UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED March 31, 2010o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





Commission file No. 333-144597





TEAM NATION HOLDINGS CORPORATION


(Exact name of registrant as specified in charter)




Nevada
98-0441861(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)4667 MacArthur Boulevard, Suite 150, Newport Beach, CA
92660(Address of principal executive offices)
(Zip Code)





Registrant’s telephone number, including area code:949 885 9892





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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o  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.




Large accelerated filero
Accelerated fileroNon-accelerated filero
Smaller reporting companyx





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 May 13, 2010, there were 92,567,249 shares of the registrant’s common stock, $.0001 par value, outstanding.





Table of Contents




TeamNation Holdings Corporation


FORM 10-Q


For the Quarterly Period Ended March 31, 2010





TABLE OF CONTENTS


PagePART 1 — FINANCIAL INFORMATIONItem 1.
Financial Statements:Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009
F-2Consolidated Statements of Operations for the Three Month Periods ended March 31, 2010 and 2009 (unaudited)
F-3Consolidated Statements of Cash Flows for the Three Month Periods ended March 31, 2010 and 2009 (unaudited)
F-4Notes to the Unaudited Consolidated Financial Statements
F-6Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2Item 3.
Quantitative and Qualitative Disclosures About Market Risk
3Item 4.
Controls and Procedures
3PART II — OTHER INFORMATIONItem 1.
Legal Proceedings
4Item 1A.
Risk Factors
4Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
4Item 3
Default on Senior Securities
4Item 4
Submission of Matters to Vote of Securities Holders
4Item 5.
Other Information
4Item 6.
Exhibits
5SIGNATURES
6





Table of Contents





ITEM1. FINANCIAL STATEMENTS


Team Nation Holdings Corporation
 Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 
 Financial Statements of Team Nation Holdings Corp:
  PageBalance Sheets as of March 31, 2010 (unaudited) and December 31, 2009
F-2Statements of Operations for the three-month periods ended March 31, 2010 and 2009 (unaudited)
F-3Statements of Cash Flows for the three-month periods ended March 31, 2010 and 2009 (unaudited)
F-4Notes to Financial Statements
F-6
  
  F-1
 Table of Contents
  
 TeamNation Holdings Corporation
 Balance Sheets
 As of March 31, 2010 and December 31, 2009
  March 31,


December 31,2010


2009(unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
6,452


$
19,029Due from affiliates


-



313,321Total current assets


6,452



332,350Notes receivable- related party


2,277,428



2,261,350Accrued interest on JMJ note receivable


8,737



2,804Title plant


710,000



710,000Software and leasehold improvements, net of accumulated depreciation of $13,947 and $8,500


52,003



52,515Deposits


27,030



27,030Total assets

$
3,081,650


$
3,386,049LIABILITIES AND SHAREHOLDER'S DEFICITCurrent liabilities:Accounts payable - trade

$
637,325


$
693,275Accounts payable of abandoned discontinued operations


5,569



5,569Affiliate payable


113,910



-Related party convertible payable obligations


241,649



182,673Accrued liabilities


125,347



119,314Current portion of financing agreement


121,850



104,882Current portion of note payable


42,088



-Convertible debt obligation, net of discount of $713,405 and $982,051


240,105



97,458Derivative liability


3,372,896



4,206,376Total current liabilities


4,900,739



5,409,547Financing agreement, net of current portion


2,590,183



2,645,118Convertible note payable, net of discount of $527,190 and $576,460


72,810



23,540Note payable, net of current portion


76,134



76,134Accrued interest


8,839



2,839Total liabilities


7,648,705



8,157,178Commitments and contingencies (note 13)Shareholder's deficit:Preferred stock ($0.001 stated value, 60 shares authorized, 60 shares issued and outstanding)


-



-Common stock ($0.001 stated value, 1,000,000,000 shares authorized, 85,319,804 and 67,901,401 shares issued and outstanding)


85,320



67,901Additional paid in capital


1,724,621



1,566,039Stock subscription receivable


(450,000
)


(450,000
)Accumulated deficit


(5,926,996
)


(5,955,069
)Total shareholder's deficit


(4,567,055
)


(4,771,129
)Total liabilities and shareholder's deficit

$
3,081,650


$
3,386,049
  The accompanying notes are an integral part of the financial statements.
  F-2
 Table of Contents
  Team Nation Holdings Corporation
 Statements of Operations
 For the Three-Month Periods Ended March 31, 2010 and 2009
  For the Three MonthPeriod Ended March 31,2010


2009(unaudited)


(unaudited)Management fees


-


$
30,000Management fees- related party

$
367,800



562,320Joint marketing


824



-Total revenue


368,624



592,320Operating expenses:Title plant feesSearch fees


202,523



274,828Processing and general


154,228



112,389Customer service expenses


16,210



64,999General & administrative expenses


337,945



180,442Related party management fees


100,800



-Bad debt expense


-



30,000Unreimbursed expenses


-



11,000Selling expenses


37,587



3,282Total operating expenses


849,293



676,940Operating loss


(480,669
)


(84,620
)Other expense (income):Interest income


(5,933
)


-Interest income- related party


(16,078
)


(15,502
)Interest expense


28,032



74,350Accretion of debt discount


317,916



-Derivative liability income


(833,480
)


-Loss from continuing operations before provision for income taxes


28,874



(143,468
)Provision for income taxes


800



-Loss from continuing operations


28,074



(143,468
)Loss from discontinued operations


-



(3,918
)Net income (loss)

$
28,074


$
(147,386
)Income (loss) per share from continuing operations:Basic

$
0.00


$
0.00Diluted

$
0.00


$
0.00Loss per share from discontinued operations:Basic

$
0.00


$
0.00Diluted

$
0.00


$
0.00Net income (loss) per share:Basic

$
0.00


$
0.00Diluted

$
0.00


$
0.00Weighted average shares outstanding:Basic


75,682,142



47,191,894Diluted


293,407,450



47,191,894
 The accompanying notes are an integral part of the financial statements.
 F-3
 Table of Contents
 TeamNation Holdings Corporation
 Statements of Cash Flows
 For the Three-Month Periods Ended March 31, 2010 and 2009
  For the Three MonthPeriod Ended March 31,2010


