UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington D.C. 20549








FORM 10-K








(Mark One)


x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010 OR





o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO ______________





Commission file number: 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)
(IRS Employer Identification No.)





4667 MacArthur Boulevard, Suite 310, Newport Beach, CA 92660(Address of principal executive offices) (Zip Code)





Issuer's telephone number:949 514 6267





Securities Registered Under Section 12(b) of the Exchange Act:   None





Securities Registered Under Section 12(g) of the Exchange Act:   None








(Title of class)





Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act    Yes o    No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes o    No x





Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 (§ 229.405 of this chapter) during the preceeding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes o     No o





Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of the issuer’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 filer o



Non-accelerated filer o

(Do not check if smaller reporting company)
Accelerated filer o



Smaller reporting company x





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





State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: (114,700,247 shares) based on the price at which the common equity was last sold as of June 30, 2010:  $172,050




State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 1,778,008,187 shares of Common Stock as of April 8, 2011.


Documents Incorporated by Reference: None





Table of Contents





NOTE REGARDING FORWARD LOOKING STATEMENTS





This Form 10-K and the documents we incorporate by reference contain certain forward-looking statements that involve a number of risks and uncertainties. These statements include changes in national and regional housing demand and values, the levels of interest and inflation rates, the availability and cost of mortgage loans, employment trends, default rates on mortgage loans, those factors listed under the caption “Risk Factors” and other factors set forth elsewhere in this Form 10-K. These statements, in addition to statements made in conjunction with the words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” and similar expressions, are forward-looking statements within the meaning of the Safe Harbor provision of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance and only reflect management’s expectations and estimates. The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:





•
The costs of producing title evidence are relatively high, while premiums are subject to regulatory and competitive restraints.•
Real estate activity levels have historically been cyclical and are influenced by the overall economy, particularly interest rates.•
The title insurance industry may be exposed to substantial claims by large classes of claimants.•
The industry is regulated by state laws that require the maintenance of minimum levels of capital and surplus and that restrict the amount of dividends that may be paid by our insurance subsidiary.





We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Form 10-K to conform them to actual results. We do not, nor does any other person, assume responsibility for the accuracy and completeness of those statements. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the caption “Risk Factors.”





We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict such new risk factors, nor can we assess the impact, if any, of such new risk factors on our businesses or the extent to which any factor or combination of factors may cause actual results to differ materially from those projected in any forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this Form 10-K and the documents we incorporate by reference might not occur.





For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 21E of the Securities Act.





You should carefully read this Form 10-K and the documents incorporated by reference in their entirety. They contain information that you should consider when making your investment decision.





Table of Contents





TABLEOF CONTENTS




PagePART IItem 1.


Description of Business
3Item 1A


Risk Factors
7Item 1B


Unresolved Staff Comments
10Item 2.


Description of Properties
10Item 3.


Legal Proceedings
11Item 4.


Submission of Matters to a Vote of Security Holders
11PART IIItem 5.


Market for Registrant's Common Equity and Related Stockholder Matters
12Item 6.


Selected Financial Data
12Item 7.


Management's Discussion and Analysis of Financial Condition and Results of Operation
13Item 8.


Financial Statements and Supplementary Data
15Item 9.


Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
16Item 9A.


Controls and Procedures
16PART IIIItem 10.


Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
18Item 11.


Executive Compensation
20Item 12.


Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters
23Item 13.


Certain Relationships and Related Transactions
24Item 14.


Exhibits, Financial Statement Schedules
28Item 15.


Principal Accounting Fees and Services
29SIGNATURES



30





Table of Contents





ITEM1 — DESCRIPTION OF BUSINESS





SUMMARY





We were incorporated as Suncross Exploration Corporation in Nevada on November 16, 2004. On June 17, 2008, Suncross Exploration Corporation (“Suncross”) entered into an Agreement and Plan of Reorganization dated as of June 17, 2008 relating to the acquisition (“Acquisition”) of Team Nation Holding Corporation (“Team”).  With the acquisition of Team, Suncross became a company specializing in title insurance and escrow services through our affiliate title agency(ies), and the provision of management, production services, HR administration, IT support, and accounting administration for title insurance companies and related real estate ventures. Under the terms of the acquisition, Suncross issued 25,000,000 shares (“Suncross Shares”) of its restricted common stock to the four (4) shareholders of Team in exchange for 100% of the issued and outstanding shares of Team. 22,000,000 shares were subsequently transferred to CalCounties Title Nation Company, a California corporation owned by Dennis R. Duffy-one third; Daniel J. Duffy-one third; and Janis Okerlund-one-third.





Historically, we also participated in the management of distressed asset funds specializing in the acquisition of distressed RMBS, CMBS, CMO, CDO and REO assets. Having found that market to be too volatile, we have refocused our attention to the title insurance services which are the core of our business.





Title Insurance Services:   Our services are offered to residential and commercial customers, independent and affiliated title agencies, and related companies in the real estate and mortgage lending industries throughout the United States, predominantly in the State of California. We currently provide services including HR, IT, accounting, production and customer service to CalCounties Title Nation (“CCTN”) which operates 2 branch offices and employs approximately 80 individuals located in California. In December, 2009 we formed TEAM Title LLC, a Delaware limited liability company, which is obtaining licenses to provide direct operations in 35 states nationally.  In March 2010 we converted TEAM Title LLC to a Delaware corporation.  TEAM Title Inc. was developed to become the national license arm of TEAM Nation Holdings.  In 2010 TEAM Title, Inc. has achieved authority (through licensing expense to state governments) to conduct title and settlement transactions in the District of Columbia, Georgia, Iowa, Kentucky, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island and West Virginia.  The business plan for TEAM Title includes licensing in an additional 28 states, including Arizona, Florida, Nevada and Texas over the next three quarters.  Once licensed, TEAM Title will conduct direct title and settlement services in the licensed areas and will focus its marketing efforts to regional and national lenders, asset managers, and banking centers.





Our strategy to turn away from the risk inherent distressed asset market to focus on our core title services business has enabled us to:


•
expand our geographic footprint to offer real estate services on a nationwide basis through our vast referral network;•
diversify our customer base by targeting national real estate lenders and mortgage brokers, in addition to our traditional focus on real estate agents and regional lenders in the Southwestern United States;•
serve as the exclusive provider of settlement and information services in closing a real estate transaction; and•
increase our revenue opportunities for each transaction without significantly increasing our fixed costs.





Operating Strategy





We attribute our success to an operating strategy which emphasizes the following factors:





Commitment to Service.


•
We believe that title insurance policies and escrow functions are generally standardized, and that the level of service provided is therefore the key differentiating factor among title industry competitors. We are committed to providing an unparalleled quality of service to our customers, and we emphasize the importance of that culture of service to all of our employees. Our advanced technology platform facilitates our prompt and efficient delivery of title and escrow services. Through our commitment to service, we strive to build lasting and personal relationships with our real estate industry clients.





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Customer and Market Focus.


•
Our services and marketing for our traditional title insurance and escrow segment are directed primarily to real estate agents and lenders in the residential resale and refinance sectors of the market, which we believe are less prone to cyclical industry downturns associated with changing interest rates than the commercial real estate and new home sectors.





•
In the residential resale market, we focus on establishing relationships with real estate agents, who typically direct the selection of escrow and title insurance services by their clients. Although title insurance premiums are typically paid by the buyer or seller of residential property, depending on local custom, the real estate agent responsible for the closing generally selects the title agent because of his or her greater familiarity with service levels. All parties to the home closing are concerned with personal time schedules and the costs associated with settlement delays. We provide title search and escrow services in connection with the resale transaction, and we arrange for the issuance of owner and lender title insurance policies at closing either directly as agent for other national title insurers or indirectly through our referral network via our national coordinators.





•
In the residential refinance market, we actively promote relationships with community banks and other lenders who refinance existing mortgage loans. Although the borrower pays our fees, we view these lenders as our customers because they typically direct the selection of escrow and title insurance by their borrowers. Our services in a refinance transaction also include title search and escrow services in connection with the refinancing of the existing mortgage loan, and the issuance of a lender title insurance policy in favor of the new lender.





•
Our lender services are provided and marketed to national lenders and mortgage brokers. Unlike our traditional title and escrow services, these services are typically offered on a national scale from centralized processing centers. We believe this approach allows us to focus on providing high quality service while managing our costs.





Operating Flexibility.


•
The cyclical nature of the title insurance industry requires us to consistently manage operating expense levels in response to market fluctuations. Our executives and key managers have extensive experience in controlling expenses to reflect cyclical industry movements. We control our most significant cost item, personnel expenses, through use of temporary personnel and overtime personnel as needed, reduction in staffing levels when appropriate, and commission and incentive elements of our compensation structure that vary significantly with changes in our revenue levels. Because the existing cycle has been a downward one in the industry, we have been able to grow counter-cyclically to attract key personnel and opportunities from companies that are downsizing significantly due to market constriction and over burdensome overhead.





•
We also seek to maintain financial and other operating flexibility by controlling other significant expense items, including contracts for data services for title and property information, which are structured based on usage; supply costs, which are variable based on business volume; and provisions for title and escrow losses, which correlate generally to revenue levels. We also manage our fixed costs such as rent by entering into relatively short term leases, typically three to five years.





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Experienced Management Team.


•
We focus on attracting and retaining the highest quality management and operational personnel available. Our executives and other key managers have an average of over 20 years experience in the title insurance industry, and directly participated in the successful development and operation of several large regional title agency networks, major title insurance underwriters and providers of various real estate settlement services. In addition, our entrepreneurial culture, growth record, incentive compensation structure and dedication to customer service help us to continually attract top producers with established client relationships.





•
Our operational management is centralized, with our key managers given primary responsibility for operations in their respective areas of service. Regular meetings of key managers allows for an exchange if ideas, feedback, suggestions and overall transparency in the management team so that management decisions made in one service area are sympathetic to the needs of the company at large.





Growth Strategies





Our primary long-term objectives are to become a national provider of title insurance and integrated real estate services and to maximize our profits throughout different real estate cycles. Counter-cyclical growth is a primary goal while the economy continues to struggle, creating opportunities to implement our strategies effectively. To accomplish our objectives, we are pursuing various growth strategies that include both acquisitions and organic growth, all of which are designed to broaden our market position and maximize profitability. Specifically, these strategies include:





Increasing Share of Existing Markets.


•
Our title and escrow operations are concentrated in Southern California which provides a particularly strong platform for future growth because Southern California traditionally ranks high in relation to other states in the rate of new job creation and population growth. We operate branch offices in two of the largest and most active real estate markets in the nation: greater Los Angeles and Orange County, California.





•
We intend to expand operations in existing and target markets by continually attracting top producers and establishing lean marketing branch offices in those markets, while retaining centralized processing. Unlike competitors who expand physical operations, including title production, customer service and property information services into each location, we believe that adding revenue without corresponding increases in fixed operational costs should significantly improve our operating margins in those markets.





Expanding Geographically.


•
From our base in the southland, we intend to expand licensing to cover all of California and add licensing throughout the nation to enable our entry into desirable markets. Traditional expansion strategies include replicating operations in every market but our strategy relies heavily on centralization of core services from production and customer service to IT administration and accounting support. By using our management services business model we can focus on marketing and revenue strategies in the new marketplace while continuing to increase efficiency by centralizing repetitive services. We will entertain regional offices or strategic acquisitions in target markets as well to augment our growth strategy and ensure we grow with focus and minimal operating expense. we do not currently serve to build a national presence with branch operations in states with either high growth or in which major population centers exist.





