of
December 31, 2009 or 2008.
   8
   Fair
value of financial instruments
  The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph
820-10-35-37”) to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and
expands disclosures about fair value measurements.  To increase
consistency and comparability in fair value measurements and related
disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into
three (3) broad levels.  The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical assets or
liabilities and the lowest priority to unobservable inputs.  The three
(3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are
described below:
  Level
      1
                
                Quoted
      market prices available in active markets for identical assets or
      liabilities as of the reporting date.Level
      2
                
                Pricing
      inputs other than quoted prices in active markets included in Level 1,
      which are either directly or indirectly observable as of the reporting
      date.Level
      3
                
                Pricing
      inputs that are generally observable inputs and not corroborated by market
      data.
  The
carrying amounts of the Company’s financial assets and liabilities, such as
cash, other receivables, loans receivable, deposits and accounts payable,
advances from shareholder, loans payable and common stock to be issued,
approximate their fair values because of the short maturity of these
instruments. The Company’s loans receivable, and loans payable approximate the
fair value of such instruments based upon management’s best estimate of interest
rates that would be available to the Company for similar financial arrangements
at December 31, 2009.
  The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
December 31, 2009 or 2008, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the interim period ended December 31, 2009, 2008 or for the period from June 11,
2008 (inception) through December 31, 2009.
  Revenue
recognition
  The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition.  The Company recognizes revenue
when it is realized or realizable and earned. The Company considers revenue
realized or realizable and earned when all of the following criteria are met:
(i) persuasive evidence of an arrangement exists, (ii) the product has been
shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably
assured.
   9
   The
Company will derive its revenue from sales contracts with customers with
revenues being generated upon the shipment of mineral ores upon the Company
commencing exploration operations.  Persuasive evidence of an
arrangement is demonstrated via invoice, product delivery is evidenced by
warehouse shipping log as well as a signed bill of lading from the trucking
company or third party carrier and title transfers upon shipment, based on free
on board (“FOB”) warehouse; the sales price to the customer is fixed upon
acceptance of the purchase order and there is no separate sales rebate,
discount, or volume incentive.
  Stock-based
compensation for obtaining employee servicesand
equity instruments issued to parties other than employees for acquiring goods or
services
  The
Company accounts for its stock based compensation in which the Company obtains
employee services in share-based payment transactions under the recognition and
measurement principles of the fair value recognition provisions of section
718-10-30 of the FASB Accounting Standards Codification and accounts for equity
instruments issued to parties other than employees for acquiring goods or
services under guidance of section 505-50-30 of the FASB Accounting Standards
Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards
Codification, all transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable.  The
measurement date used to determine the fair value of the equity instrument
issued is the earlier of the date on which the third-party performance is
complete or the date on which it is probable that performance will
occur.
  Income
taxes
  The
Company accounts for income taxes under Section 740-10-30 of the FASB Accounting
Standards Codification.  Deferred income tax assets and liabilities
are determined based upon 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.  Deferred tax assets are reduced by a valuation allowance to
the extent management concludes it is more likely than not that the assets will
not be realized.  Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the statements of operations in the period that includes the
enactment date.
  The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification
(“Section 740-10-25”).  Section 740-10-25 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should
be recorded in the financial statements.  Under Section 740-10-25, the
Company may recognize the
 