2009(unaudited)


(unaudited)Cash flows from operating activities:Net income (loss)

$
28,074


$
(147,386
)Loss from discontinued operations


-



(3,918
)Loss from continuing operations


28,074



(143,468
)Adjustments to reconcile net income to cash provided by (used in) operating activities:Shares issued for services


10,000



-Bad debt expense


-



30,000Unreimbursed expenses


-



11,000Depreciation expense


5,447



-Accretion of debt discount


317,916



-Derivative liability income


(833,480
)


-Accrued interest expense on JMJ note payable


6,000



-Accrued interest income on related party notes receivable


(16,078
)


(15,501
)Accrued interest income on in substance stock subscription


(5,933
)


-Decrease (increase) in assets:Accounts receivable


-



(29,960
)Due from affiliate


313,321



-Prepaid expenses


-



(27,787
)Deposit


-



(26,530
)Increase (decrease) in liabilities:Accounts payable


(13,861
)


(124,351
)Accrued liabilities


6,033



77,170Related party payable


113,910



242,267Related party convertible payable obligations


98,976



-Cash provided by (used in) operating activities - continuing operations


30,325



(11,078
)Cash used in operating activities-  discontinued operations


-



(3,650
)Cash provided by (used in) operating activities


30,325



(14,728
)Cash flows from investing activities:Purchase of software and improvements


(4,935
)


-Cash used in investing activities -continuing operations


(4,935
)


-Cash provided by investing activities -discontinued operations


-



368Cash provided by (used in) investing activities


(4,935
)


368Cash flows from financing activities:Related party loan


-



(2,608
)Repayment of financing agreement


(37,967
)


-Sale of common stock


-



7,004Bank overdraft


-



5,668Cash provided by (used in) financing activities - continuing operations


(37,967
)


10,064Cash used in financing activities - discontinued operations


-



-Cash provided by (used in) financing activities


(37,967
)


10,064Net decrease in cash


(12,577
)


(4,296
)Cash and cash equivalents at beginning of period


19,029



4,296Cash and cash equivalents at end of period

$
6,452


$
-
  The accompanying notes are an integral part of the financial statements.
 
 F-4
 Table of Contents
  Team Nation Holdings Corporation Statements of Cash Flows
 For the Three-Month Periods Ended March 31, 2010 and 2009
(continued)
  Supplemental Disclosure of Cash Flow Information
  For the Three MonthPeriod Ended March 31,2010


2009(unaudited)


(unaudited)Cash paid during the fiscal years for:Interest

$
22,032


$
420Income taxes

$
800


$
-Schedule of Non cash Financing ActivitiesCommon stock used to satisfy related party convertible payable obligations

$
40,000


$
-Common stock used to satisfy convertible debt obligation

$
126,000


$
-
   F-5
 Table of Contents
  TeamNation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
  1.         Description of Business
  TEAM Nation Holdings Corporation (the "Company") ("TEAM"), a Nevada corporation, was originally incorporated in California on November 22, 2006 as Real Estate Services Holding, Inc. and changed its name to TEAM on June 21, 2007.  Until December 2009, the financial statements included the accounts of TEAM Nation Holding Corporation (“TEAM”) and its two wholly owned subsidiaries, Escrow Nation, Inc. (“ESCROW”) and Mortgage Nation, Inc. (“MORTGAGE”). The operations of both subsidiaries have been discontinued. All significant intercompany balances and transactions have been eliminated.  TEAM, ESCROW and MORTGAGE commenced operations on February 1, 2007. TEAM is a management and services company specializing in management solutions for title companies and title production services.  The Company focuses on counter-cyclical growth to acquire, manage and consult for title, escrow, mortgage, real estate and REO companies.
  TEAM provides management, title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services to a title company in exchange for order-based fees.
 
 Nature of Presentation
  Certain reclassifications have been made to prior-period amounts to conform to current presentation. Management is responsible for the unaudited financial statements included in this document.  The financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company's financial position and operating results.  The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009.
  Preparing the Company's financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
  2.         Significant Accounting Policies
  Cash and cash equivalents
  The Company considers all cash on hand; cash in banks and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.  At March 31, 2010, the Company does not have any cash equivalents.
  Concentration of Credit Risk for Cash Deposits at Banks
  Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At March 31, 2010 and December 31, 2009, the Company did not have any funds on deposit in excess of FDIC insured limits.
  F-6
 Table of Contents
 
 Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 Revenue recognition
  TEAM’s revenue is derived from management and production services.  Revenue from services is recognized when the service is performed.
  Trade Accounts Receivable and Allowance for Doubtful Accounts
  Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments (Note 5). Management considers the following factors when determining the collectibility of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.  The Company wrote off all trade receivables as of December 31, 2009 and did not reserve any receivables during the three-month period ended March 31, 2010.
  Estimates
  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
  Fair value of financial instruments
  The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include:
  Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
  Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
  Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
  F-7
 Table of Contents
 
 Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 The carrying values of our cash and beneficial conversion feature derivative liability carried at fair value as of March 31, 2010 and December 31, 2009, are classified in the table below in one of the three categories described above:
  Fair Value at March 31, 2010 and December 31, 2009Level 1


Level 2


Level 3


TotalMarch 31, 2010:Cash and cash equivalents

$
6,452



-



-


$
6,452Derivative liability


-



-


$
3,372,896


$
3,372,896December 31, 2009:Cash and cash equivalents

$
19,029



-



-


$
19,029Derivative liability

$
-



-



4,206,376


$
4,206,376
  Contingencies
  Certain conditions may exist as of the date financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.  Company management and its legal counsel assess such contingencies related to legal proceeding that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.  If the assessment of a contingency indicates that it is probably that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements.  If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or if probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable, would be disclosed.
  Advertising
  Advertising expense was $342 and $0 for the three-month periods ended March 31, 2010 and 2009, respectively.
  Software and Improvements
  Software and improvements are recorded at cost and are depreciated using the straight-line method over their expected useful lives. Expenditures for normal maintenance and repairs are charged to income, and significant improvements are capitalized. Upon the sale or retirement of software and improvements, the accounts are relieved of the cost and the related accumulated depreciation or amortization, with any resulting gain or loss included in the statement of operations.
 