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Vendor and Production Services:   Team currently holds contracts to provide vendor and production services to the largest independent title agency in Orange and Los Angeles counties, California.  Services include title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services in exchange for fees.  TEAM’s bundled resources have allowed the agency to grow significantly and have made it a target acquisition for TEAM, which has the right to purchase 100% of the agency upon approval of the California Department of Insurance.





Escrow Operations:   Team wholly owns Escrow Nation, a California corporation and is scheduled to be dissolved in 2011.  TSS Escrow, Inc. was formed in February 2011 and it will become a licensed escrow agency under the California Department of Corporations.





Mortgage Operations:   Mortgage Nation, Inc. is wholly owned by Team and is licensed to provide mortgage broker services to its affiliates, employees and investors.  Mortgage Nation is currently inactive and is scheduled to be dissolved in 2011.





Acquisition strategy: Team is committed to finding, analyzing and acquiring failing real estate companies, particularly title agencies, title insurance companies licensed both in California and throughout the United States, escrow, and mortgage companies to acquire their revenue streams and inventories and to adjust their infrastructure to mitigate expenses.  Already poised to support growing operations, we can pick up the business at hand without needing to increase staff or duplicate costly services.  Team is also in negotiations to acquire a title insurance underwriter and is in discussions to joint venture national operations with two companies situated outside of California.




Competition





The title insurance and real estate settlement services business is highly competitive. We believe that quality and timeliness of service are the key competitive factors in the industry because parties to a real estate transaction are usually concerned with time schedules and costs associated with delays in the closing of transactions. Other competitive factors in the title and escrow business include pricing and the financial strength of the title insurance underwriter.





Companies with significant market share in the local and regional markets in which we compete include First American, Fidelity National Title, Chicago Title and Ticor Title. The number and size of competing companies varies in different geographic markets and has significantly diminished in the last 18 months due to market contraction. In those markets where we operate and intend to operate, we will face competition from other independent agencies although several competitor agencies have discontinued service, sold to other underwriters or gone out of business since the end of 2006. Major national insurance underwriters, many of which have financial and other resources significantly greater than ours are the largest competitor but, we believe that we can effectively compete against these larger competitors in the markets that we serve. We believe that our level of service and our nimble operating structure are the principal differentiating factors which have enabled us to compete effectively with our competitors, even in the challenging industry market conditions we face.





The principal competitors for our vendor services are title companies such as First American and Fidelity National Title, both of which primarily outsource their title production and customer service functions to overseas operations. We believe our commitment to customer service and consistent performance are more valuable to our vendor services clients and the ability to centralize locally has enabled us to significantly reduce expenses for our clients and managed companies and will continue to do so without the need to send our production services overseas.





Employees





As of April 8,2011, we had a total of 16 direct employees. We believe our relations with our employees are excellent.





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ITEM1A — RISK FACTORS





The risk factors listed in this section and other factors noted herein or incorporated by reference could cause our actual results to differ materially from those contained in any forward-looking statements. The following risk factors, in addition to the information discussed elsewhere herein, should be carefully considered in evaluating us and our business:





The demand for our title insurance and related services is highly dependent upon the volume of real estate transactions and other general economic conditions, and our future revenues and profits may decline as interest rates stabilize or rise.





The demand for title insurance, management, and production services depends upon, among other things, the volume of commercial and residential real estate transactions. The volume of these transactions has historically been influenced by factors such as mortgage interest rates and the state of the overall economy. When mortgage interest rates are increasing or during an economic downturn or recession, real estate activity typically declines and the title insurance and related industries tend to experience lower revenues and profitability. For example, stable mortgage interest rates and strength in the real estate market, especially in California and throughout the West Coast, contributed to very positive conditions for the title insurance industry from 2003 through 2006. However, beginning in late 2007 through present, the seizure of the credit markets, failure of financial institution, dramatic increase in defaults on home mortgages and the collapse of home values resulted in a significant decline in real estate transactions. As a result, the market shifted from a refinance-driven market in 2003-2006 to a market driven by short sale, REO, loan modification and investor driven purchases.





Beginning in December of 2008, the level of refinance activity increased, due in significant part to substantial decreases in mortgage interest rates. As of December 31, 2009, the volume of refinance activity has declined somewhat but remains significantly higher than the volume in 2007 and 2008. In the 2nd and third quarters of 2009, resale transactions increased significantly as investors and undecided buyers entered the market to take advantage of decreased prices and low interest rates.   In 2010, while interest rates remained low, overall transactions (refinance and resale) decreased as more strict mortgage lending underwriting guidelines limited the pool of homebuyers and existing homeowners who would qualify for refinancing. In addition, the slow and stagnant hiring statewide and nationwide as a result of a slowly recovering economy has limited the potential for increased transactions from new homebuyers. Also, decreased home prices nationwide and the aforementioned stricter underwriting guidelines from lenders have limited the available equity in many homes to qualify homeowners for refinancing transactions. We cannot predict changes in the interest rate environment, jobs market, home prices and government regulation of underwriting guidelines in future periods and its complete impact on residential resale and refinance activity. We expect interest rates to increase in 2011, and if mortgage interest rates rise quickly and significantly during 2011, it would likely negatively affect opened orders and, in turn, have a negative impact on our revenue levels and profitability.





Our success depends on our ability to attract and retain key personnel.





Competition for personnel in our industry is historically intense. We may have difficulty hiring the necessary sales, marketing and management personnel to support our growth. The successful implementation of our business model and growth strategy depends on the continued contributions of our seasoned executives and key managers. The loss of any key employee, the failure of any key employee to perform in his or her current position, or the inability of our officers and key managers to expand, train and manage our employee base could prevent us from executing our growth strategy and have a material adverse effect on our business.





Additionally, competition for personnel varies from region to region and increased costs may hurt our financial performance in certain regions. For example, competition for key personnel in California has substantially increased our costs of attracting and retaining personnel. Additional personnel cost increases in this or other regions could lower our profits.





The title insurance industry experiences seasonal fluctuations.





Historically, residential real estate activity has been generally slower in the winter, when fewer families move, buy or sell homes, with increased volumes in the spring and summer. Residential refinancing activity generally is more uniform throughout the year, subject to interest rate stability. Demand for our title insurance and related services generally tracks these seasonal demand patterns of the residential real estate market, although acquisitions of other title insurance companies and changes in interest rates may alter these traditional seasonal demand patterns. We typically report our lowest revenues and earnings in the first quarter, with revenues and earnings increasing into the second quarter and through the third quarter and declining again in the fourth quarter.




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Our business is highly competitive and increased competition could reduce our revenues and profitability.





The business of providing real estate transaction products and services is highly competitive, particularly with respect to price, service and expertise. According to Demotech, Inc., the top five title insurance companies accounted for over 90% of net premiums collected in 2008. Over 40 independent title insurance companies accounted for less than 10% of the market. The number and size of competing companies varies in the different geographic areas in which we conduct our business. Companies with significant market share in the local and national markets in which we compete include First American, Old Republic, Stewart Title, and Fidelity National Title. All of the top five title insurers have larger distribution networks, greater financial resources, more extensive computerized databases and longer standing relationships than us. The number and size of competing companies varies in the different geographic areas in which we conduct our business. Also, the removal of regulatory barriers might result in new competitors entering the title insurance business, and those new competitors may include diversified financial services companies that have greater financial resources than we do and possess other competitive advantages. Competition with the major title insurance companies, expansion by smaller regional companies and new entrants could adversely affect our business operations and financial condition.





We may not be able to implement successfully our strategy of selectively acquiring other businesses in the title insurance industry and related industries.





As part of our overall growth strategy, we intend to acquire selectively businesses in our industry and related industries that will allow us to enter new markets, provide services that we currently do not offer or advance our existing technology. Our ability to implement our selective acquisition strategy will depend on our success in identifying and consummating acquisitions of businesses on favorable terms. Although we also are actively seeking other acquisition candidates, we can give no assurance that we will be successful in these efforts. If we are unable to acquire appropriate businesses on favorable economic terms, or at all, or are unable to introduce new products and services successfully, our business could be materially adversely affected.





We may encounter difficulties managing and integrating our acquisitions.





Part of our continued growth strategy is to pursue additional opportunities to diversify and expand our operations by acquiring other companies. The success of each acquisition will depend upon our ability:





•
to integrate the acquired businesses' operations, products and personnel to achieve synergies and economies of scale;•
to retain key personnel of the acquired businesses;•
to maintain the customers and goodwill of the acquired businesses;•
manage any unexpected costs or unforeseen liabilities associated with the acquired businesses; and•
to expand our financial and management controls and reporting systems and procedures.





Security breaches and computer viruses could harm our business by disrupting our delivery of services and damaging our reputation.





We electronically receive, process, store and transmit sensitive business information of our customers. Unauthorized access to our computer systems could result in the theft or publication of confidential information, the deletion or modification of records or otherwise cause interruptions in our operations. These concerns about security are increased when we transmit information over the Internet. Computer viruses have also been distributed and have rapidly spread over the Internet. Computer viruses could infiltrate our systems, disrupting our delivery of services and making our products unavailable. Any inability to prevent security breaches or computer viruses could cause existing customers to lose confidence in our systems and terminate their agreements with us, and could inhibit our ability to attract new customers.




We may experience significant claims relating to our title insurance operations and losses resulting from fraud, defalcation or misconduct.





A significant component of our revenue arises from an affiliate title company issuing title insurance policies which typically provides coverage for the real property mortgage lender and the buyer of the real property. As a result, the affiliate retains insurance risk up to $5,000 on policies they issue through agency operations. If we are successful in our bid to acquire a title insurance underwriter, our retained insurance risk will increase up to and including $2.0 million in some cases. We may also be subject to a legal claim arising from the handling of escrow transactions. The affiliate title company carries errors and omissions insurance coverage for errors made during the real estate settlement process of up to $1.0 million per occurrence, $1.0 million in the aggregate, subject to a deductible of $25,000 per occurrence. The occurrence of a significant title or escrow claim in any given period could have a material adverse effect on our financial condition and results of operations during the period.




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Fraud, defalcation and misconduct by employees are also risks inherent in our business. As of December 31, 2010, an affiliate title company was custodian of approximately $12 million of cash deposited by customers with specific instructions as to its disbursement from escrow, trust and account servicing files. The affiliate carries insurance covering the loss or theft of funds of up to $1.0 million annually in the aggregate, subject to a deductible of $25,000 per occurrence. To the extent that any loss or theft of funds substantially exceeded our insurance coverage, our business could be materially adversely affected.





Our insurance agency is subject to substantial government regulation.





State authorities regulate our insurance agency in the state in which it does business. These regulations generally are intended for the protection of policyholders rather than stockholders. The nature and extent of these regulations vary from jurisdiction to jurisdiction, but typically involve:


•
approval of premium rates for insurance;•
standards of solvency and minimum amounts of statutory capital surplus that must be maintained;•
limitations on types and amounts of investments;•
establishing reserves, including statutory premium reserves, for losses and loss adjustment expenses;•
regulation of dividend payments and other transactions between affiliates;•
prior approval of the acquisition and control of an insurance company or of any company controlling an insurance company;•
licensing of insurers and agents;•
regulation of reinsurance;•
restrictions on the size of risks that may be insured by a single company;•
regulation of underwriting and marketing practices;•
deposits of securities for the benefit of policyholders;•
approval of policy forms;•
methods of accounting; and•
filing of annual and other reports with respect to financial condition and other matters.





These regulations may impede or impose burdensome conditions on rate increases or other actions that we might want to take to implement our business strategy and enhance our operating results. Additionally, as a result of having operations within an industry that is governed by various regulatory authorities, the sometimes fast-changing regulatory environment could impact the way we operate and compete in the markets we serve.