 
 10
 
 
 tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position.  The tax benefits
recognized in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement.  Section
740-10-25 also provides guidance on de-recognition, classification, interest and
penalties on income taxes, accounting in interim periods and requires increased
disclosures.  The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
Section 740-10-25.
  Net
loss per common share
  Net
loss per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification.  Basic net loss per 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 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 and 3,745,767 warrants
outstanding as of December 31, 2009, which were excluded from the calculation
because their effect would be anti-dilutive.
  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. 33-9072 on October 13, 2009.  Under the provisions
of Section 404 of the Sarbanes-Oxley Act, public companies and their independent
auditors are each required to report to the public on the effectiveness of a
company’s internal controls.  The smallest public companies with a
public float below $75 million have been given extra time to design, implement
and document these internal controls before their auditors are required to
attest to the effectiveness of these controls.  This extension of time
will expire beginning with the annual reports of companies with fiscal years
ending on or after June 15, 2010.  Commencing with its annual report
for the year ending June 30, 2010, 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; andof
      the framework used by management to evaluate the effectiveness of the
      Company’s internal control over financial
  reporting.
   11
   Furthermore,
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
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009.  The Codification does not
change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place.  All existing accounting standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15,
2009.  The adoption of this standard did not have a material impact on
its consolidated financial position, results of operations or cash
flows.
  In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section 480-10-S99” which
represents an update to section 480-10-S99, distinguishing liabilities from
equity, per EITF Topic D-98, Classification
and Measurement of Redeemable Securities.  The Company does not
expect the adoption of this update to have a material impact on its consolidated
financial position, results of operations or cash flows.
  In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value”, which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities.  This Update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset b. Quoted prices
for similar liabilities or similar liabilities when traded as assets. 2. Another
valuation technique that is consistent with the principles of topic 820; two
examples would be an income approach, such as a present value technique, or a
market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this Update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this Update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements.  The Company does
not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash
flows.
   12
   In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per
Share – Amendments to Section 260-10-S99”,which represents technical
corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53,
Computation of
Earnings Per Share for a Period that includes a Redemption or an Induced
Conversion of a Portion of a Class of Preferred Stock and EITF Topic
D-42, The
Effect of the Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock. The Company does not expect the adoption
of this update to have a material impact on its consolidated financial position,
results of operations or cash flows.
  In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees”.  This Update represents a
correction to Section 323-10-S99-4, Accounting by
an Investor for Stock-Based Compensation Granted to Employees of an Equity
Method Investee. Additionally, it adds observer commentAccounting
Recognition for Certain Transactions Involving Equity Instruments Granted to
Other Than Employees to the Codification. The Company does not expect the
adoption to have a material impact on its consolidated financial position,
results of operations or cash flows.
  In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides
amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall,
for the fair value measurement of investments in certain entities that calculate
net asset value per share (or its equivalent). The amendments in this Update
permit, as a practical expedient, a reporting entity to measure the fair value
of an investment that is within the scope of the amendments in this Update on
the basis of the net asset value per share of the investment (or its equivalent)
if the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments a the measurement date, any
unfunded commitments (for example, a contractual commitment by the investor to
invest a specified amount of additional capital at a future date to fund
investments that will be make by the investee), and the investment strategies of
the investees. The major category of investment is required to be determined on
the basis of the nature and risks of the investment in a manner consistent with
the guidance for major security types in U.S. GAAP on investments in debt and
equity securities in paragraph 320-10-50-1B. The disclosures are required for
all investments within the scope of the amendments in this Update regardless of
whether the fair value of the investment is measured using the practical
expedient. The Company does not expect the adoption to have a material impact on
its consolidated financial position, results of operations or cash
flows.
   13
   In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-01 “Equity Topic
505 – Accounting for Distributions to Shareholders with Components of Stock and
Cash”, which clarify that the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a potential
limitation on the total amount of cash that all shareholders can elect to
receive in the aggregate is considered a share issuance that is reflected in EPS
prospectively and is not a stock dividend for purposes of applying Topics 505
and 260 (Equity and Earnings Per Share (“EPS”)).  Those distributions
should be accounted for and included in EPS calculations in accordance with
paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting
Standards codification.  The amendments in this Update also provide a
technical correction to the Accounting Standards Codification.  The
correction moves guidance that was previously included in the Overview and
Background Section to the definition of a stock dividend in the Master
Glossary.  That guidance indicates that a stock dividend takes nothing
from the property of the corporation and adds nothing to the interests of the
stockholders.  It also indicates that the proportional interest of
each shareholder remains the same, and is a key factor to consider in
determining whether a distribution is a stock dividend.
  In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-02 “Consolidation
Topic 810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary
– a Scope Clarification”, which provides amendments to Subtopic 810-10
and related guidance within U.S. GAAP to clarify that the scope of the decrease
in ownership provisions of the Subtopic and related guidance applies to the
following:
  1.
                A
      subsidiary or group of assets that is a business or nonprofit
      activity
 2.
                A
      subsidiary that is a business or nonprofit activity that is transferred to
      an equity method investee or joint
venture
 3.
                An
      exchange of a group of assets that constitutes a business or nonprofit
      activity for a noncontrolling interest in an entity (including an equity
      method investee or joint venture).
 
 The
amendments in this Update also clarify that the decrease in ownership guidance
in Subtopic 810-10 does not apply to the following transactions even if they
involve businesses:
  1.
                Sales
      of in substance real estate.  Entities should apply the sale of
      real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment)
      and 976-605 (Retail/Land) to such
transactions.
 2.
                Conveyances
      of oil and gas mineral rights.  Entities should apply the
      mineral property conveyance and related transactions guidance in Subtopic
      932-360 (Oil and Gas-Property, Plant, and Equipment) to such
      transactions.
 