  Estimated Useful LivesSoftware
3 yearsBuilding improvements
lesser of useful life or lease term
  Intangible costs
  Intangible assets with indefinite useful lives are not amortized, but instead tested annually for impairment.  Intangible assets with definite useful lives are amortized over that period to their estimated residual value, and are also reviewed for impairment.
  F-8
 Table of Contents
 Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 New Accounting Pronouncements
  There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective.  Each of these pronouncements, as applicable, has been or will be adopted by the Company.  Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results.
  In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” and also issued as Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles”  which establishes the FASB Accounting Standards Codification (“the Codification” or “ASC”) as the official single source of authoritative U.S. generally accepted accounting principles (“GAAP”). All guidance contained in the Codification carries an equal level of authority. All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant SEC guidance organized using the same topical structure in separate sections within the Codification. The Codification is not intended to change GAAP, but it will change the way GAAP is organized and presented. The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Except for the disclosure requirements, the adoption of this statement did not have an impact on the determination or reporting of the Company’s financial statements. The Company is providing the Codification cross-reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.
  In June 2009, the FASB issued guidance for accounting for transfers of financial assets and eliminates the exemption from consolidation for qualifying special-purpose entities. This statement is effective for financial asset transfers occurring after the beginning of an entity’s first fiscal year that begins after November 15, 2009. This statement is not expected to have any impact on our financial position or results of operations.
  In May 2009, the FASB established general standards of accounting for disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this statement sets forth (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This statement is effective for interim or annual periods ending after June 15, 2009 and we adopted it on April 1, 2009.
  In April 2009, the FASB issued guidance to determine fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions are not orderly. If an entity determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. This standard is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively.  The adoption of this standard no material impact on the Company’s financial statements.
  3.         Discontinued Operations
  In May 2007 we formed two subsidiaries: Escrow Nation, Inc. (“Escrow”) and Mortgage Nation, Inc. (“Mortgage”).  Escrow was licensed to transact escrow business by the California Department of Corporations and Mortgage was licensed to provide mortgage broker services.  In December 2007, we decided to discontinue the operations of both Escrow and Mortgage as a result of the significant downturn in the California housing market.  In December 2009, these entities were abandoned and liabilities were assumed by the Company.  We recognized a loss of $3,918 from the discontinued operations for the three-month period ended March 31, 2009.
  The accompanying table illustrates the reporting of the discontinued operations on the face of the Statements of Operations for the three-month period ended March 31, 2009:
  For the Three Month PeriodEnded March 31, 2009ESCROW


MORTGAGE


TotalRevenues

$
-


$
-


$
-Costs and expenses:Selling, general and administrative


-



368



368Shutdown expense


3,395



-



3,395Interest expense


155



-



155Loss from discontinued operations

$
(3,550
)

$
(368
)

$
(3,918
)
 F-9
 Table of Contents
  Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 4.         Related Party Transactions
  Relationship With Affiliate - CalCounties Title Nation
  TEAM's only revenue source from July 1, 2009 going forward is from its vendor services agreement with CalCounties Title Nation ("CCTN"), which is a Southern California title company operated by TEAM's officers and directors.  In 2007, TEAM, as a private company, lent its officers and directors the funds which were used to buy CCTN.  TEAM is dependent on CCTN for working capital advances and its only source of revenue.  If CCTN were unable to continue to provide working capital advances or revenue, TEAM would not be able to survive.  TEAM is a variable interest of CCTN, but CCTN is not a variable interest of TEAM.  As such, the financial statements of TEAM presented herein have not been consolidated with the financial statements of CCTN.  CCTN's financial statements as of December 31, 2009 and for the year then ended were audited by another firm for the purpose of filing them with the California Department of Insurance and are summarized as follows:
  As ofDecember 31,2009Current assets

$
3,938,971Total assets

$
5,153,659Current liabilities

$
2,548,060Total liabilities

$
2,934,295Stockholders' equity

$
2,219,364
  For TheYear EndedDecember 31,2009Total operating revenues

$
13,172,745Total operating expenses

$
12,156,231Net income

$
1,106,609
  Due To/From Affiliate
  The components of the amounts due to/from CCTN for the three-month period ended March 31, 2010 is as follows:
 