If we fail to comply with privacy regulations imposed on providers of services to financial institutions, our business could be harmed.





As a provider of services to financial institutions, we are bound by the same limitations on disclosure of the information we receive from our customers as apply to the financial institutions themselves. If we fail to comply with these regulations, we could be exposed to suits for breach of contract or to governmental proceedings, damage our customer relationships, harm our reputation and inhibit our ability to obtain new customers. In addition, if more restrictive privacy laws or rules are adopted in the future on the federal or state level, or, with respect to our international operations, by authorities in foreign jurisdictions on the national, provincial, state or other level, then it could have an adverse impact on us.




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Our stock price might be volatile and you might not be able to resell your shares at or above the price you have paid.





If you purchase shares of common stock, you might not be able to resell those shares at or above the price you have paid. The market price of our common stock might fluctuate significantly in response to many factors, some of which are beyond our control, including the following:





•
actual or anticipated fluctuations in our annual and quarterly results of operations;•
changes in securities analysts' expectations;•
variations in our operating results, which could cause us to fail to meet analysts' or investors' expectations;•
announcements by our competitors or us of significant technical innovations, contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;•
conditions and trends in the title insurance and real estate business;•
general market, economic, industry and political conditions;•
changes in market values of comparable companies;•
additions or departures of key personnel;•
stock market price and volume fluctuations attributable to inconsistent trading volume levels; and•
future sales of equity or debt securities, including sales which dilute existing investors.





In addition, the stock market has experienced extreme volatility that often has been unrelated to the performance of its listed companies. These market fluctuations might cause our stock price to fall regardless of our performance. In the past, companies that have experienced volatility in the market price of their stock have been the objects of securities class action litigation. If we were involved in securities class action litigation, it could result in substantial costs and a diversion of our attention and resources and have a material adverse effect on our business.





Certain provisions of our certificate of incorporation, granting our board of directors broad discretion to issue shares of preferred stock, may adversely affect your rights as a common stockholder.





Our board of directors may, without further action by our common stockholders, from time to time, issue shares of our authorized but unissued preferred stock, and determine the rights, preferences and limitations of each series of preferred stock. Upon the vote of a majority of the directors then in office, our board of directors, without stockholder approval, may issue shares of preferred stock with dividend, liquidation, voting, conversion and other rights superior to the rights of our common stockholders. Satisfaction of any dividend preferences of our outstanding redeemable preferred stock and future issuances of preferred stock would reduce the amount of funds available for the payment of dividends on shares of common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of our company before any payment to our common stockholders. Under some circumstances, the issuances of shares of preferred stock may make a merger, tender offer or proxy contest or the assumption of control by a holder of a large block of our securities or the removal of incumbent management more difficult. Any issuances of our preferred stock thus may have a material adverse effect on your rights as a common stockholder.




ITEM1B — UNRESOLVED STAFF COMMENTS




As a smaller reporting Company, the Company is not required to include this Item.





ITEM2 — DESCRIPTION OF PROPERTIES





We conduct our title insurance business operations in leased office space. We currently lease branch offices in Newport Beach and Pasadena, California. Our branch office leases generally provide for initial terms ranging from three to five years, and our current leases run from 18 to 36 months. We believe that the use of short-term office leases enhances our operating flexibility, which is particularly important because of the cyclical nature of the real estate industry.




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We occupy two leased office suites in the same building in Newport Beach, CA of approximately 4,500 square feet (1st floor) & 1,500 square feet (3rd floor) respectively, in which our executive offices are located. We sublease 2,000 square feet of the first floor space to CCTN, which houses a title and escrow unit in the facility.





In Pasadena, California, we sublease approximately 2400 square feet in which is located our title plant and production services, customer service, and one executive office.





In  March, 2009 we vacated our sublease in Irvine California and have no continuing obligation under its terms.





We have leases on various storage facilities throughout the southland that house our extra furniture, equipment, secure file storage and miscellaneous items.





See Notes to our consolidated financial statements for additional information relating to our lease commitments.





We believe that our facilities are adequate to meet our current needs and that additional facilities are available to meet our development and expansion needs in existing and projected target markets.





ITEM3 — LEGAL PROCEEDINGS





In the ordinary course of business, our insurance agency(ies) are subject to claims and are named as defendants in litigation relating to policies of insurance or other related services performed on behalf of insured policyholders and other customers. While the results of insurance claims and litigation cannot be predicted with certainty, management believes, based on the advice of legal counsel, that the final outcome of such lawsuits and claims will not have a material adverse effect on our financial position, results of operations, or liquidity.





On September 8, 2008 we filed suit in the Superior Court of California, Orange County, against Professional Business Bank, 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 Professional Business Bank to our subsidiary holding company. Professional Business Bank responded by calling both loans due and we are currently in arbitration on the matter. In November, 2009, we entered into a material agreement for settlement of the lawsuit and counter claims.  The agreement reached between the parties will result in dismissal of the court claims made against PBB, counterclaims made by PBB against TEAM and dismissal of the arbitration process between the parties.  Under the agreement, TEAM will realize a net reduction of $1,031,842.00 from its payables, while entering into the settlement agreement. In the settlement, four officers and directors of TEAM agreed to surrender certain Certificates of Deposit held at PBB in the interest of TEAM that will be paid immediately upon performance of the actions under the Settlement Agreement. PBB agreed to provide financing that supersedes prior financing between the Parties, in an amount to be $2.75 million dollars at a 5% interest rate with monthly payments of $20,000 per month, increasing by $5,000 per annum with a five year balloon payment due. This refinancing under the agreement will repay two notes, of $2,381,494.43 and $999,797.01. Personal Guaranties were executed by Dennis R. Duffy, Daniel Duffy, Janis Okerlund and Norman Francis for purposes of securing the settlement on behalf and for the benefit of TEAM.. A stipulated judgment of $3,215,062.37 in favor of PBB shall be filed if any default occurs. Neither TEAM nor PBB made any concessions regarding the merits of the separate parties’ claims and counterclaims in the settlement agreement.




On February 15, 2011 the Company brought a declaratory action regarding the convertibility of the JMJ promissory notes at the time of conversion.  The action was brought in the Thirteenth Judicial Circuit Court, in and for Hillsborough County, Florida. Such action is a single issue for the Court to determine the application of Rule 144 exemption from registration for removal of restrictive legend where collateralized note was adequate for removal of restrictive legend on such conversions. Such action is declaratory and thus is seeking an opinion of the Court. The Company, through its review by independent counsel, has taken the position that collateral alone to support a note is not adequate for future removals of restrictive legend. Counsel and management of the Company have tendered a termination of the JMJ Notes to JMJ Financial and, due to recent negotiations between the parties, believe that there will be a dismissal of such action by agreement of the parties and cancellation of all such promissory notes and collateralized promissory notes between the parties. At this time, there is no definitive determination that the JMJ notes will be terminated.





ITEM4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None





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PART II





ITEM5 — MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





(a)        The Registrant’s common stock is traded in the over-the-counter market under the symbol TEMN (OTC Bulletin Board Symbol) and has traded under the Symbol since July 7, 2008. Prior to this date and the reorganization with Suncross Exploration, the company’s common stock had the symbol SCXC though was not quoted by any market maker and no trade data is available. The table below sets forth the high and low bid prices of the Registrant’s common stock for the periods indicated. Such prices are inter-dealer prices, without mark-up, mark-down or commissions and do not necessarily represent actual sales.





Period Ending

High

Bid


Low

Bid


High

Ask


Low

Ask12/31/2010


0.0001



0.0001



1000.00



1000.0009/30/2010


0.0001



0.0001



0.0017



0.001706/30/2010


0.0010



0.0010



0.0420



0.042003/31/2010


0.0096



0.0001



2000.00



0.0400





(b)        As of December 31, 2010, there were 542 shareholders of record of the Registrant’s common stock.





(c)        The Registrant has neither declared nor paid any cash dividends on its common stock, and it is not anticipated that any such dividend will be declared or paid in the foreseeable future.





Effective August 11, 1993, the Securities and Exchange Commission (the “Commission”) adopted Rule 15g-9, which established the definition of a “penny stock,” for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks; and (ii) that the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form,(i)sets forth the basis on which the broker or dealer made the suitability determination; and (ii) states that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.





Equity Compensation Plan Information





The Company does not currently have any Equity Compensation Plans in effect.





Dividends





The Company has not paid any dividends to date, and has no plans to do so in the immediate future.





ITEM6 — SELECTED FINANCIAL DATA





As a smaller reporting Company, the Company is not required to include this Item.





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ITEM7 — 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.




At December 31, 2010 we had negative working capital of $4,231,407 and incurred an operating loss of $382,972 during the year ended December 31, 2010.  Our operations do not currently provide sufficient cash flow to meet our obligations and it does not appear this will occur within the next year based on current operating trends. 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 into 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 tranches of up to $10,000 into shares of the Company’s common stock at the conversion rate of 60% of the average five day closing price preceding the conversion notice date. The financing anticipated has not yet been realized as the stock market hasn’t been willing to absorb the volume of this type of financing to achieve the desired amount of capital. The original intent was for the Eventus debt to be paid back within one year and based on cash realized so far it is only on track to be paid off by 2015. This has caused an adjustment which has required the derivative liability and debt discount and related accretion to be reassessed and matched with a projected payoff date of April 2015. This reassessment is reflected in the following discussions about the 2010 financial statements.





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 even more expensive than Eventus 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. The company is in the process of trying to terminate the financing arrangement with the management of JMJ because of the cost it has had in diluting the company’s stock value. While a favorable outcome is expected based on recent discussions with legal counsel, no terms have been finalized yet. Assuming a favorable outcome, additional derivative liability income would have been realized on the 12/31/2010 statement of operations in the amount of $1,943,750.




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 Table of Contents




These two financing arrangements are responsible for 1.308 billion shares of the 1.371 billion share difference between basic and diluted weighted average shares outstanding on the statement of operations for the year. Eventus has already indicated that at current stock prices they will not participate in further financing or at best will only participate in very limited financing not sufficient to cover operating capital deficiencies. This financing caused a derivative liability of $4,206,376 as of 12/31/2009 (Eventus and JMJ). A derivative liability of $1,943,750 exists as of 12/31/2010 for JMJ and a derivative liability of $1,207,930 exists as of 12/31/2010 for Eventus. These derivative liabilities are a significant current liability in the amount of $3,151,680 as of December 31, 2010 which is approximately 74% of the working capital deficiency that exists as of 12/31/2010. The company does anticipate that a portion of this liability will be terminated once JMJ agrees to the financing termination terms. Assuming that happens, it would mean derivative liability income would be realized in the Other Income section of the statement of operations. Accretion of debt discount expense on the statement of operations for the year ended December 31, 2010 ($1,198,756) and for 2009 ($130,999) are solely related to JMJ and Eventus debt agreements.


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.





RESULTS OF OPERATIONS





Comparison of Year Ended December 31, 2010 to the year ended December 31, 2009





Revenues





Our revenue in 2010 totaled $2,640,403 compared to $2,020,670 during the prior year. Virtually all revenue was generated through a contract with a title company owned by our officers and directors (99.9% of revenue for 2010 and 96.5% of revenue in 2009). A small amount of joint marketing revenue was generated in 2010 ($1,863) as the company’s plans for this revenue stream did not materialize in 2010 as much as management had hoped. The increase in revenue for the year was due to a contract adjustment with the aforementioned officer/director owned Title Company in December 2010 that increased revenues in December 2010 by $997,120. This contract increased the revenues to be realized for 2010 and going forward. It increased the revenue for the fixed cost of management services provided and increased the revenue for the variable fee per file charged in processing title orders. The increase was agreed to by both companies since the overall decrease in market title orders has not allowed the company to cover its costs. Without the one time December 2010 increase in revenues, revenue would have been down in 2010 by 19% because of the decrease in title orders in the overall economy.