 If
a decrease in ownership occurs in a subsidiary that is not a business or
nonprofit activity, an entity first needs to consider whether the substance of
the transaction causing the decrease in ownership is addressed in other U.S.
GAAP, such as transfers of financial assets, revenue recognition, exchanges of
nonmonetary assets, sales of in substance real estate, or conveyances of oil and
gas mineral rights, and apply that guidance as applicable. If no other guidance
exists, an entity should apply the guidance in Subtopic 810-10.
   14
   Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
 
 NOTE
3 - GOING CONCERN
 
 As
reflected in the accompanying financial statements, the Company had a deficit
accumulated during the exploration stage of $1,419,490 and a working capital
deficit of $1,771,442 at December 31, 2009, respectively.
  While
the Company is attempting to commence operations and generate revenues, the
Company’s cash position may not be significant enough to support the Company’s
daily operations.  Management intends to raise additional funds by way
of a public or private offering.  Management believes that the actions
presently being taken to further implement its business plan and generate
revenues provide the opportunity for the Company to continue as a going
concern.  While the Company believes in the viability of its strategy
to generate revenues and in its ability to raise additional funds, there can be
no assurances to that effect.  The ability of the Company to continue
as a going concern is dependent upon the Company’s ability to further implement
its business plan and generate revenues.
  The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
 
 NOTE
4 - 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.
  Stock
Options
 
 15
   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.
 
 NOTE
5 - 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.
   16
   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.
 
 Joint
Venture Agreement
 
 On
October 30, 2009, VAC and the title holder of all of Volcan’s 28 bauxite
tenements in Eastern Australia, entered into a joint venture agreement (the
“Agreement”)
with Martin Place Securities Pty Ltd (“MPS”), a
Sydney, Australia based investment banking firm that focuses on the resource
industry. Pursuant to this Agreement, each of Volcan Holdings and MPS agreed to
form a new joint venture entity (“Newco”),
50% of which shall be initially owned by MPS and 50% of which shall initially be
owned by Volcan Holdings. As moneys are raised into Newco the founding
shareholders will be diluted equally. At the balance date, AUD $1,550,000 was
raised into Newco (now called Plateau Bauxite Limited). As a result of that
raise, Volcan currently holds 31.25% of the issued capital of Newco. In
addition, under this Agreement, Newco was granted the right to purchase an
option to earn interests in VAC’s tenements by making a payment, on behalf of
VAC, to the Queensland government in the amount of A$250,000 in satisfaction of
tenement fees owed and A$250,000 to Volcan Holdings for general corporate
purposes (the “Tenement
Interest Option”). These amounts are recorded as Option Fee income in
Other Income (Expense) in the Statement of Operations.
  Under
the Tenement Interest Option, Newco would have the right to earn a 10% interest
in any of the 28 tenements held by VAC (other than NSW EL 7301) that Newco
spends at least A$500,000 on within 24 months of October 30, 2009. Once Newco
has earned this 10% interest in a tenement, it will have the right to earn an
additional 10% interest in such tenement by purchasing A$500,000 of shares of
common stock of Volcan Holdings at a purchase price of A$10 per share within 24
months of October 30, 2009. As such, in order
for Newco to acquire a 20% interest in each of Volcan Australia’s 28 tenements
(other than NSW EL 7301), Newco would need to spend at least A$14 million on the
28 tenements and purchase at least A$14 million of shares of common stock of
Volcan Holdings at a purchase price of $10 per share.
 
 17
 
  With
respect to NSW EL 7301, under the Tenement Interest Option, Newco will have the
right to earn a 12.5% interest of by identifying a JORC compliant inferred
resource of 100 million tons of economic grade bauxite on that tenement within
12 months of October 30, 2009, and purchasing A$3 million of shares of commons
stock of Volcan Holdings at a purchase price of A$10 per share. Newco has the
right to earn a further 12.5% by identifying a JORC compliant inferred resource
of 300 million tons of economic grade bauxite on that tenement within 12 months
of October 30, 2009, and purchasing an additional A$3 million of shares of
common stock of Volcan Holdings at a purchase price of A$10 per
share.
  Under
the Agreement, each of VAC and MPS has agreed to cause Newco to enter into an
exclusive management agreement with Australian Gemstone Mining Pty Ltd (“AGM”),
an affiliate of Sholom Feldman and Pnina Feldman, for the provision of
geological and project management services by AGM for all projects associated
with the tenements held by VAC at cost as approved by the board of Newco, plus a
15% management fee, for a minimum of 24 months from October 31, 2009 and
thereafter for such time that this agreement remains in effect.
  Following
execution of this Agreement, VAC and MPS formed a new company in New South Wales
to serve as Newco entitled Plateau Bauxite Limited (“PBL”).
Moreover, in November 2009, MPS helped PBL raise A$1,550,000 from investors in
Australia in a private placement and on November 19, 2009, PBL purchased the
above described Tenement Interest Option. PBL intends to try to list on the
Australian Securities Exchange in 2010.
 