 Due from CCTN, December 31, 2009

$
313,321Satisfaction of amounts owed by CCTN for the vendor services agreement


367,800Operating capital advances from CCTN to TEAM


(757,482
)Operating capital advances from TEAM to CCTN


27,565Sublease payments from CCTN to TEAM


21,224Sublease payments from TEAM to CCTN


(26,993
)TEAM assumption of CCTN invoices


(59,345
)Due to CCTN, March 31, 2010

$
(113,910
)
  F-10
 Table of Contents
  Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 Notes Receivable – Related Party
  On May 31, 2007, the Company lent its 4 officers and directors a total of $2,600,000 in exchange for notes receivable from each director.  The notes receivable consist of four notes in the original amount of $650,000 each which were non-interest bearing until May 31, 2008 and interest only payable at the rate of 5% per annum until the notes receivable are due in full on May 1, 2014.  On November 10, 2009, the agreements were amended, calling for interest only payments to commence January 1, 2011.  On June 1, 2008, the Company lent its 4 officers and directors a total of $1,000,000 in exchange for notes receivable from each director.  The notes receivable consist of four notes in the original amount of $250,000 each, bearing interest at 4.62% per annum.  There were no payments due until June 1, 2010, at which point interest only payment are due at the rate of 5% per annum until the notes receivable are due in full on June 1, 2015.  On November 10, 2009, the agreements were amended, calling for interest only payments to commence January 1, 2011.  The total notes receivable balance, including accrued interest, at March 31, 2010, from its four officers and directors was $2,277,428.  The funds were used by the officers and directors to purchase and fund CCTN.
  During the three month periods ended March 31, 2010 and 2009, the notes receivable balance increased by $16,078 and $15,502, respectively, as a result of the accrual of interest.
  Management Agreements
  Management fee revenues
  On January 2, 2008, TEAM entered into a management agreement with CCTN to manage all of their operations.  TEAM provides management, title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services to CCTN for a monthly management fee plus a share of net profits, determined on a calendar quarterly basis.  This agreement was amended as of January 1, 2009 to change the monthly fee from a flat fee of $100,000 per month to a semi-variable fee of $40,000 per month plus $60 per open title order.  Management fee revenue from CCTN was $367,800 and $562,320 for the three-month periods ended March 31, 2010 and 2009, respectively, and is reported as related party management fees in the statement of operations.  Title plant fees were $202,523 and $274,828 for the three-month periods ended March 31, 2010 and 2009, respectively.
  Management fee expenses
  TEAM entered into management agreements in 2007 with affiliates of the four officers and directors by which they would actively manage operations, human resources, accounting services, sales, and marketing efforts for the TEAM. Each of the four agreements called for a $15,000 monthly fee.  These agreements were cancelled on January 1, 2009.  The Company entered into new management agreements with two of the officers and directors as of July 1, 2009, each at a cost of $25,200 per month per agreement.  Total management fee expenses were $100,800 and $0 for the three-month periods ended March 31, 2010 and 2009, respectively.  TEAM paid for the services partially in cash and partially as a reduction in shareholder receivables.  The management fee agreements were terminated February 28, 2010.  Related party management fee expenses payable were $241,649 at March 31, 2010.
  Modification of Payables
  On November 3, 2009, the Company modified the terms of the management fee payables owed to the four officers and directors which made the payables convertible into shares of the Company's common stock at 60% of the average of the prior 5 day closing price.  The payables are due on demand and fully transferable.
  F-11
 Table of Contents
 
 Shares Issued
  As discussed in note 12, in July 2009, the Company issued 14,109,338 shares of its common stock to its four officers and directors for $423,280 in certificates of deposit which were taken by Professional Business Bank to reduce the line of credit.  The outstanding balance of the line of credit became due in July 2009 and the Company defaulted.  The officers and directors had guaranteed the line of credit with personal certificates of deposit.  As a result, Professional Business Bank called the guarantee to reduce the debt.
  In two November 2009 transactions, Sunderland Capital, LLC (Sunderland) bought and converted a total of $20,000 of the Company's convertible related party payable.  In each transaction, Sunderland converted the $10,000 tranche into 666,665 shares of the Company's common stock at $0.015 per share, a 40% discount to the prior 5 days closing average.
  In three December 2009 transactions, Eventus bought and converted a total of $30,000 of the Company's convertible related party payable.  In each transaction, Eventus converted the $10,000 tranche into shares of the Company's common stock at a 40% discount to the prior 5 days closing average.  A total of 1,942,210 shares of the Company's common stock were issued in the three transactions.
  On December 23, 2009, the Company issued its four officers and directors each 15 shares of Series A Convertible Preferred Stock of the Company for total consideration of $60,000.  Each share of Series A Convertible Preferred Stock is convertible into 1% of the Company's common stock at the date of conversion.  The preferred shares do not have liquidation preference over common shares.  Each preferred share is entitled to as many votes equal to 1% of the Company's outstanding common stock.
  In four February 2010 transactions, Eventus bought and converted a total of $40,000 of the Company's convertible related party payable.  In each transaction, Eventus converted the $10,000 tranche into shares of the Company's common stock at a 40% discount to the prior 5 days closing average.  A total of 3,716,112 shares of the Company's common stock were issued in the four transactions.
  Subleases
  TEAM has entered into subleases with CCTN.  TEAM leases office space from CCTN in Pasadena, CA and CCTN leases space from TEAM in Newport Beach, CA. TEAM pays CCTN 50% of its lease expense for the Pasadena office, which amounts to $8,998 per month. CCTN pays TEAM 80% of its lease expense for the Newport Beach office which amounts to $7,075 per month. These transactions are booked through affiliate receivable/payable accounts.  See Note 13 for the Company's minimum lease obligations.
  TEAM's sublease expense to CCTN
  2010 (remainder of year)

$
80,9782011


-2012


-2013


-2014 and thereafter


-Total minimum lease payments

$
80,978
  TEAM's sublease revenue from CCTN
  2010 (remainder of year)

$
63,6712011


84,8952012


17,6872013


-2014 and thereafter


-Total minimum sublease revenue

$
166,253
 
 F-12
 Table of Contents
  Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 5.         Uncollectible Amount and Related Settlement Gain
  In December 2007, TEAM entered into a management agreement with FirstSouthwestern Title Company ("FIRST"), which was a title company with operations in Southern California, to manage all of their operations. FIRST owed TEAM $470,895 for fees work performed under the management agreement through July 2009.  In July 2009, FIRST received notice from the Department of Insurance that they wanted FIRST to voluntarily turn over their license to do business in California due to insufficient working capital and net worth, which ownership of FIRST agreed to.  At that time, TEAM's management agreement with FIRST was terminated, and the unpaid management fee receivable was uncollectible and the amount was fully reserved.  In agreement with the management of FIRST, $261,279 was reduced from the reserve as it was identified as an offset against an amount due FIRST from CCTN.  The amount in excess of 2009 FIRST revenue, $191,279, was recognized as other income.  CCTN agreed to the right of offset of the amount.  The remaining $457,817 owed by FIRST was written off as uncollectible as of December 31, 2009.
  6.         Note Receivable (In-Substance Stock Subscription)
  On November 18, 2009, the Company entered into a financing arrangement with JMJ Financial ("JMJ"), an unrelated third-party.  The financing arrangement consists of a $600,000 convertible note payable to JMJ ("JMJ Note Payable) in consideration for a $500,000 secured and collateralized note receivable from JMJ (JMJ Note Receivable).  The financing arrangement is designed for JMJ to convert the JMJ Note Payable, in tranches, into TEAM common stock and pay down the JMJ Note Receivable with cash.  See Note 9 for details of the JMJ Note Payable.  Since the JMJ Note Receivable is in-substance a stock subscription, the Company has recorded the JMJ Note Receivable as a reduction of equity rather than an asset.
  The $500,000 JMJ Note Receivable, dated November 18, 2009, is due November 18, 2012.  The JMJ Note Receivable bears interest at a rate of 14.4% with no discount allowed for early principal reductions.  All interest and principal payments are due on the maturity date.  Principal and interest may be prepaid without penalty.  The JMJ Note Receivable is secured by $500,000 worth of assets of JMJ.  JMJ paid $50,000 of the JMJ Note Receivable with cash in November 2009.  The JMJ Note Receivable principal and accrued interest balances are $450,000 and $8,737 at December 31, 2009, respectively.
  7.         Software and Leasehold Improvements
  Software and leasehold improvements consist of the following:
 