Costs and expenses





General and administrative expense amounted to $1,169,600 in 2010 as compared to $1,266,388 in the prior period reflecting efforts to cut overhead in light of the decrease in title orders overall for the year. Director Fees have increased from $30,000 in 2009 to $394,000 in 2010. A $4,000 Director Fee per director began in April 2010 to reduce outstanding shareholders notes receivable per Board authorization. The Board also granted a one time director fee of $60,000 per director in the 4th quarter.




Title plant search fees decreased from $994,595 to $744,474 as these data charges are a variable cost that is directly related to the 21% title order decrease from 2009 and 2010. Customer service expenses decreased from $240,698 to $18,624 and have been almost completely phased out.





Selling expenses have increased from $3,282 to $109,043 as the company tries to generate joint marketing revenues and other nationwide title & escrow fee streams outside of the vendor services contract with the title company owned by our officers and directors. As a part of this plan, in the third quarter of 2010 we formed a wholly owned subsidiary, TEAM Title Inc., a Delaware corporation which was developed in 2010 to become the national license arm of TEAM Nation Holdings.  Through the third quarter 2010 TEAM Title, Inc. has achieved authority (through licensing expense to state governments) to conduct title and settlement transactions in the District of Columbia, Georgia, Iowa, Kentucky, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island and West Virginia.  The business plan for TEAM Title includes licensing in an additional 28 states, including Arizona, Florida, Nevada and Texas over the next three quarters.  Once licensed, TEAM Title will conduct direct title and settlement services in the licensed areas and will focus its marketing efforts to regional and national lenders, asset managers, and banking centers.




14
 Table of Contents




Related party management fees decreased from $302,400 to $100,800 as services were terminated in February 2010. However, new related party management fee contracts have been entered into with four affiliated management companies that will cost $12,500 per affiliate per month beginning January 2011. Also, under “Other expense (income)” on the statement of operations, the balances due for these management agreements in the amount of $241,649 were forgiven by the related party shareholders to the benefit of the company. This is reported as an “other income” item on the statement of operations.




Interest income increased as a result of a full year of accrued interest on the JMJ note receivable and because 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. To begin paying the applicable interest and shareholder note receivable balances, payments began April 1, 2010 at the rate of $4,000 per month per Director. Interest expense decreased from $268,084 to $150,268 primarily due to debt with Professional Business Bank being renegotiated in late 2009 which yielded a much lower interest rate and lower principal balance due for 2010 than the default interest rate and outstanding balance that was in effect for 2009.





As previously mentioned, accretion of debt discount expense on the statement of operations for the year ended December 31, 2010 ($1,198,756) and for 2009 ($130,999) are solely related to JMJ and Eventus debt agreements. Derivative liability income was realized in 2010 in the amount of $1,933,766 as compared to derivative liability expense of $2,616,867 realized in 2009. A large driver of the derivative liability is the company stock price, which has decreased 98% from $0.03 per share on 12/31/2009 to $0.0005 per share as of 12/31/2010. As the stock price goes down, the derivative liability tends to go down due to the value of the share options decreasing proportionately with the stock price. Without the gain from the reversal of the derivative liability in 2010, instead of reported net income of $553,157 there would have been a net loss of $1,380,609.





OFF-BALANCE SHEET ARRANGEMENTS





We had no off balance sheet arrangements.





ITEM8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The response to this item is submitted as a separate section of this report beginning on page F-1.









15
 Table of Contents




Team Nation Holdings Corporation


Index to the Consolidated Financial Statements


As of December 31, 2010 and 2009 and
 For the Years Ended December 31, 2010 and 2009









Report of Independent Registered Public Accounting Firm
F-2Consolidated Financial Statements of Team Nation Holdings Corporation:Consolidated Balance Sheets as of December 31, 2010 and 2009
F-3Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009
F-4Consolidated Statements of Shareholder's Deficit for the Years Ended December 31, 2010 and 2009
F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009
F-6Notes to the Consolidated Financial Statements
F-8













F-1
 Table of Contents





REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and
 Stockholders of Team Nation Holdings Corporation
 
 We have audited the accompanying consolidated balance sheets of Team Nation Holdings Corporation as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the years in the two-year period ended December 31, 2010. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Team Nation Holdings Corporation as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2010 in conformity with U.S. generally accepted accounting principles.
 As discussed in Note 13, the Company has sustained recurring losses and negative cash flows from operations, at December 31, 2010 it had negative working capital of $4.2 million, total liabilities of $6.9 million, and a stockholders’ deficit of $3.9 million.  The Company's only significant source of revenue, and its sole customer, is a related party.  The Company expects that it will need to raise substantial additional capital to accomplish its business plan over the next several years and plans to generate the additional cash needed through the sale of its common stock that currently has a depressed value.  The Company’s most significant asset is a group of eight non-current notes receivable – related party issued by the Company’s directors, amounting to $2.2 million at December 31, 2010 (representing 73% of total assets).   The Company's significant debt servicing requirements, its ongoing operating losses and negative cash flows along with the depressed value of its common stock gives raise to substantial doubt about the Company’s ability to continue as a going concern.
  As discussed in Note 4 to the financial statements, the Company has numerous significant transactions with related parties.  The transactions are with the Company's two officers and four directors and entities under their control. The Company’s financial statements for the years ended December 31, 2010 and 2009 reported net income of $0.55 million and a net loss of $(3.6) million, respectively.  In 2010, the management of the Company recognized a “one-time” revenue transaction of $1.0 million for past services provided to its sole customer, a related party.
 
 As discussed in Note 9 to the financial statements, the Company recognized derivative liability income of $1.9 million for the year ended December 31, 2010 as a result of valuing certain derivative liabilities at their fair values as of December 31, 2010.
 
 
 Kelly & Company
 Costa Mesa, California
 April 8, 2011




F-2
 Table of Contents




TeamNation Holdings Corporation


Consolidated Balance Sheets







ASSETSDecember 31,


December 31,2010


2009Current assets:Cash and cash equivalents

$
8,056


$
19,029Due from affiliates


-



313,321Prepaid expenses


20,786



-Total current assets


28,842



332,350Notes receivable related parties


2,205,227



2,261,350Accrued interest on JMJ note receivable


26,803



2,804Title plant


710,000



710,000Software and leasehold improvements, net of accumulated amortization of $30,445 and $8,500


35,506



52,515Deposits


27,628



27,030Total assets

$
3,034,006


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

$
483,407


$
693,275Accounts payable of abandoned discontinued ops


5,569



5,569Related party convertible payable obligations


-



182,673Accrued director's fees


240,000



-Affiliate payable


18,858



-Accrued liabilities


92,492



119,314Current portion of financing agreement


172,277



104,882Current portion of note payable


88,439



-Convertible debt obligation, net of discount of $862,182 and $982,051


7,527



97,458Derivative liability


3,151,680



4,206,376Total current liabilities


4,260,249



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


2,460,610



2,645,118Convertible note payable, net of discount of $376,642 and $576,460


173,358



23,540Accrued interest on convertible note payable


26,839



2,839Note payable, net of current portion


18,122



76,134Total liabilities


6,939,178



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


1



1Common stock ($0.001 stated value, 2,000,000,000 shares authorized, 261,097,419 and 67,901,401 shares issued and outstanding)


261,097



67,901Additional paid in capital


1,685,642



1,566,038Stock subscription receivable


(450,000
)


(450,000
)Accumulated deficit


(5,401,912
)


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


(3,905,172
)


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

$
3,034,006


$
3,386,049




The accompanying notes are an integral part of the financial statements.


F-3
 Table of Contents





TeamNation Holdings Corporation
 Consolidated Statements of Operations




For the


For theYear Ended


Year EndedDecember 31,


December 31,2010


2009Management fees  - related party

$
2,638,540


$
1,949,940Management fees


-



70,000Joint marketing


1,863



730Total revenue


2,640,403



2,020,670Operating expenses:Title plant feesSearch fees


744,474



994,595Processing and general


486,834



506,241General and administrative


1,169,600



1,266,388Directors fees


394,000



30,000Management fees  -related parties


100,800



302,400Customer service expenses


18,624



240,698Selling expenses


109,043



3,282Total operating expenses


3,023,375



3,343,604Operating loss


(382,972
)


(1,322,934
)Other expense (income):Interest income


(24,005
)


(5,325
)Interest income - related parties


(87,877
)


(63,184
)Interest expense


150,268



268,084Collection of reserved accounts receivable


(2,562
)


(191,279
)Accretion of debt discount


1,198,756



130,999Debt forgiveness  - related parties


(241,649
)


-Gain on settlement of lawsuit


-



(465,063
)Derivative liability expense (income)


(1,933,766
)


2,616,867Income (loss) from continuing operations before provision for income taxes


557,863



(3,614,033
)Provision for income taxes


(4,043
)


(3,200
)Income (loss) from continuing operations


553,820



(3,617,233
)Loss from discontinued operations


(663
)


(5,213
)Net income (loss)

$
553,157


$
(3,622,446
)Income (loss) per share from continuing operations:Basic

$
0.00


$
(0.07
)Diluted

$
0.00


$
(0.07
)Loss per share from discontinued operations:Basic

$
0.00


$
0.00Diluted

$
0.00


$
0.00Net income (loss) per share:Basic

$
0.00


$
(0.07
)Diluted

$
0.00


$
(0.07
)Weighted average shares outstanding:Basic


138,838,103



54,304,646Diluted


1,510,114,393



54,304,646


The accompanying notes are an integral part of the financial statements.




F-4
 Table of Contents




TeamNation Holdings Corporation
 Consolidated Statement of Shareholder's Deficit









Additional


StockPreferred


Preferred


Common


Common


Paid in


Subscriptions


AccumulatedShares


Stock


Shares


Stock


Capital


Receivable


Deficit


TotalBalance December 31, 2008


-



-



47,191,894


$
47,191


$
1,138,946


$
(163,084
)

$
(2,332,623
)

$
(1,309,570
)Stock subscriptions collected


-



-



-



-



-



13,430



-



13,430Stock subscriptions cancelled


-



-



(166,205
)


(166
)


(149,488
)


149,654



-



-Convertible preferred stock sold to directors


60


$
1



-



-



59,999



-



-



60,000Free up shares issued


-



-



1,694,130



1,694



(1,694
)


-



-



-Shares sold for cash


-



-



200



-



200



-



-



200JMJ note receivable in substance stock subscription


-



-



-



-



-



(500,000
)


-



(500,000
)Funds received on JMJ note receivable


-



-



-



-



-



50,000



-



50,000Shares issued to directors for personally paying down debt


-



-



14,109,338



14,109



409,171



-



-



423,280Officer payment of legal expenses


-



-



-



-



10,000.0



-



-



10,000Shares issued to satisfy debt


-



-



3,275,540



3,276



46,724



-



-



50,000Shares issued to satisfy lease liability


-



-



1,796,504



1,797



52,180



-



-



53,977Net loss


-



-



-



-



-



-



(3,622,446
)


(3,622,446
)Balance December 31, 2009


60


$
1



67,901,401


$
67,901


$
1,566,038


$
(450,000
)

$
(5,955,069
)

$
(4,771,129
)Shares issued upon conversion of convertible debt


-



-



188,977,006



188,977



70,823



-



-



259,800Shares issued upon conversion of related party payables


-



-



3,716,012



3,716



36,284



-



-



40,000Shares issued for services


-



-



500,000



500



9,500



-



-



10,000Shares issued for cash


-



-



3,000



3



2,997



-



-



3,000Net income


-



-



-



-



-



-



553,157



553,157Balance December 31, 2010


60


$
1



261,097,419


$
261,097


$
1,685,642


$
(450,000
)

$
(5,401,912
)

$
(3,905,172
)




The accompanying notes are an integral part of the financial statements.