 NOTE
6 - SUBSEQUENT EVENTS
 
 The
Company has evaluated all events that occur after the balance sheet date as of
December 31, 2009 through February 17, 2010, the date when the financial
statements were issued to determine if they must be reported.  The
Management of the Company determined that there was no reportable subsequent
event to be disclosed.
   18
 
 
 Item
2.      Management’s Discussion and Analysis of
Financial Condition and Results of Operations
 
 Overview
 
 We are a
mineral exploration company that intends to explore prospective bauxite deposits
in New South Wales, Australia and Queensland, Australia. We are in the
exploration stage, have not generated any revenue to date and do not
anitcipate doing so in the near future. Our inception for accounting
purposes was June 11, 2008.
 
 Critical
Accounting Policies
 
 Exploration stage
company.We are an exploration stage company as defined by
section 915-10-20 of the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification. We are still devoting substantially all of
our efforts to establishing our business and its planned principal operations
have not commenced.  All losses accumulated since inception have been
considered as part of our exploration stage activities.
 
 Use of
Estimates.The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.
 
 Fiscal Year
End.We elected June 30 as our fiscal year ending
date.
 
 Cash
Equivalents.We consider all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
 
 Mineral Property and Related Mineral
Rights - Bauxite Claims.We follow topic 930 and subtopic
720-15 of the FASB Accounting Standards Codification for our mineral property
and related mineral rights - bauxite claims.  Mineral property and
related mineral rights acquisition costs are capitalized pending determination
of whether the drilling has found proved reserves.  If a mineral ore
body is discovered, capitalized costs will be amortized on a unit-of-production
basis following the commencement of production.  Otherwise,
capitalized acquisition costs are expensed when it is determined that the
mineral property has no future economic value.  Exploration costs,
including rights of access to lands for geophysical work and salaries,
equipment, and supplies for geologists and geophysical crews are expensed as
incurred.  When it is determined that a mining deposit can be
economically and legally extracted or produced based on established proven and
probable reserves, further exploration costs and development costs as well as
interest costs relating to exploration and development projects that require
greater than six (6) months to be readied for their intended use incurred after
such determination will be capitalized.  The establishment of proven
and probable reserves is based on results of final feasibility studies which
indicate whether a property is economically feasible.  Upon
commencement of commercial production, capitalized costs will be transferred to
the appropriate asset categories and amortized on a unit-of-production
basis.  Capitalized costs, net of salvage values, relating to a
deposit which is abandoned or considered uneconomic for the foreseeable future
will be written off.  Upon becoming fully amortized, the related cost
and accumulated amortization are removed from the accounts.  The sale
of a partial interest in a proved property is accounted for as a cost recovery
and no gain or loss is recognized as long as this treatment does not
significantly affect the unit-of-production amortization rate.  A gain
or loss will be recognized for all other sales of proved properties and will be
classified in other operating revenues.  Maintenance and repairs are
charged to expense, and renewals and betterments are capitalized to the
appropriate property and equipment accounts.
 
 The
provision for depreciation, depletion and amortization (“DD&A”) of mineral
properties is calculated on a property-by-property basis using the
unit-of-production method.  Taken into consideration in the
calculation of DD&A are estimated future dismantlement, restoration and
abandonment costs, which are net of estimated salvage values.
 