 March 31,2010Software

$
64,584Leasehold improvements


1,36765,951Less: accumulated depreciation


(13,947
)Software and Leasehold Improvements, net

$
52,004
  Depreciation expense related to software and leasehold improvements for the three-month periods ended March 31, 2010 and 2009, was $5,447 and $0, respectively.
  F-13
 Table of Contents
  Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
  8.         Title Plant
  The Company acquired the Orange County title plant from California Counties Title Nation (“CCTN”) in December 2007.  CCTN is wholly owned by four affiliates of the four officers and directors of the Company.  The amount paid for the title plant was based on an appraisal and the consideration for the $710,000 purchase price included $200,000 in cash and a note payable by the Company in the amount of $510,000.  The note was non-interest bearing and was paid in full in December 2008.
  The Company reviews the carrying value of the title plant asset on an annual basis to determine whether impairment may exist.  No impairments existed at December 31, 2009.
  9.         Convertible Debt
  Convertible Debt Obligation - Eventus Capital
  On November 25, 2009, the Company converted its affiliate payable to CCTN, in the amount of $1,089,509, to an unsecured, convertible obligation in favor of CCTN.  CCTN then transferred this convertible debt obligation to Eventus Capital, Inc. (“Eventus”), an unrelated third party. The debt obligation is due November 25, 2010, bears no interest and contains a conversion feature that allows Eventus to convert the debt obligation, in $10,000 tranches, into shares of the Company’s common stock at a conversion rate of 60% of the average five day closing bid price preceding the conversion notice date.  Eventus may convert the debt obligation at their election, but may not hold more than 4.99% of the Company’s outstanding shares at any time.
  Since conversion of the debt obligation into common shares is at the option of the holder and the conversion price is indexed to the Company's stock price, the fair value of the embedded conversion feature of the debt obligation is recorded by the Company as a derivative liability. This derivative liability is adjusted to fair value at each reporting period, with income or expense recorded to the statement of operations.  At the issuance date, the fair value of the embedded conversion feature of the debt obligation, a level 3 fair value input, was $1,583,194 which resulted in a debt discount of $1,089,510 and a derivative liability expense of $493,684. The derivative liability expense was recorded upon issuance in the amount that the liability exceeded the value of the debt obligation.  On December 22, 2009, Eventus converted $10,000 of the debt obligation into 638,570 common shares of the Company (Note 12).  During the three-month period ended March 31, 2010, Eventus converted $126,000 of the debt obligation into 13,202,291 common shares of the Company.  At March 31, 2010, the debt obligation balance to Eventus was $953,510.  The value of the embedded conversion feature had decreased to $1,542,896 resulting in a decrease to the derivative liability and to the Company's loss of $210,347 for the three-month period ended March 31, 2010.  Accretion of the debt obligation's debt discount for the three-month period ended March 31, 2010 was $268,646.
  Convertible Note Payable - JMJ Financial
  As part of the financing arrangement with JMJ (Note 6), the Company issued a $600,000 unsecured, convertible note payable (the "JMJ Note Payable") dated November 18, 2009, to JMJ Financial for a consideration of $500,000 (reflecting a 16.66% original issue discount) in a private placement. The JMJ Note Payable bears interest at a rate of 12% with no discount allowed for principal reductions.  The JMJ Note Payable is due on or before November 18, 2012. At any time after the 180th day following the effective date of the JMJ Note Payable, the holder may at its election convert all or part of the JMJ Note Payable plus accrued interest into shares of the Company's common stock at the conversion rate of 40% of the lowest trade price in the 20 trading days prior to the conversion. The terms of the JMJ Note Payable limit JMJ from owning more than 9.99% of the Company's common stock at any given time.
  Since conversion of the JMJ Note Payable into common shares is at the option of the holder and the conversion price is indexed to the Company's stock price, the fair value of the embedded conversion feature of the JMJ Note Payable is recorded as a derivative liability. The derivative liability is adjusted to fair value at each reporting period, with income or expense recorded to the statement of operations.  At the issuance date, the fair value of the embedded conversion feature, a level 3 fair value input, of the JMJ Note Payable was $2,992,500 which resulted in a debt discount of $600,000 and a derivative liability expense of $2,492,500. At March 31, 2010, the value of embedded conversion feature had decreased to $1,830,000, resulting in a decrease to the derivative liability and a decrease in the Company's loss of $419,250 for the three-month period ended March 31, 2010.  Accretion of the JMJ Note Payable debt discount for the three-month period ended March 31, 2010 was $49,270.
  F-14
 Table of Contents
 Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 
 Fair Value Valuation Technique and Assumptions
  The Company uses the Black-Scholes Option Pricing Model to determine the fair value of derivative liabilities associated with the embedded conversion features of the Eventus debt obligation and the JMJ note payable.  The assumptions used in calculating the black-scholes value of these embedded conversion features as of March 31, 2010 is as follows:
  Risk-free interest rate
0.34% to 1.50%Expected volatility of common stock
281% to 345%Dividend yield