F-5
 Table of Contents


TeamNation Holdings Corporation
 Consolidated Statements of Cash Flows







For the


For theYear Ended


Year EndedDecember 31,


December 31,2010


2009Cash flows from (used in) operating activities:Net income (loss)

$
553,157


$
(3,622,446
)Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:Loss from discontinued operations


-



(5,213
)Unreimbursed expenses


-



60,909Expenses paid by an officer and director


-



10,000Amortization


21,944



8,500Shares issued for services


10,000



-Debt discount accretion


1,198,756



130,999Derivative liability (income) expense


(1,933,766
)


2,616,866Gain on debt settlement


-



(465,063
)Gain on debt forgiveness from related parties


(241,649
)


-Directors fees used to satisfy notes receivable


144,000



-Accrued interest income on stock subscription receivable


(24,000
)


(2,804
)Accrued interest expense on convertible debt obligation


24,000



2,839Decrease (increase) in assets:Accounts receivable


-



11,040Other receivables


-



(60,909
)Prepaid expenses


(20,786
)


-Due from affiliates


313,321



(313,321
)Related party notes receivable


-



(45,883
)Deposit


(598
)


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


(167,778
)


557,727Accrued liabilities


(26,822
)


457,796Due to affiliate


18,858



757,332Accrued directors fees


240,000



-Convertible related party debt obligations


98,976



43,516Cash from operating activities - continuing operations


207,613



115,355Cash used in operating activities - discontinued operations


-



(42,635
)Cash from operating activities


207,613



72,720Cash flows used in investing activities:Purchase of software and improvements


(4,935
)


(61,015
)Accrued interest on related party notes receivable


(87,877
)


-Cash used in investing activities - continuing operations


(92,812
)


(61,015
)Cash used in investing activities - discontinued operations


-



14,596Cash used in investing activities


(92,812
)


(46,419
)




The accompanying notes are an integral part of the financial statements.





F-6
 Table of Contents





Team Nation Holdings Corporation


Consolidated Statements of Cash Flows







Cash flows used in financing activities:Restricted cash


-



2,653Sale of common stock


3,000



436,909Sale of convertible preferred stock


-



60,000Repayment of related party payable


-



(13,958
)Proceeds from JMJ financing agreement


-



50,000Payments made on financing agreement


(117,112
)


-Payments made on note payable


(11,662
)


(529,872
)Cash used in financing activities - continuing operations


(125,774
)


5,732Cash used in financing activities - discontinued operations


-



(17,300
)Cash used in financing activities


(125,774
)


(11,568
)Net increase (decrease) in cash


(10,973
)


14,733Cash and cash equivalents at beginning of period


19,029



4,296Cash and cash equivalents at end of period

$
8,056


$
19,029








Supplemental Disclosure of Cash Flow Information






For the


For theYear Ended


Year EndedDecember 31,


December 31,2010


2009Cash paid during the fiscal years for:Interest

$
125,846


$
1,438Income taxes

$
4,043


$
3,200Schedule of Non cash Financing ActivitiesCommon stock used to satisfy related party convertible payable obligations

$
40,000


$
40,000Common stock used to satisfy convertible debt obligations

$
259,799


$
10,000Common stock used to satisfy discontinued operation's lease liability

$
-


$
53,977Note receivable issued as consideration for convertible note payable, recorded as stock subscription

$
-


$
500,000Write off of uncollectible trade and other receivables

$
-


$
457,817Recording of debt discount on convertible debt agreements

$
879,070


$
1,589,510




The accompanying notes are an integral part of the financial statements.





F-7
 Table of Contents




TeamNation Holdings Corporation
 Notes to the Consolidated Financial Statements





1.       Description of Business and Nature of Presentation




Description of Business




TEAM Nation Holdings Corporation (the “Company”) (“TEAM”), a Nevada corporation, is a management and services company specializing in management solutions for title companies and providing title production services. TEAM currently provides management, title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services to a single related party title company in exchange for transaction-based fees (Note 4). TEAM Title Inc. (TEAM Title), the Company's wholly-owned subsidiary, is a Delaware corporation which was formed in 2010 to provide a national licensing arm for TEAM.  Through December 31, 2010, TEAM Title has obtained licensure to conduct title and settlement transactions in the District of Columbia, Georgia, Iowa, Kentucky, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island and West Virginia.  TEAM Title's business plan anticipates licensing in an additional 28 states, including Arizona, Florida, Nevada and Texas during the next nine months.  Once the planned licensing is obtained, TEAM Title plans to conduct direct title and settlement services in the licensed areas with a focus on its marketing efforts to regional and national lenders, asset managers, and banking centers.




Basis of Presentation




These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.  The Company has evaluated subsequent events through the date that the financial statements were issued and included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.




Principles of Consolidation





The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary TEAM Title, after elimination of all material intercompany accounts, transactions, and profits.




Reclassification




Certain reclassifications have been made to the 2009 financial statements to conform to the 2010 presentation. These reclassifications had no effect on previously reported results of operations and accumulated deficit presented.




F-8
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements
 
 
 2.       Significant Accounting Policies




Estimates




The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosure of contingent obligations in the financial statements and accompanying notes.  The Company's most significant estimates relate to the determination of the fair value of the derivative liabilities using the Black Scholes method, the expected maturity of the Eventus debt, the useful lives of software and leasehold improvements, and the determination of the deferred income tax asset valuation allowance. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.
  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 December 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 December 31, 2010 and 2009, the Company did not have any funds on deposit in excess of FDIC insured limits.




Revenue recognition




TEAM’s revenue is derived from management solutions for title companies and providing title production services.  Revenue from services is recognized when all of the following criteria have been met; Persuasive evidence of an arrangement exists; Delivery has occurred or services have been rendered; The fee for the arrangement is fixed or determinable; and Collectability is reasonably assured.





F-9
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements





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. Management considers the following factors when determining the collectability 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 operations and a credit to the related valuation allowance. The Company wrote off all of trade accounts receivable with balances as of December 31, 2009.  TEAM did not increase its allowance for doubtful accounts during the year ended December 31, 2010.




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.




The carrying values of our cash and beneficial conversion feature derivative liability carried at fair value as of December 31, 2010 and 2009, are classified in the table below in one of the three categories described above:




Level 1


Level 2


Level 3


TotalDecember 31, 2010:Cash and cash equivalents

$
8,056



-



-


$
8,056Derivative liability


-



-


$
2,926,868


$
2,926,868December 31, 2009:Cash and cash equivalents

$
19,029


$
-



-


$
19,029Derivative liability


-



-


$
4,206,376


$
4,206,376




F-10
 Table of Contents


Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements




The Company uses level 3 inputs to determine the fair value of its derivative liabilities.  The derivatives are valued using the Black Scholes Option Pricing Model which includes a calculation of historical volatility of the stock and an estimated maturity date.




Advertising




Advertising expense was $1,630 for the year ended December 31, 2009.  There was no advertising expense for the year ended December 31, 2010.




Software and Leasehold Improvements




Software and leasehold improvements are recorded at cost and are amortized 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 leasehold improvements, the asset account and contra account are relieved of the cost and the related accumulated amortization.  Any resulting gain or loss from the transaction is included in the statement of operations.




EstimatedUseful LivesSoftware

3 yearsLeasehold improvements

plus reasonable renewal options

Lesser of useful life or lease term




Title plant




The Company's title plant is carried at original cost, with the costs of maintaining the title plant charged to expense as incurred. Because properly maintained title plants have indefinite lives and do not diminish in value with the passage of time, no provision has been made for depreciation or amortization. The Company analyzes its title plant for impairment on an annual basis. This analysis includes, but is not limited to, the effects of obsolescence, duplication, demand and other economic factors.




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.




F-11
 Table of Contents


Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements




In January 2010, the FASB issued updated guidance related to fair value measurements and disclosures, which requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and to describe the reasons for the transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level 3, a reporting entity should disclose separately information about purchases, sales, issuances and settlements (that is, on a gross basis rather than one net number). The updated guidance also requires that an entity should provide fair value measurement disclosures for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring fair value measurements for Level 2 and Level 3 fair value measurements. The updated guidance is effective for interim or annual financial reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. Other than disclosure, the adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In June 2009, the FASB established 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-references alongside the references to the standards issued and adopted prior to the adoption of the Codification.




In January 2010, the FASB issued updated guidance related to fair value measurements and disclosures, which requires a reporting entity to disclose separately, a reconciliation for fair value measurements using significant unobservable inputs (Level 3) information about purchases, sales, issuances and settlements (that is, on a gross basis rather than one net number). The updated guidance is effective for interim or annual financial reporting periods beginning after December 15, 2010 and for interim periods within the fiscal year. Management does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.




F-12
 Table of Contents


Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements








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. We adopted this statement on July 1, 2009 as it was effective for interim or annual periods ending after June 15, 2009.




In February 2010, the FASB issued updated guidance which amended the subsequent events disclosure requirements to eliminate the requirement for Securities and Exchange Commission (“SEC”) filers to disclose the date through which it has evaluated subsequent events, clarify the period through which conduit bond obligors must evaluate subsequent events and refine the scope of the disclosure requirements for reissued financial statements. The updated guidance was effective upon issuance. Except for the disclosure requirements, the adoption of the guidance had no impact on the Company’s consolidated financial statements.




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 are now required to estimate fair value. We adopted this standard on July 1, 2009 as it was effective for interim or annual periods ending after June 15, 2009.




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, the Company terminated the operations of Escrow and Mortgage and their net liabilities were assumed by the Company.  We recognized losses of $663 and $5,213 from the two subsidiaries' discontinued operations for the years ended December 31, 2010 and 2009, respectively.




F-13
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements








4.       Related Party Transactions




Relationship with Affiliate - CalCounties Title Nation




TEAM's sole significant revenue source from July 1, 2009 through December 31, 2010 has been derived by providing transaction related services to a related entity, CalCounties Title Nation ("CCTN").  CCTN is a Southern California title company owned by TEAM's four directors.




In 2007, TEAM, then a privately owned company, lent its four directors, two who serve as its sole officers, all of the funds necessary to acquire all of the outstanding shares of CCTN.  For all periods presented herein, TEAM is dependent on CCTN for working capital advances and is its only source of revenue.  This reliance on CCTN raises substantial doubt about the Company's ability to continue as a going concern.