 Impairment of Long-Lived
Assets.We have adopted paragraph 360-10-35-17 of the FASB
Accounting Standards Codification for our long-lived assets.  Our
long-lived assets, which include mineral property and related mineral rights,
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
 
 We assess
the recoverability of our long-lived assets by comparing the projected
undiscounted net cash flows associated with the related long-lived asset or
group of long-lived assets over their remaining estimated useful 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 long-lived assets are
determined to be recoverable, but the newly determined remaining estimated
useful lives are shorter than originally estimated, the net book values of the
long-lived assets are depreciated over the newly determined remaining estimated
useful lives.
   19
 
 We
periodically review our proved mineral properties for impairment whenever events
and circumstances indicate a decline in the recoverability of their carrying
value may have occurred.  We estimate the expected undiscounted future
cash flows of our mineral properties and compare such undiscounted future cash
flows to the carrying amount of the mineral properties to determine if the
carrying amount is recoverable.  If the carrying amount exceeds the
estimated undiscounted future cash flows, we will adjust the carrying amount of
the mineral properties to fair value.  The factors used to determine
fair value include, but are not limited to, recent sales prices of comparable
properties, estimates of proved reserves, future commodity pricing, future
production estimates, anticipated capital expenditures, and a discount rate
commensurate with the risk associated with realizing the expected cash flows
projected.
 
 Unevaluated
properties are assessed periodically on a property-by-property basis and any
impairment in value is charged to expense.  If the unevaluated
properties are subsequently determined to be productive, the related costs are
transferred to proved mineral properties.  Proceeds from sales of
partial interests in unproved leases are accounted for as a recovery of cost
without recognizing any gain until all costs are recovered.
 
 We
determined that there were no impairments of long-lived assets as of December
31, 2009 or 2008.
 
 Fair value of financial
instruments.We follow paragraph 825-10-50-10 of the FASB
Accounting Standards Codification for disclosures about fair value of its
financial instruments and paragraph 820-10-35-37 of the FASB Accounting
Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of
its financial instruments. Paragraph 820-10-35-37 establishes a framework for
measuring fair value in accounting principles generally accepted in the United
States (“U.S. GAAP”), and expands disclosures about fair value
measurements.  To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels.  The fair value
hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to
unobservable inputs.  The three (3) levels of fair value hierarchy
defined by Paragraph 820-10-35-37 are described below:
 
 Level
1:  Quoted market prices available in active markets for identical
assets or liabilities as of the reporting date.
 
 Level 2:
Pricing inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
 
 Level 3:
Pricing inputs that are generally observable inputs and not corroborated by
market data.
 
 The
carrying amounts of our financial assets and liabilities, such as cash, other
receivables, loans receivable, deposits and accounts payable, advances from
shareholder, loans payable and common stock to be issued, approximate their fair
values because of the short maturity of these instruments. Our loans receivable,
and loans payable approximate the fair value of such instruments based upon
management’s best estimate of interest rates that would be available to us for
similar financial arrangements at December 31, 2009.
 
 We do not
have any assets or liabilities measured at fair value on a recurring or a
non-recurring basis.  Consequently, we did not have any fair value
adjustments for assets and liabilities measured at fair value at December 31,
2009 or 2008, nor gains or losses are reported in the statement of operations
that are attributable to the change in unrealized gains or losses relating to
those assets and liabilities still held at the reporting date for the interim
period ended December 31, 2009, 2008 or for the period from June 11, 2008
(inception) through December 31, 2009.
 
 Revenue Recognition.We apply
paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue
recognition.  We recognize revenue when it is realized or realizable
and earned. We consider revenue realized or realizable and earned when all
of the following criteria are met: (i) persuasive evidence of an arrangement
exists, (ii) the product has been shipped or the services have been rendered to
the customer, (iii) the sales price is fixed or determinable and (iv)
collectability is reasonably assured.
 
 We will
derive our revenue from sales contracts with customers with revenues being
generated upon the shipment of mineral ores upon our commencement of exploration
operations.  Persuasive evidence of an arrangement is demonstrated via
invoice, product delivery is evidenced by warehouse shipping log as well as a
signed bill of lading from the trucking company or third party carrier and title
transfers upon shipment, based on free on board (“FOB”) warehouse; the sales
price to the customer is fixed upon acceptance of the purchase order and there
is no separate sales rebate, discount, or volume incentive.
 
 Stock-based Compensation.We account for
our stock based compensation in which we obtain employee services in share-based
payment transactions under the recognition and measurement principles of the
fair value recognition provisions of section 718-10-30 of the FASB Accounting
Standards Codification and account for equity instruments issued to parties
other than employees for acquiring goods or services under guidance of section
505-50-30 of the FASB Accounting Standards Codification. Pursuant to paragraph
718-10-30-6 of the FASB Accounting Standards Codification, all transactions in
which goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable.  The measurement date used to
determine the fair value of the equity instrument issued is the earlier of the
date on which the third-party performance is complete or the date on which it is
probable that performance will occur.
   20
 
 Income Taxes.We
account for income taxes under Section 740-10-30 of the FASB Accounting
Standards Codification.  Deferred income tax assets and liabilities
are determined based upon 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.  Deferred tax assets are reduced by a valuation allowance to
the extent management concludes it is more likely than not that the assets will
not be realized.  Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the statements of operations in the period that includes the
enactment date.
 