0.00
%Expected life of conversion features
0.7-2.6 years
  10.      Note Payable
  In March 2010, the Company signed an unsecured promissory note to convert a trade payable to a vendor into a note payable due March 2012. The principal amount of the note payable is $118,223, the same amount as the trade payable, with a term of 24 months requiring $5,000 monthly payments at 4% interest annually. The Company may prepay in whole or in part the balance of the note prior to maturity without penalty. In the event of default, the vendor may declare the unpaid principal balance and earned interest on this note immediately due. The current portion of the note payable is $42,088 as of March 31, 2010.
  11.      Professional Business Bank Debt
  In November 2009, the Company and its four major shareholders, who are also officers and directors, entered into a Settlement Agreement that resolved then existing litigation (Note 13) and satisfied promissory notes that were in default with Professional Business Bank ("PBB").  Per the settlement agreement, PBB received five certificates of deposit ("CDs") that were being held as collateral until resolution of this matter.  One of the CDs, with a value of $106,593, was the property of the Company. The other four CDs, totaling $423,280, were the property of the guarantors (the 4 officers and directors). As part of the settlement, PBB settled the Company's two notes payable in default totaling $3,381,292 and accrued interest of $363,644 by issuing a new financing in the amount of $2,750,000 with a five-year term and at an interest rate of 5%.  The financing calls for monthly payments of $20,000 per month that commenced January 26, 2010 and increase annually by $5,000 per month.  The monthly payments include principal and interest with the unpaid balance due at the end of the five year term.  If the Company is able to pay off the $2,750,000 within one year of issuance, the Company will receive a $250,000 discount.  PBB has received as security for this transaction a stipulated judgment against the Company and the four officers and directors in the amount of $3,215,062.  The four officers and directors all entered into personal guaranty agreements with PBB (Note 4).  The settlement agreement resulted in a gain on settlement of $465,063 for the year ended December 31, 2009.
  Debt owed to PBB at March 31, 2010 and December 31, 2009 consists of the following:
  2010


2009Financing AgreementPBB financing agreement payable; unsecured; interest at 5% APR; guaranteed by the four officers and directors; monthly principal and interest payments o f$20,000 per month starting January 26, 2010, increasing $5,000 annually with a balloon payment due at the end of the five year term

$
2,750,000



2,750,000Less current portion


(121,850
)


(104,882
)Long term debt to PBB

$
2,628,150


$
2,645,118
 
 For the three-month periods ended March 31, 2010 and 2009, interest expense on the PBB debt was $28,032 and $74,350, respectively.
   Maturity of all TEAM debt, is as follows:
  Year ended December 31,2010 (remainder of year)

$
121,2332011


230,2892012


860,2652013


316,2712014 and beyond


1,902,197$
3,430,255
 
 F-15
 Table of Contents
 
 Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 12.      Stockholder's Equity
  Preferred stock
  On December 23, 2009, the Company issued its four officers and directors each 15 shares of Series A Convertible Preferred Stock of the Company for $60,000.  Each share of Series A Convertible Preferred Stock is convertible into 1% of the Company's common stock at the date of conversion.  The preferred shares do not have liquidation preference over common shares.  Each preferred share is entitled to as many votes equal to 1% of the Company's outstanding common stock.  On January 4, 2010, the Company amended the certificiate of designation of preferences and rights of Series A Preferred Stock previously filed with the Nevada Secretary of State which changed the number of shares authorized from 50,000,000 to 60 shares. At March 31, 2010 and December 31, 2009, there were 60 shares issued and outstanding.  There were no preferred shares issued and outstanding at December 31, 2008.
  Common stock
  The Company collected $7,004 of subscriptions receivable during the three-month period ended March 31, 2009.
  In June 2009, the Company issued 400,797 shares of its common stock to certain of its stock subscription subscribers to meet a pricing provision in the subscription agreement ("Free-up shares").  There was no financial impact of the issuance of these shares.
  In July 2009, the Company issued 14,109,338 shares of its common stock to its four officers and directors as consideration for each of the individuals' certificates of deposit which were taken by PBB to partially satisfy a line of credit.  The certificates of deposit in total were valued at $423,280.  The outstanding balance of the line of credit became due in July 2009 and the Company defaulted.  The officers and directors had guaranteed the line of credit with personal certificates of deposit.  The Company reached a settlement with PBB effective December 31, 2009 (Note 11).
  In August 2009, the Company sold 200 shares of its common stock for cash of $200.
  In September 2009, the Company issued 1,293,333 shares of its common stock to a stock subscription subscriber to meet a pricing provision in the agreement.  There was no financial impact of the issuance of these shares.
  In two November 2009 transactions, Sunderland bought a total of $20,000 of the Company's convertible related party payable.  In each transaction, Sunderland converted the $10,000 tranche into 666,665 shares of the Company's common stock at $0.015 per share, a 40% discount to the prior 5 days closing average.
  In three December 2009 transactions, Eventus bought a total of $30,000 of the Company's convertible related party payable.  In each transaction, Eventus converted the $10,000 tranche into shares of the Company's common stock at a 40% discount to the prior 5 days closing average.  A total of 1,942,210 shares of the Company's common stock were issued in the three transactions.
  In December 2009, the Company issued 1,796,504 shares of its common stock to the former landlord of ESCROW, the Company's discontinued subsidiary, in satisfaction of a $53,895 lease liability owed.  The share value of $0.03 was the closing price on the date of issuance.
  In December 2009, Eventus converted a $10,000 tranche of the Company's convertible debt obligation (Note 9) into 638,570 shares of the Company's common stock at $0.01566 per share, a 40% discount to the prior 5 days closing average.
  F-16
 Table of Contents
  Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
  In four February 2010 transactions, Eventus bought a total of $40,000 of the Company's convertible related party payable.  In each transaction, Eventus converted the $10,000 tranche into shares of the Company's common stock at a 40% discount to the prior 5 days closing average.  A total of 3,716,112 shares of the Company's common stock were issued in the four transactions.
  In February 2010, the Company issued 500,000 shares of the Company's common stock for investor relations services valued at $10,000.
  During the quarter ended March 31, 2010, Eventus converted 11 tranches of its  convertible debt obligation totaling $126,000.  In each transaction, Eventus converted the debt into shares of the Company's common stock at a 40% discount to the prior 5 days closing average.  A total of 13,202,291 shares of the Company's common stock were issued in the eleven transactions.
  13.      Commitments and Contingencies
  Operating Leases
  The Company has operating leases for certain office equipment and the facility. Future minimum lease payments are as follows for the years ending December 31:
  2010 (remainder of year)