TEAM is a variable interest entity of CCTN while CCTN is not a variable interest of TEAM.  As such, the financial statements of TEAM for all periods presented have not been consolidated with those of CCTN.  CCTN's summarized financial statements as of December 31, 2010 and 2009 and for the years ending December 31, 2010 and 2009 are presented below:




As of


As ofDecember 31,


December 31,2010


2009Current assets

$
3,649,248


$
3,938,971Total assets

$
5,465,782


$
5,153,659Current liabilities

$
2,281,659


$
2,548,060Total liabilities

$
2,977,250


$
2,934,295Stockholders' equity

$
2,488,532


$
2,219,364
  For the


For theYear Ended


Year EndedDecember 31,


December 31,2010


2009Total operating revenues

$
11,878,028


$
13,172,745Total operating expenses

$
11,752,073


$
12,156,231Net income

$
468,432


$
1,106,609




F-14
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







Due To/From Affiliate




The components of the due to/due from CCTN activity for the years ended December 31, 2010 and 2009 are as follows:




2010


2009Amount due (from) to CCTN, beginning of period

$
(313,321
)


332,177Satisfaction of amounts owed by CCTN to TEAM for the vendor services provided


(2,638,540
)


(1,941,141
)Operating capital advances provided by CCTN to TEAM


2,944,989



3,179,725Operating capital advances provided by TEAM to CCTN


(248,204
)


(419,374
)Facility sublease payments made by CCTN to TEAM


(84,895
)


(82,209
)Facility sublease payments made by TEAM to CCTN


107,970



112,478Transfer of liability owed CCTN to Eventus Capital (Note 9)


-



(1,089,510
)CCTN accounts payable assumed by TEAM


250,859



(405,467
)Amount due to (from) CCTN, end of period

$
18,858



(313,321
)




Notes Receivable – Related Party




On May 31, 2007, the Company lent its 4 directors, two who are its soleofficers, a total of $2,600,000 for notes receivable from the directors.  There were four notes receivable, one per director, for the original amounts of $650,000.  Each of the related parties notes were non-interest bearing through May 31, 2008, at which time the notes bore an interest rate of 5% per annum with annual interest only payments commencing on May 31, 2009 and continuing until May 1, 2014, when all principal and accrued interest becomes due in full.  The first of the interest only payments due on May 31, 2009 on all four of the notes were not made.  On November 10, 2009, the terms of the four notes were amended to provide for the interest only payments to begin on January 1, 2011.




On June 1, 2008, the Company lent its four directors, two who are its soleofficers, a total of $1,000,000.  There were four individual promissory notes, each for $250,000, bearing an annual interest rate of 4.62%.  The first interest only payment on each of the notes was to be made on June 1, 2010.  As of the first payment's due date, each of the note's interest rates reset to 5% per annum until June 1, 2015, when all principal and accrued interest becomes due in full.  On November 10, 2009, the terms of the four notes were amended to provide for the interest only payments to begin on January 1, 2011.




F-15
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







The total notes receivable balance, including accrued interest, as of December 31, 2010, due from its four directors, two who are its sole officers, was $2,205,227.




We recorded accrued interest related to the notes receivable - related parties for the years ended December 31, 2010 and 2009 of $87,877 and $63,184 respectively.  As of April 1, 2010, the Company began compensating each of its four directors with a $4,000 per month director's fee.  Accrued directors’ fees for all four of the Company's directors were used to satisfy accrued interest on the notes receivable - related parties for the years ended December 31, 2010 and 2009 amounting to $87,877 and $56,123, respectively.




Directors Fees




As discussed above, on April 1, 2010 the Company began compensating each of its four directors with a $4,000 per month director's fee.  Director fee expenses totaled $394,000 and $30,000 for the years ended December 31, 2010 and 2009, respectively.




In addition to the monthly compensation to the four directors discussed above, in September 2010, the Board authorized a one-time director’s fee to three of the company’s directors totaling $10,000 ($3,333 per director). Then in November 2010, the Board authorized a one-time $60,000 director’s fee to each of the four Directors (total of $240,000).




Management Agreements - Related Parties




Management fee revenues




TEAM manages all of CCTN's operations by providing management, title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services.  TEAM's monthly management fee from January 1, 2009 forward is a semi-variable fee of $40,000 per month plus $60 per open title order.  The Company's management fee revenue - related party from CCTN for the years ended December 31, 2010 and 2009 was $2,638,540 and $1,949,940, respectively.  The related TEAM title plant fees expense for the years ended December 31, 2010 and 2009 were $744,474 and $994,595, respectively.




In December 2010, TEAM and CCTN agreed to a one-time management fee charge of $997,120.  The charge was recorded to reflect the actual costs that TEAM was incurring to process title orders, which was not consistent with the contract between TEAM and CCTN.  As a result, on January 3, 2011, the contract between TEAM and CCTN was amended to increase the semi variable fee of $40,000 per month to $50,000 per month and to increase the fee per open title order from $60 to $80 per open title order.




F-16
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







Management fee expenses - Related Parties




On July 1, 2009, the Company entered into management agreements with affiliates of two of the Company's four directors.  These two individuals are the sole TEAM officers.  For managing the Company's operations, human resources, accounting services, sales, and marketing efforts, each of the affiliates of the officers were compensated at a rate of $25,200 per month per agreement.  The two officers had separate compensation arrangements with their individual affiliates and did not receive any salary compensation from the Company for the period from July 1, 2009 through December 31, 2009.  Total management fee - related parties expenses were $100,800 and $302,400 for the years ended December 31, 2010 and 2009. The related parties' management fee agreements were terminated in February 2010.




On January 3, 2011, the Company entered into new management agreements with affiliates of all four of the Company's directors.  Two of the individuals are the sole TEAM officers.  For managing the Company's operations, human resources, accounting services, sales, and marketing efforts, each of the affiliates of the officers are going to be compensated at a rate of $10,000 per month per agreement.  In addition to the monthly accrued fees, each of the four contracts stipulates that each affiliate will receive 250 million shares of TEAM’s common stock as contract incentive shares over 60 months. The shares will be issued on a monthly basis, with 4,166,667 shares issued to each director each month.




Modification of Management Fees Payable - Related Parties




On November 3, 2009, the Company entered into an agreement with the affiliates acting as the Company's two officers and modified the payment terms of the management fee - related party payables owed to the two affiliates.  The modification agreement provided for the right of conversion by the holders of the management fees - related party payables of any portion of the amounts owed them into shares of the Company's common stock.  The conversion option was based on a rate of a share of the Company's common stock for an amount equal to 60% of the average of the closing price for the preceding five days. The management fees - related party payables were due on demand and fully transferable.




Forgiveness of Management Fees - Related Party Payables




In June 2010, the related party affiliates forgave all management fees - related parties amounts owed to them.  A gain, net of income taxes, of $241,649 has been recognized by the Company on the debt forgiveness in the Statement of Operations.




F-17
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







Car Payments - Related Parties




From June 2010 through August 2010, the company paid the monthly cost of a vehicle used for company business by one of its officers. The vehicle was leased personally by an LLC 100% owned and managed by the officer. TEAM made the payment each month directly to the leasing company amounting to $1,011. Beginning September 2010 and still in effect, TEAM paid the monthly cost of a vehicle owned by the officer. The payment each month of $897 is made directly by TEAM to the officer’s lender and is structured as a month to month car lease between TEAM and the officer.




Prior to June 2010, payments totaling $10,907 over 5 months were paid to TEAM’s two officers as reimbursement for automobile expenses incurred each month.  In all, during 2010, the Company reimbursed its officers $17,528 in car payments.  In 2009, the Company did not reimburse its officer for any costs related to autos.


Shares Issued




As discussed in Note 12, in July 2009, the Company issued 14,109,338 shares of its common stock to its four directors in exchange for the individual's satisfaction of bank debt of $423,280 at a value of $0.03 per common share.  The related party individuals surrendered four certificates of deposit that had been pledged as collateral for the Company's credit facility with Professional Business Bank.  The surrender of the related parties' certificates of deposit facilitated the eventual settlement of the Company's dispute with the bank.  The dispute arose in part because of the Company being declared in default on the unpaid balance due the bank on the line of credit in July 2009.




In two November 2009 transactions, Sunderland Capital, LLC (Sunderland) bought and then converted a total of $20,000 of the Company's recently modified related party convertible payables.  In each of the transactions, Sunderland converted a $10,000 tranche of the related party convertible payable 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 separate 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 at an average of $0.015 per share.




On December 23, 2009, the Company issued its four 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 outstanding as of the date of conversion.  The preferred shares do not have liquidation preferences.  Each Series A Convertible Preferred share has voting rights that represent 1% of all the Company's outstanding shares.  The conversion feature of the Series A Convertible Preferred shares is based on the then number of common shares outstanding and is formulaic in nature. The calculated effective conversion price into the Company's common shares as of the date of issuance of the Company's Series A Convertible Preferred Stock in December 2009 was $0.0006 per share.




F-18
 Table of Contents




In four separate 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 averaging $0.011 per share.




Subleases - Related Parties




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 CCTN2011

$
107,9702012


-2013


-2014


-2015 and thereafter


-Total minimum lease payments

$
107,970TEAM's sublease revenue from CCTN2011

$
84,8952012


17,6872013


-2014


-2015 and thereafter


-Total minimum sublease revenue

$
102,582




F-19
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







5.       Uncollectible Amount and Related Settlement Gain




In December 2007, TEAM entered into a management agreement with First Southwestern 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 voluntarily turned over their license to operate as a title company in the state of California to the California Department of Insurance.  The return of the title company license was based on FIRST's insufficient amounts of working capital and net worth.  When TEAM's management agreement with FIRST was terminated, the unpaid management fee receivable was determined to be uncollectible and the amount fully reserved.  As a partial resolution of the termination of the management agreement with FIRST, $261,279 of the amount that TEAM originally recorded as a reserve of doubtful accounts was determined to be subject to the right of offset against amounts due FIRST from CCTN.  There was $191,279 in excess of TEAM's 2009 management revenue from FIRST that was recognized in the nine month period ending September 30, 2009 as other income.  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 consisted 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 in substance was designed for JMJ to convert the JMJ Note Payable, in tranches, into TEAM common stock and pay down the JMJ Note Receivable with cash (Note 9).  Since the JMJ Note Receivable is in-substance a stock subscription, the Company 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 $26,803 at December 31, 2010 and $450,000 and $2,804 at December 31, 2009.




F-20
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







7.       Software and Leasehold Improvements




Software and leasehold improvements are reported net of amortization and consist of the following:




December 31,


December 31,2010


2009Software

$
64,584



59,649Leasehold improvements


1,367



1,36765,951



61,016Less: accumulated amortization


(30,445
)


(8,500
)Software and Leasehold Improvements, net

$
35,506


$
52,516




Amortization expense related to software and leasehold improvements for the years ended December 31, 2010 and 2009 were $21,944 and $8,500, respectively.




8.       Title Plant




The Company acquired the Orange County title plant from CCTN in December 2007. The $710,000 purchase price for the title plant was based on an appraisal. 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, 2010.




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 had an original due date of 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 subject to a contractual limitation that they may not hold more than 4.99% of the Company’s outstanding shares at any time.




F-21
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







As conversion of the debt obligation into common shares is at the option of the holder, the conversion price is indexed to the Company's stock price, and debt had a future due date, the fair value of the embedded conversion feature of the debt obligation was recorded by the Company as a derivative liability. This derivative liability was adjusted to fair value at each reporting period, with income or expense recorded to the Statement of Operations.  As of the initial date of the convertible debt transaction, 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.  During the years ended December 31, 2010 and 2009, $209,800 and $10,000 of the debt obligation were converted into 97,660,339 and 638,570 common shares of the Company, respectively.  At November 25, 2010, the original due date of the obligation, the Company and Eventus amended the terms of the debt to make it due upon demand.  The Company and Eventus both anticipate the continued conversion of the debt obligation into the Company's common stock as the market will allow. Since the debt was not satisfied in one year as initially anticipated, the Company reassessed the expected date of the debt satisfaction to be April 2015.  Despite this expected satisfaction date, the debt remains as a current liability since it can be called for cash at Eventus' option.  In reassessing the expected satisfaction date, additional debt discount of $879,070, derivative liability expense of $907,657 and a derivative liability of $1,786,727 were recorded in November 2010.  In total, the Company recognized derivative liability income of $1,628,266 for the year ended December 31, 2010 on the Eventus debt. Derivative liability expense from the Eventus debt was $867,616 for the year ended December 31, 2009.  Accretion of the Eventus debt obligation's debt discount for the years ended December 31, 2010 and 2009 was $998,938 and $107,459. This debt obligation is not included in the debt maturity table in Note 7.