 We
adopted section 740-10-25 of the FASB Accounting Standards Codification
(“Section 740-10-25”).  Section 740-10-25 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should
be recorded in the financial statements.  Under Section 740-10-25, we
may recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the
position.  The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a
greater than fifty percent (50%) likelihood of being realized upon ultimate
settlement.  Section 740-10-25 also provides guidance on
de-recognition, classification, interest and penalties on income taxes,
accounting in interim periods and requires increased disclosures.  We
had no material adjustments to its liabilities for unrecognized income tax
benefits according to the provisions of Section 740-10-25.
 
 Net Loss per Common
Share.Net loss per common share is computed pursuant to
section 260-10-45 of the FASB Accounting Standards
Codification.  Basic net loss per 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 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 and 3,745,767 warrants outstanding as of December 31, 2009,
which were excluded from the calculation because their effect would be
anti-dilutive.
 
 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 December 31, 2009
 
 Revenues. For the six months
ended December 31, 2009 and 2008, we did not recognize any revenue.
 
 Expenses. For the six months
ended December 31, 2009, we incurred $436,792 in expenses, which consisted of
stock compensation of $87,500, professional fees of $241,048 and general and
administrative expenses of $108,245  For the six months ended December
31, 2008, we incurred $872,674 in expenses, which consisted of  stock
compensation of $420,000, professional fees of $253,672 and general and
administrative expenses of $199,002.
 
 Income Tax Expense. For the
six months ended December 31, 2009 and December 31, 2008, we did not recognize
any income tax expense.
 
 
 21
 
 
 Accounts Payable. For the six months
ended December 31, 2009, we had other accounts payable of approximately
$1,973,732, as compared to approximately $1,564,199 for the fiscal year ended
June 30, 2009.  The accounts payable for both periods consisted of
amounts due to a related party, Australian Gemstone Mining Services Pty Ltd
(“AGM”), for the purchase of exploration and prospecting information and
administration services.  These amounts largely related to work done
by AGM’s
geological team in exploring our
tenements and exploring opportunities.  The reimbursement of
these amounts are important to retain the geological expertise that is currently
available to us for
our
future development of our
projects, which require specialist expert knowledge of this particular area and
geology. The geological team is mindful of our
current cash position and therefore has agreed to a staggered payment plan that
our directors believe will not materially affect our
ability to carry out our
initial objectives in securing an independent verification of inferred JORC
resources on our
tenements. It is the view of our
directors, that such a resource statement should in normal market conditions
make us
eligible for larger institutional
funding.
 Liquidity
and Capital Resources
 
 We
had cash or cash equivalents of $31,794 at December 31,
2009. For the fiscal year ended June 30, 2009, we had cash and cash equivalents
of $92,062. 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 $250,000 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. We anticipate
that Plateau Bauxite Limited, which has the right to acquire up to 25% of
certain of our tenements and with respect to which have a non-controlling
interest, to contribute funds towards the initial field program. 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, provided we are able to
raise sufficient funds, we
intend to make the following expenditures in connection with exploring
the geology of our tenement holdings:
 ·
              Aerial
      photo and remote data interpretation. We intend to spend approximately
      $130,000 to conduct and interpret airborne and/or satellite surveys
      of our proposed tenement holdings.
  ·
              High
      resolution image based mapping and target selection. We intend to spend
      approximately $200,000 to conduct ground-based geological mapping and
      target selection of the bauxite and other mineral deposits on our proposed
      tenement holdings.
  ·
              Drilling,
      sampling and sub-surface mapping. We intend to spend approximately
      $6,600,000 million to perform drilling and sampling of bauxite
      deposits that we identify on our tenement
  holdings.
  ·
              Bulk
      sampling of identified bauxite deposits. We intend to spend approximately
      $700,000 to conduct bulk sampling of bauxite deposits that we identify on
      our proposed tenement holdings.
 
 Payment to Shareholder.Pursuant to the
terms of a share
exchange agreement, pursuant to which we acquired all of the outstanding capital
stock of Volcan Australia Corporation Pty Ltd., 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 induring
this initial period.
 