$
184,8572011


145,4582012


30,4932013


-2014 and thereafter


-Total minimum lease payments

$
360,808
 
 Rental expense was $32,690 and $17,538 for the three-month periods ended March 31, 2010 and 2009, respectively.  Rental expense is net of sublease income of $21,224 and $3,537 for the three-month periods ended March 31, 2010 and 2009.  Note 4 contains future expected sublease income and expenses.
  Litigation
  The Company's policy is to recognize amounts related to legal matters as a charge to operations if it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
  On September 8, 2008 we filed suit in the Superior Court of California, Orange County, against Professional Business Bank ("PBB"), for, among other things, interference with business prospects and violation of our rights of privacy relative to a line of credit and loan made by PBB to our subsidiary holding company.  PBB responded by calling both loans due.  In November 2009, we reached a settlement (Note 11) with PBB to resolve this matter.
  F-17
 Table of Contents
  Team Nation Holdings Corporation
 Notes to the Financial Statements
 As of March 31, 2010 and December 31, 2009 and
 For the Three-Month Periods Ended March 31, 2010 and 2009
 Going Concern
  The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  At December 31, 2009, the Company had negative working capital of $4,894,287, total liabilities of $7,648,705, and a stockholders’ deficit of $4,567,055.  The Company's only source of revenue and sole customer is a related party (Note 4).  The Company’s most significant asset is a group of eight notes receivable that were issued by its four officers and directors, amounting to $2,261,350, which had the payment terms rewritten on extended terms in 2008.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that may result from the outcome of these uncertainties.
  The Company hopes to meet its working capital requirements through debt and private placements of equity.  In addition, the Company has entered into management contracts with a title company owned by four affiliates of the Company’s officers and directors, from which the Company expects to have positive cash flow.
  14.       Loss Per Share
  Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.
  Potentially dilutive common stock equivalents include the common stock issuable upon conversion of preferred stock and the conversion of debt that have conversion prices below the market value of our common stock at the measurement date.  The following is a reconciliation of the number of shares used in the calculation of basic loss per share and diluted loss per share for the three-month periods ended March 31, 2010 and 2009:
  For the three month

period ending 
March 31,2010


2009Numerator:Net income (loss)

$
28,074


$
(147,386
)Denominator:Weighted average number of common shares outstanding


75,682,142



47,191,894Incremental shares from the assumed conversion of debt and preferred stock


217,725,308



-Diluted common shares outstanding


293,407,450



47,191,894Net income (loss) per share:Basic and diluted

$
0.00


$
0.00Diluted

$
0.00


$
0.00
 
 The following table sets forth the number of shares reserved for issuance upon conversion of debt and Series A Preferred Stock:
  As of March 31,2010


2009Series A Preferred Shares


69,680,402



-Shares issued upon conversion of debt


304,289,581



-373,969,983



-
  The Series A Preferred Shares are convertible into 1% of the Company's outstanding common shares at the time of conversion.  The number of shares upon conversion presented above represents the maximum number of shares to be issued assuming the preferred shares are converted consecutively, rather than all at once.





F-18
 Table of Contents





ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





From time to time, we may publish forward-looking statements relative to such matters as anticipated financial results, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements appearing earlier in this report. All statements other than statements of historical fact included in this report are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following: our current liquidity needs, as described in our periodic reports; changes in the economy; our inability to raise additional capital; our involvement in potential litigation; volatility of our stock price; the variability and timing of business opportunities; changes in accounting policies and practices; the effect of internal organizational changes; adverse state and federal regulation and legislation; and the occurrence of extraordinary or catastrophic events and terrorist acts. These factors and others involve certain risks and uncertainties that could cause actual results or events to differ materially from management’s views and expectations. Inclusion of any information or statement in this report does not necessarily imply that such information or statement is material. We do not undertake any obligation to release publicly revised or updated forward-looking information, and such information included in this report is based on information currently available and may not be reliable after this date.





LIQUIDITY, FINANCIAL CONDITION AND GOING CONCERN





The accompanying financial statements have been prepared assuming we will continue as a going concern.  We commenced limited operations in February 2007 and began full business operations in May 2007.  As discussed in the Notes to the Consolidated Financial Statements, on June 17, 2008 the shareholders of TEAM exchanged all of the outstanding common shares of TEAM for 25 million common shares of Suncross Exploration Corporation (“SUNCROSS”), which resulted in the TEAM shareholders having control of Suncross. At the time of the merger, Suncross changed its name to Team Nation Holdings Corp. The financial statements prior to that date are those of HOLDING.





At March 31, 2010 we had negative working capital of $4,894,287 and incurred an operating loss of $480,669 during the three month period ended March 31, 2010.  Our operations do not currently provide sufficient cash flow to meet our obligations. It is not likely that we will become cash flow positive in 2010.  However, we believe we are able to restructure or meet our obligations as they become due during the coming months while we move toward positive cash flow. Our company is still highly leveraged and there can be no assurance that revenues from operations, convertible debt financing and/or common stock sales will be sufficient to fund our current business plan.





The company has also entered in to convertible debt obligations with Eventus Capital and JMJ Financial to help meet financing needs. As described in detail in Note 9 of the financial statements, this financing is based on cash payments to TEAM in exchange for stock at a discount which pays down the debt financing owed to Eventus and JMJ. Eventus can convert the obligation in $10,000 tranches into shares of the Company’s common stock at the conversion rate of 60% of the average five day closing bid price preceding the conversion notice date. With each cash payment, JMJ can convert into shares of the Company's common stock at the conversion rate of 40% of the lowest trade price in the 20 trading days prior to the conversion. This financing is expensive and dependent on the ability of the marketplace to absorb the volume of stock sales that are required to maintain this level of stock issuance. These two financing arrangements are responsible for over 174 million shares of the almost 218 million share difference between basic and diluted weighted average shares outstanding on the statement of operations. Eventus and JMJ have already indicated that at current stock prices they will not participate in further financing. This financing caused a derivative liability expense of $2,616,867 on the statement of operations in 2009. However, for the 3 months ended March 31, 2010, the original derivative liability incurred has been reduced by $833,480. This derivative liability is still a significant current liability in the amount of $3,372,896 which is approximately 69% of the working capital deficiency that exists as of 3/31/2010.