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.




F-22
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







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. During the years ended December 31, 2010 and 2009, JMJ converted $50,000 and $0 of debt obligation into 91,316,667 and 0 common shares of the Company. At December 31, 2010, the value of embedded conversion feature had decreased to $1,943,750, resulting in derivative liability income of $305,500 for the year ended December 31, 2010.  Derivative liability expense from the JMJ financing arrangement was $1,749,250 for the year ended December 31, 2009  Accretion of the JMJ Note Payable debt discount for the years ended December 31, 2010 and 2009 was $199,818 and $23,540, respectively.




Fair Value Valuation Technique and Assumptions




The Company uses the Black-Scholes Option Pricing Model to determine the fair value of derivative liability 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 December 31, 2010 are as follows:




Risk free interest rate

0.50% to 1.46%Expected volatility of common stock

340% to 358%Dividend yield

0.00 %Expected life of conversion features

1.9 - 4.3 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 outstanding note payable balance including interest at December 31, 2010 is $106,561. The current portion of the note payable is $88,439.  Total payments of $20,000 were made and interest expense of $3,338 was recorded for the year ended December 31, 2010.  The Company has not made all of the monthly payments as they become due and the note payable is in default at December 31, 2010.  The note payable holder has not declared the unpaid principal and earned interest due.




F-23
 Table of Contents





Team Nation Holdings Corporation


Notes to the Consolidated Financial Statements





11.       Professional Business Bank Debt




In November 2009, the Company and its four major shareholders, who are also the Company's 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 four Company 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 increases 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 was able to satisfy the $2,750,000 within one year of issuance, the Company would have received a $250,000 discount.  PBB has received as security for this transaction a stipulated judgment against the Company and the four directors in the amount of $3,215,062.  The four directors all entered into personal guaranty agreements with PBB (Note 13).  The settlement agreement resulted in a gain on settlement of $465,063 for the year ended December 31, 2009.


Debt owed to PBB at December 31, 2010 and 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 of $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

$
2,632,887



2,750,000Less current portion


172,277



104,882Long term debt to PBB

$
2,460,610


$
2,645,118




For the years ended December 31, 2010 and 2009, interest expense on the PBB debt was $150,268 and $268,084, respectively.




F-24
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements




Maturity of TEAM debt is as follows:






Year ended December 31,2011

$
260,7162012


810,2652013


316,2712014


1,902,1962015 and beyond


-$
3,289,448




12.       Stockholder's Equity




Authorized Shares




On January 21, 2011, the Company's Board of Directors, and by a vote of the majority of the voting shares of the Corporation, approved an increase of the authorized shares of the Corporation from 1,000,000,000 to 2,000,000,000 shares of common stock.




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 certificate 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 December 31, 2010 and 2009, there were 60 shares issued and outstanding.




Common stock




The Company collected $13,430 of subscriptions receivable during the year ended December 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 used in the PBB settlement to partially satisfy the then outstanding debt.  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 was in default.  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 7).




F-25
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







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.




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.




In July 2010, 3,000 shares were issued for cash of $3,000.




In 2010, Eventus converted 23 tranches of its convertible debt obligation totaling $203,560.  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 76,835,339 shares of the Company's common stock were issued in the 23 transactions, which represents an average per share conversion price of $0.0026.




F-26
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







In two December 2010 transactions, Sunderland bought a total of $6,240 of the Company's debt to Eventus.  In each transaction, Sunderland 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 20,825,000 shares of the Company's common stock were issued in the two transactions, which represents an average per share conversion price of $0.0003.




In 2010, JMJ Financial converted 23 tranches of its convertible debt obligation totaling $50,000.  In each transaction, JMJ converted the debt into shares of the Company's common stock at a conversion rate of 40% of the lowest trade price in the 20 trading days prior to the conversion.  A total of 91,316,667 shares of the Company's common stock were issued in the 23 transactions, which represents an average per share conversion price of $0.0005.




At December 31, 2010, the Company does not have adequate shares authorized to issue upon conversion of the debt (Note 13).  If needed, the Company intends to increase the number of shares authorized or enact a reverse stock split while keeping the current number of shares authorized.




13.       Commitments, Contingencies and Management's Plan




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.




Concentrations




Revenue




As discussed in Note 4, virtually all of the Company's revenue is from processing title orders for CCTN, a related party.  For the years ended December 31, 2010 and 2009, 99.9% and 96.5% of the Company's revenue was from CCTN, respectively.  The Company would experience severe financial difficulties if CCTN no longer needed title orders processed or stopped using the Company to process their title orders.




F-27
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







Supplier




The Company is dependent on third-party data search providers for title searches that occur outside of Orange County. In 2010 and 2009, the Company used one supplier for approximately 75% and 90% of title orders processed, respectively. The Company is dependent on the ability of its suppliers to provide services on a timely basis and on favorable pricing terms. The loss of this principal supplier or a significant reduction in service availability from this supplier could have a material adverse effect on the Company. The Company believes that its relationship with this supplier is satisfactory at December 31, 2010 and does not anticipate any reductions in service.




Officer and Directors Loans




The Company amended certain of the terms of four officers and directors' note receivable agreements.  Our legal counsel has reviewed these amendments and has indicated that they are compliant with Section 402(a) of the Sarbanes-Oxley Act of 2002.




Authorized Shares




At December 31, 2010, the Company did not have adequate shares authorized to issue upon conversion of the JMJ and Eventus debt (Note 9).  If needed, the Company intends to increase the number of shares authorized or enact a reverse stock split while keeping the current number of shares authorized.  Given the Company's stock trading price as of December 31, 2010 and the date of this report, management does not believe that the debt will be converted to the extent that there will be insufficient shares authorized, and as such, has not recorded a liability for any costs associated with this matter.




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:




2011

$
253,4282012


30,4932013


-2014


-2015 and thereafter


-Total minimum lease payments

$
283,921




Rental expense was $157,304 and $115,512 for the years ended December 31, 2010 and 2009, respectively.  Rental expense is net of sublease income of $84,895 and $67,209 for the years ended December 31, 2010 and 2009.  Note 4 contains future expected sublease income and expenses.




F-28
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







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.




In November 2009, the Company entered into a settlement (Note 7) with PBB to resolve the pending litigation regarding the amount of the bank's then outstanding loans.




On February 15, 2011 the Company brought a declaratory action regarding the convertibility of the JMJ promissory notes at the time of conversion.  The action was brought in the Thirteenth Judicial Circuit Court, in and for Hillsborough County, Florida. Such action is a single issue for the Court to determine the application of Rule 144 exemption from registration for removal of restrictive legend where collateralized note was adequate for removal of restrictive legend on such conversions. Such action is declaratory and thus is seeking an opinion of the Court. The Company, through its review by independent counsel, has taken the position that collateral alone to support a note is not adequate for future removals of restrictive legend. Counsel and management of the Company have tendered a termination of the JMJ Notes to JMJ Financial and, due to recent negotiations between the parties, believe that there will be a dismissal of such action by agreement of the parties and cancellation of all such promissory notes and collateralized promissory notes between the parties. At this time, there is no definitive determination that the JMJ notes will be terminated.




Going Concern




The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  At December 31, 2010, the Company had negative working capital of $4,231,407, total liabilities of $6,939,178, and a stockholders’ deficit of $3,905,172.  The Company's only significant 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 $2,205,227 at December 31, 2010, which had the payment terms rewritten on extended terms in 2008.  Our significant debt servicing requirements, the ongoing operating losses and negative cash flows along with the depressed value of our common stock 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 the conversion of its current debt and the identification of other sources of debt and private placement of equity funding.




F-29
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







14.       Deferred Income Taxes




As a result of its losses, the Company has not recorded any current or deferred income tax provisions for the years ended December 31, 2010 and 2009.  Significant components of the Company's deferred income tax assets at December 31, 2010 and 2009 are as follows:






2010


2009Deferred tax assets:Net operating loss carryforward

$
3,312,745


$
3,138,976Valuation allowance


(3,312,745
)


(3,138,976
)Net deferred tax assets

$
-


$
-




A reconciliation between the amount of income tax expense for the years ended December 31, 2010 and 2009, determined by applying the applicable US statutory income tax rates, is as follows:




2010


2009US Net income (loss) of continuing operations before taxes

$
557,863


$
(3,614,033
)Change in valuation allowance


34.0
%


34.0
%Estimated tax (benefit)

$
189,673


$
(1,228,771
)Provision for deferred taxes


(193,716
)


1,225,571Net income tax expense

$
(4,043
)

$
(3,200
)




The Company has federal net operating loss carryforwards of $3,312,745. The federal net operating loss carryforward will begin to expire in 2027.  Based upon its history of losses and management's assessment of when operations are anticipated to generate taxable income, the Company has concluded that it is more likely than not that the net deferred income tax assets will not be realized through future taxable earnings and, accordingly, has established a full valuation allowance for them. The valuation allowance increased by $173,769 during the year ended December 31, 2010 as a result of the current year’s net losses.




F-30
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







15.       Income (Loss) Per Share




The following is a reconciliation of the number of common shares used in the calculation of basic income (loss) per share and diluted income (loss) per share for the years ended December 31, 2010 and 2009:




For the


For theYear Ended


Year EndedDecember 31,


December 31,2010


2009Numerator:Net income (loss)

$
553,157


$
(3,622,446
)Denominator:Weighted average number of common shares outstanding


138,838,103



54,304,646Incremental shares resulting from the assumed conversion of debt and preferred stock


1,371,276,290



-Diluted common shares outstanding


1,510,114,393



54,304,646Net income (loss) per share:Basic

$
0.00


$
(0.07
)Diluted

$
0.00


$
(0.07
)




The following table sets forth the number of common shares issuable upon conversion of the Series A Preferred Stock and convertible debt:




As of December 31,2010


2009Series A Preferred Shares


213,489,001



55,454,850Shares issuable upon conversion of debt


6,303,360,028



136,562,001




Each Series A Preferred Share is convertible into 1% of the Company's outstanding common shares at the time of its 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.  At December 31, 2010, the Company does not have adequate shares authorized to issue upon such a conversion of the debt (Note 13).  If needed, the Company intends to increase the number of shares authorized or enact a reverse stock split while keeping the current number of shares authorized.




F-31
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







16.      Subsequent Events




Authorized Shares




As discussed in Note 12, on January 21, 2011, the Company's Board of Directors, and by a vote of the majority of the voting shares of the Corporation, approved an increase of the authorized shares of the Corporation from 1,000,000,000 to 2,000,000,000 shares of common stock. The Company amended its Articles of Incorporation by the filing of a Certificate of Change with the Nevada Secretary of State.




Related Party




Management fee revenues




As discussed in Note 4, on January 3, 2011, the contract between TEAM and CCTN was amended to increase the semi variable fee of $40,000 per month to $50,000 per month and to increase the fee per open title order from $60 to $80 per open title order.




Management fee expenses




As discussed in Note 4, on January 3, 2011, the Company entered into new management agreements with affiliates of all four of the Company's directors.  Two of the individuals are the sole TEAM officers.  For managing the Company's operations, human resources, accounting services, sales, and marketing efforts, each of the affiliates of the officers are going to be compensated at a rate of $10,000 per month per agreement.  In addition to the monthly accrued fees, each of the four contracts stipulates that each affiliate will receive 250 million shares of TEAM’s common stock as contract incentive shares which will vest over 60 months. The shares will be issued on a monthly basis, with 4,166,667 shares issued to each director each month.