 Related Party Transaction.We have paid
approximately 150,000
to AGM for the provision of exploration and prospecting information. The
remaining funds will be paid 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 approximately $480,000
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 $380,000
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. In addition, the director
has agreed to defer any payments owed to him until our liquidity situation
improves.
  22
  
 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 2010 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.
 
 Off-Balance
Sheet Arrangements
 
 We did
not engage in any off balance sheet arrangements during the six months ended
December 31, 2009 and 2008.
 
 Recent
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. 33-9072 on October 13, 2009.  Under the provisions of
Section 404, public companies and their independent auditors are each required
to report to the public on the effectiveness of a company’s internal
controls.  The smallest public companies with a public float below $75
million have been given extra time to design, implement and document these
internal controls before their auditors are required to attest to the
effectiveness of these controls.  This extension of time will expire
beginning with the annual reports of companies with fiscal years ending on or
after June 15, 2010.   Commencing with our annual report for
the year ending June 30, 2010, we will be required to include a report of
management on our 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 our financial
  reporting;
 ·
              of
      management’s assessment of the effectiveness of our internal control
      over financial reporting as of year end;
and
 ·
              of
      the framework used by management to evaluate the effectiveness of our
      internal control over financial
reporting.
 
 Furthermore, we
are required to file the auditor’s attestation report separately
on our internal control over financial reporting on whether it believes
that we have maintained, in all material respects, effective internal control
over financial reporting.
 
 In June
2009, the FASB approved the FASB Accounting Standards Codification as the single
source of authoritative nongovernmental U.S. GAAP to be launched on July 1,
2009. The FASB Accounting Standards Codification does not change current U.S.
GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by
providing all the authoritative literature related to a particular topic in one
place. All existing accounting standard documents will be superseded and all
other accounting literature not included in the FASB Accounting Standards
Codification will be considered non-authoritative. The FASB Accounting Standards
Codification is effective for interim and annual periods ending after September
15, 2009. The adoption of this standard did not have a material impact on our
consolidated financial position, results of operations or cash
flows.
 
 In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section 480-10-S99” which
represents an update to section 480-10-S99, distinguishing liabilities from
equity, per EITF Topic D-98, Classification and Measurement of
Redeemable Securities.  We do not expect the adoption of this
update to have a material impact on our consolidated financial position, results
of operations or cash flows.
 
 In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value”, which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities.  This Update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset b. Quoted prices
for similar liabilities or similar liabilities when traded as assets. 2. Another
valuation technique that is consistent with the principles of topic 820; two
examples would be an income approach, such as a present value technique, or a
market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this Update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this Update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements. We do not expect the
adoption of this update to have a material impact on our consolidated
financial position, results of operations or cash flows.
   23
 
 In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per Share –
Amendments to Section 260-10-S99”,which represents technical corrections
to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share
for a Period that includes a Redemption or an Induced Conversion of a Portion of
a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred
Stock. We do not expect the adoption of this update to have a material
impact on our consolidated financial position, results of operations or
cash flows.
 
 In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees”.  This Update represents a
correction to Section 323-10-S99-4, Accounting by an Investor for
Stock-Based Compensation Granted to Employees of an Equity Method
Investee. Additionally, it adds observer commentAccounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees
to the Codification. We do not expect the adoption to have a material impact
on our consolidated financial position, results of operations or cash
flows.
 
 In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides
amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall,
for the fair value measurement of investments in certain entities that calculate
net asset value per share (or its equivalent). The amendments in this Update
permit, as a practical expedient, a reporting entity to measure the fair value
of an investment that is within the scope of the amendments in this Update on
the basis of the net asset value per share of the investment (or its equivalent)
if the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments a the measurement date, any
unfunded commitments (for example, a contractual commitment by the investor to
invest a specified amount of additional capital at a future date to fund
investments that will be make by the investee), and the investment strategies of
the investees. The major category of investment is required to be determined on
the basis of the nature and risks of the investment in a manner consistent with
the guidance for major security types in U.S. GAAP on investments in debt and
equity securities in paragraph 320-10-50-1B. The disclosures are required for
all investments within the scope of the amendments in this Update regardless of
whether the fair value of the investment is measured using the practical
expedient. We do not expect the adoption to have a material impact on our
consolidated financial position, results of operations or cash
flows.
 