The ability of the Company to continue as a going concern during the next year depends on the Company’s success being able to acquire ongoing financing and being able to execute its operating plans to generate positive cash flow.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





2
 Table of Contents





RESULTS OF OPERATIONS





Comparison of Three Month Period Ended March 31, 2010 to the Three Month Period Ended March 31, 2009





Revenues





Our revenue during the three month period in 2010 totaled $368,624 compared to $592,320 during the same period in the prior year. This decrease was due to a comparable decrease in title insurance orders from a title company owned by our officers and directors. Virtually all revenue was generated through a contract with this title company owned by our officers and directors (99.8% of revenue for 2010 and 94.9% of revenue in 2009). A small amount of joint marketing revenue was generated in the 1st quarter of 2010 as the company’s plans for this revenue stream just began to take effect in the 4th quarter of 2009.





Costs and expenses





General and administrative expense amounted to $337,945 in 2010 as compared to $180,442 in the prior period.  The company’s employee base just began to be hired in 2009 whereas 2010 reflects a full administrative staff expense. Title plant processing fees increased in 2010 compared to 1st quarter 2009 for the same staff building reasons.





Title plant search fees decreased from $274,828 to $202,523 as these data charges are a variable cost that is directly related to the title order decrease when comparing 1st quarter 2009 and 1st quarter 2010. Customer service expenses are decreasing ($64,999 to $16,210) both as a result of lower orders and the company phasing out this service offering. Selling expenses have increased from $3,282 to $37,587 as the company tries to generate joint marketing revenues and other revenue streams outside of the vendor services contract with the title company owned by our officers and directors.





Related party management fee expense increased in the three month period in 2010 only because no such management agreements existed in the 1st quarter of 2009. These two months of expenses were terminated in February 2010. Bad debt expense and unreimbursed expenses from 2009 are solely related to revenue streams from First Southwestern Title Company, which went out of business in 2009. All amounts owed from this title company were written off in 2009.





Interest income increased as a result of accrued interest on related party notes receivable due from directors which were in effect prior to the reverse acquisition between Team and Suncross that occurred in June 2008. The interest applicable to related party shareholders has been separated on the Statement of Operations. Interest expense decreased from $74,350 to $28,032 between the comparable quarters primarily due to debt with Professional Business Bank being renegotiated in late 2009 which yielded a much lower interest rate for 1st quarter 2010 than the default interest rate that was in effect in 1st quarter 2009.





OFF-BALANCE SHEET ARRANGEMENTS





We had no off balance sheet arrangements.





ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





As a Smaller Business Issuer, we are not required to include this Item.





ITEM4. CONTROLS AND PROCEDURES





We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, who also acts as our Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-14(c). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.


3
 Table of Contents





Changes in Internal Control Over Financial Reporting





We made no changes in our internal control over financial reporting during the second quarter of fiscal year 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





Evaluation of Disclosure Controls and Procedures





We have carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer/Principal Accounting Officer, of the effectiveness of the design and operation of all of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer/Principal Accounting Officer concluded that our disclosure controls and procedures were effective as of September 30, 2009.





PART II – OTHER INFORMATION





ITEM1. LEGAL PROCEEDINGS





From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.





ITEM1A. RISK FACTORS





As a Smaller Business Issuer, we are not required to include this Item.





ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. Please see 8-K filings dated September 11, 2009 and September 15, 2009.





ITEM3. DEFAULTS UPON SENIOR SECURITIES. None.





ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.





ITEM5. OTHER INFORMATION. None.





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ITEM6. EXHIBITS





The following Exhibits are filed as part of this report pursuant to Item 601 of Regulation S-K:


3.1
Articles of Incorporation (1)3.2
Amended and Restated Articles of Incorporation (2)3.3
Amendment to Articles of Incorporation (3)10.1
Agreement and Plan of Reorganization dated June 17, 2008, between Registrant and Team Nation Holdings Corporation; (4)10.2
Agreement and Plan of Reorganization dated  June 10, 2009, between Registrant and Calcounties Title Nation Company; (5)10.3
Management Agreement dated January 2, 2009, between Team and CCTN; (5)10.4
Convertible Promissory Note dated 11-18-2009 between Registrant and JMJ Financial (6 )10.5
Amended Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock filed in Nevada on 1-4-10 (7 )10.6
Settlement Agreement dated January 21, 2010 between Registrant and Professional Business Bank  (8)14.1
Code of Ethics (9)16.1
Letter from Malone & Bailey, PC dated June 26, 2008, to the Securities and Exchange Commission (10)16.2
Letter from Moore & Associates dated April 21, 2009 to the Securities and Exchange Commission (11)31.1
Section 302 Certification (CEO)31.2
Section 302 Certification (CFO)32.1
Section 906 Certification (CEO)32.2
Section 906 Certification (CFO)




(1)
Filed as an exhibit to our Form SB-2 Registration Statement filed with the Commission on July 16, 2007, an incorporated herein by reference.(2)
Filed as an exhibit to our Form 10-QSB, filed with the Commission on August 14, 2007, and incorporated herein by reference.(3)
Filed as an Exhibit to our Form 10-K, filed with the commission on May 4, 2009, and incorporated herein by reference.(4)
Filed as an exhibit to our Form 8-K, filed with the Commission on March 14, 2008, and incorporated herein by reference.(5)
Incorporated by reference from the exhibit to Registrant’s Form 8-K filed with the Commission on June 20, 2008.(6)
Incorporated by reference from the exhibit to Registrant’s Form 8-K filed with the Commission on November 19, 2009.(7)
Incorporated by reference from the exhibit to Registrant’s Form 8-K filed with the Commission on January 8, 2010.(8)
Incorporated by reference from the exhibit to Registrant’s Form 8-K filed with the Commission on March 8, 2010.(9)
Filed as an Exhibit to our Form 10-K, filed with the commission on May 4, 2009, and incorporated herein by reference.(10)
Incorporated by reference from the exhibit to Registrant’s Form 8-K filed with the Commission on June 26, 2009.(11)
Incorporated by reference from the exhibit to Registrant’s Form 8-K filed with the Commission on April 28, 2009.





(c)
Not applicable.








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SIGNATURES





Pursuant to the requirement 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.




Team Nation Holdings CorporationBy:
/s/ Dennis R. DuffyDennis R. Duffy, President/CEOMay 17, 2010By:
/s/ Daniel J. DuffyDaniel J. Duffy, Principal Financial OfficerMay 17, 2010







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