 In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-01 “Equity Topic 505 –
Accounting for Distributions to Shareholders with Components of Stock and
Cash”, which clarifies that the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a potential
limitation on the total amount of cash that all shareholders can elect to
receive in the aggregate is considered a share issuance that is reflected in EPS
prospectively and is not a stock dividend for purposes of applying Topics 505
and 260 (Equity and Earnings Per Share (“EPS”)).  Those distributions
should be accounted for and included in EPS calculations in accordance with
paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting
Standards codification.  The amendments in this Update also provide a
technical correction to the Accounting Standards Codification.  The
correction moves guidance that was previously included in the Overview and
Background Section to the definition of a stock dividend in the Master
Glossary.  That guidance indicates that a stock dividend takes nothing
from the property of the corporation and adds nothing to the interests of the
stockholders.  It also indicates that the proportional interest of
each shareholder remains the same, and is a key factor to consider in
determining whether a distribution is a stock dividend.
 
 In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-02 “Consolidation Topic
810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a
Scope Clarification”, which provides amendments to Subtopic 810-10 and
related guidance within U.S. GAAP to clarify that the scope of the decrease in
ownership provisions of the Subtopic and related guidance applies to the
following:
 
 1.
              A
      subsidiary or group of assets that is a business or nonprofit
      activity;
 
 2.
              A
      subsidiary that is a business or nonprofit activity that is transferred to
      an equity method investee or joint venture;
and
 
 3.
              An
      exchange of a group of assets that constitutes a business or nonprofit
      activity for a noncontrolling interest in an entity (including an equity
      method investee or joint venture).
 
 The
amendments in this Update also clarify that the decrease in ownership guidance
in Subtopic 810-10 does not apply to the following transactions even if they
involve businesses:
   24
 
 1.
              Sales
      of in substance real estate.  Entities should apply the sale of
      real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment)
      and 976-605 (Retail/Land) to such
transactions.
 2.
              Conveyances
      of oil and gas mineral rights.  Entities should apply the
      mineral property conveyance and related transactions guidance in Subtopic
      932-360 (Oil and Gas-Property, Plant, and Equipment) to such
      transactions.
 
 If a
decrease in ownership occurs in a subsidiary that is not a business or nonprofit
activity, an entity first needs to consider whether the substance of the
transaction causing the decrease in ownership is addressed in other U.S. GAAP,
such as transfers of financial assets, revenue recognition, exchanges of
nonmonetary assets, sales of in substance real estate, or conveyances of oil and
gas mineral rights, and apply that guidance as applicable. If no other guidance
exists, an entity should apply the guidance in Subtopic 810-10.
 
 We
do not believe that any other recently issued, but not yet effective accounting
pronouncements, if adopted, would have a material effect on the accompanying
financial statements.
 
 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 December 31, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
 
 PART
II – OTHER INFORMATION
 
 Item
2.     Unregistered Sales of Equity Securities and Use
of Proceeds.
 On January 22, 2010,
as compensation for certain consulting services, we issued (i) a five-year
warrant to purchase 750,000 shares of common stock to SeaHawk Capital Group,
Inc. ("SeaHawk") at an exercise price of $1.00 per share and (ii) a five-year
warrant to purchase 750,000 shares of common stock to Simon Jacobs at an
exercise price of $1.00 per share.These
warrants are exercisable for cash or, following the six month anniversary of the
date of issue, by way of a cashless exercise. The
warrants issued to SeaHawk and to Mr. Jacobswere 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.The
warrantsalsocontain
limitations on exercise, including the limitation that the holder may not
exercise its warrants to the extent
that upon exercise the holder, together with its affiliates, would own in excess
of 4.99% of our outstanding shares of common
stock.
 25
 
 The foregoing is not a
complete summary of the terms of the transaction described in this Item 2, and
reference is made to the complete text of the form of warrant attached hereto as
Exhibit 10.1.
 
 Item
6.      Exhibits.
 
 Exhibit
      No.
              Description10.1*
              Form
      of Warrant31.1*
              Section
      302 Certification by the Principal Executive Officer31.2*
              Section
      302 Certification by the Principal Accounting Officer32.1*
              Section
      906 Certification by the Principal Executive Officer32.2*
              Section
      906 Certification by the Principal Accounting
  Officer
 
 *
Filed herewith
 
 
 26
   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:
              February
      22, 2010
              By:
              /s/
      Pnina FeldmanPnina
      FeldmanPresident
      and Chief Executive Officer(Principal
      Executive Officer)Date:
              February
      22, 2010
              By:
              /s/
      Sholom FeldmanSholom
      FeldmanTreasurer
      and Secretary(Principal
      Accounting Officer)