Convertible Debt




In March 2011, the Company provided notice to JMJ that the Company believed that JMJ was in violation of the terms of the convertible debt agreement with the Company, and that the Company desired to cancel all outstanding agreements with JMJ, which include the convertible note payable with an outstanding principal balance of $550,000 and accrued interest of $26,839 and the note receivable with an outstanding principal balance of $450,000 and accrued interest of $26,803 at December 31, 2010.




F-32
 Table of Contents




Team Nation Holdings Corporation
 Notes to the Consolidated Financial Statements







Litigation




As discussed in Note 13, on February 15, 2011 the Company brought a declaratory action regarding the convertibility of the JMJ promissory notes at the time of conversion.  The action was brought in the Thirteenth Judicial Circuit Court, in and for Hillsborough County, Florida. Such action is a single issue for the Court to determine the application of Rule 144 exemption from registration for removal of restrictive legend where collateralized note was adequate for removal of restrictive legend on such conversions. Such action is declaratory and thus is seeking an opinion of the Court. The Company, through its review by independent counsel, has taken the position that collateral alone to support a note is not adequate for future removals of restrictive legend. Counsel and management of the Company have tendered a termination of the JMJ Notes to JMJ Financial and, due to recent negotiations between the parties, believe that there will be a dismissal of such action by agreement of the parties and cancellation of all such promissory notes and collateralized promissory notes between the parties. At this time, there is no definitive determination that the JMJ notes will be terminated.




F-33
 Table of Contents





ITEM9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE




On April, 10, 2009, the Company’s board of directors dismissed its former independent registered public accounting firm, Moore & Associates Chartered Certified Public Accountants of Las Vegas, Nevada and engaged the firm, Kelly & Company, Costa Mesa, California as the principal accountant to audit the Registrant’s financial statements for the fiscal year of the Registrant ended December 31, 2008 and beyond.
 
 During the fiscal year ended December 31, 2008 and the subsequent interim period until the change, from Moore & Associates to Kelly & Company there were no disagreements with Moore & Associates on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Moore & Associates would have caused them to make reference in connection with their report to the subject matter of the disagreement, and Moore & Associates has not advised the Company of any reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
 
 The reports of independent registered public accounting firm of Kelly & Company as of and for the years ended December 31, 2010 and 2009 did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to audit scope or accounting principle.  The reports contained a “going concern” modification.
 
 During the years ended December 31, 2010 and 2009, and through March 31, 2011, the Company did not consult with Kelly & Company regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.





ITEM9A — CONTROLS AND PROCEDURES





The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s 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 the Company’s management, including its Chief Executive Officer / Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). 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.





16
 Table of Contents




As of December 31, 2010, the end of the period of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer /Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective.





REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.





In connection with the preparation of this Annual Report on Form 10-K for the year ended December 31, 2010, management, with the participation of our Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of our internal controls over financial reporting, pursuant to Rule 13a-15 under the Exchange Act. Our Chief Executive Officer and Principal Financial Officer concluded and reported to the Board of Directors that the design and operation of our internal controls and procedures were effective as of December 31, 2010.





There have been no material changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.





ITEM 9A(T). — CONTROLS AND PROCEDURES





This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.





17
 Table of Contents





PART III





ITEM10 — DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





The current Executive officers and Directors of Registrant are:





Name

Position

AgeDennis R. Duffy

Chief Executive Officer, Chairman of the Board and Director

68Janis Okerlund

President , Secretary and Director

42Daniel J. Duffy

Director

39Norman J. Francis

Director

59





Business Experience





The following is a brief account of the business experience during at least the past five years of the directors and officers of the Registrant, indicating the principal occupation and employment during that period by each, and the name and principal business of the organizations by which they were employed.





Dennis R. Duffy, CEO and Director:





Mr. Duffy joined the Company in March 2007.  From July 2005 to March 2007, he was the Vice President and County Manager for Old Republic Title.  From August 2004 until July 2005, he was the Executive Vice President of Mercury Companies.  From June 2001 until July 2004, he was the President, Major Accounts Division of Stewart Title of California.  He started his career in the title insurance industry in 1960 with Title Insurance and Trust Company (TICOR) where he held various senior management positions over his 22 year tenure with the company.  In 1979, Mr., Duffy moved to SAFECO Title Insurance Company as marketing Manager and developed a nationwide network of 21 title entities throughout the US.  In 1980, Mr. Duffy and two partners acquired American Title Company (now known as North American Title Company) from SAFECO.  As President of American Title, Mr. Duffy grew the company to become the largest title agency in the USA serving 10 counties in California.  After selling the company in 1986 Mr. Duffy remained as a consultant until 1992, after which he consulted for several title companies on management and marketing.  In 1998 Mr. Duffy joined Fidelity National Financial (FNF) as Executive Vice President and COO of California and Arizona operations.  He ended his time with FNF after successfully assisting them with going public under the American Title umbrella with ANFI, its holding company.  Mr. Duffy worked briefly with the Mercury Companies and Old Republic Title before purchasing California Counties Title Company (“CCTC”) and co-founding Team.  Mr. Duffy holds a Masters of Business Degree from California Western University.





Janis Okerlund, Esq., President, Secretary, Principal Financial Officer and Director:


Ms. Okerlund, April 2007 to present Team Nation Holding Corporation; September 2006 to April 2007 was with Old Republic Title –National Lender Division; December 2004 to September 2006, Investors Title as VP Asst. County Manager; and May 1998 to November 2004, Fidelity National Title Company as VP Underwriting Counsel, Major Accounts Division.  Ms. Okerlund began her career in the real estate industry at First American Title in Santa Ana, California, where she performed national title operations.  While finishing her law degree at Western State University, College of Law, Ms. Okerlund became proficient at managing and underwriting complex subdivision and commercial development transactions and was quickly snapped up by Fidelity National Title (FNF) upon her matriculation.  At FNF, Ms. Okerlund was instrumental in the growth of the Major Accounts Division into one of the most profitable specialized division in the entire FNF family. Her entrepreneurial spirit and drive for continued growth led her to the Mercury Companies, as Assistant County Manager for the Investors Title brand in Orange County, and to Old Republic Title before she partnered with three industry veteran to found Team and to acquire California Counties Title Company.  Ms. Okerlund was admitted to the State Bar of California in 2001 and is a licensed attorney.





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Daniel J. Duffy, Director:





Daniel J Duffy, April 2007 to present Team Nation Holding Corporation; September 2006 – April 2007 with Old Republic Title-Major Accounts Division; August 2004 to September 2006 was with Investors Title-County Manager; and June 2001 to July 2004 was with Stewart Title of California as VP Major Accounts Division.  Mr. Duffy began his financial related career working for Wells Fargo as a clerk following his high school graduation. While attending CSUF, Dan worked through the branch system at Wells Fargo Bank and eventually moved to a Credit Union after completing his Bachelors of Fine Arts Degree. At the credit union Daniel worked in the commercial lending division in underwriting and sales. Choosing to enter into the title company arena, Daniel moved to American Tile Company and managed a national notary signing company now owned by FNF. Daniel followed the opportunity to get into the core title business by establishing the operations of Stewart Title’s Major Accounts Division in Anaheim Hills CA. During his management, Stewart Major Accounts was recognized as one of only a few division for it’s innovation as a technology leader for the Stewart companies. Daniel was recruited and established the Orange County operation for Investors Title Company as the County Manager. Daniel now works with Team Nation Holdings where he provides management oversight for title and accounting operations for the company and its managed companies.





Norman J. Francis, Director:





Mr. Francis has been with the Company since June 2007.  From June 2003 until June 2007, he was Los Angeles County Sales Manager with Alliance Title Company.  From September 2001 until May of 2003, he was  Los Angeles County Sales Manager with First Southwestern Title Co.  Raised in Fort Lauderdale, Florida, Norm Francis graduated in 1974 from Florida Atlantic University receiving an Associate of Arts Degree in Business.  Mr. Francis began his career in the Wholesale Lending Division of Sun Bank, where he rose to a Vice President before relocating to Southern California in 1980.  During his time with Sun Bank, Mr. Francis served as an active member and officer of The Board of Bankers Association.  After his move west, Mr. Francis used his extensive banking background to launch his career in the title insurance industry.  During his 28 years of service to the industry, Mr. Francis has experienced a wide range of title companies and philosophies which has allowed him the opportunity to spend a quality amount of time building a successful personal tenure in sales and sales management.  He takes special pride in teaching any Sales Associate to learn, therefore, propelling themselves into rewarding careers in the industry.





No appointee for a director position has been found guilty of any civil regulatory or criminal offense or is currently the subject of any civil regulatory proceeding or any criminal proceeding





Compliance with Section 16(a) of the Exchange Act





The Company’s common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”) and as a result the Company’s officers and directors, and persons who own more than ten percent of the Company’s equity securities are not required to comply with Section 16 of the Exchange Act.





Conflicts of Interest





Members of the Company’s management are associated with other firms involved in a range of business activities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of the Company. Insofar as the officers and directors are engaged in other business activities, management anticipates it will devote only a minor amount of time to the Company’s affairs.





The Company’s Board of Directors has adopted a policy that the Company will not seek a merger with, or acquisition of, any entity in which any officer or director serves as an officer or director or in which they or their family members own or hold a controlling ownership interest. Although the Board of Directors could elect to change this policy, the Board of Directors has no present intention to do so.





There can be no assurance that management will resolve all conflicts of interest in favor of the Company.





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ITEM11 — EXECUTIVE COMPENSATION





EXECUTIVE COMPENSATION





Cash Compensation.





Compensation paid for all services provided up to December 31, 2010 — The following table sets forth certain information with respect to the compensation we paid for services rendered during the fiscal year ended December 31, 2010, with respect to our Chief Executive Officer and each other executive officer who received cash compensation in excess of $100,000. Note that not all the compensation earned was paid to the executives due to cash constraints caused by economic conditions in 2010. Compensation accrued but not yet paid will be paid incrementally as the company is able, without impairment to its ongoing operations. There were no Option Awards or other compensation paid or accrued during the fiscal year ended December 31, 2010.





SUMMARY COMPENSATION TABLE





Name

Position

Accrued Compensation


Paid CompensationDennis R. Duffy

Chief Executive Officer,

$
196,604


$
136,604Chairman of the Board and DirectorJanis Okerlund, Esq.

President , Secretary and Director

$
193,933


$
133,933Daniel J. Duffy

Director

$
119,333


$
59,333Norman J. Francis

Director

$
99,333


$
39,333





On December 23, 2009, the Company issued 15 shares each of its authorized Series A Convertible Preferred Stock to Dennis R. Duffy, Janis Okerlund, Esq., Daniel J. Duffy, and Norman J. Francis in consideration of their performance in fiscal 2009 and as an inducement to continue service in 2010.  Sixty shares were authorized under the designation of preferences and each shares has a stated value of $1000 USD.  Each share of the Series A Preferred Stock has voting rights equal to one percent (1%) of the Company’s outstanding Common Stock as of the record date for any vote of the Company’s Common Stock.  Each share of the Series A Preferred Stock is convertible into one percent (1%) of the Company’s outstanding Common Stock as of the date of the notice of conversion.  The Series A Preferred Stock does not accrue or be paid any dividends nor does it carry liquidation preferences over the Company’s Common Stock.





On January 3, 2011, the Company entered into new management agreements with affiliates of all four of the Company's directors.  Two of the individuals are the sole TEAM officers.  For managing the Company's operations, human resources, accounting services, sales, and marketing efforts, each of the affiliates of the officers are going to be compensated at a rate of $10,000 per month per agreement.  In addition to the monthly accrued fees, each of the four contracts stipulates that each affiliate will receive 250 million shares of TEAM’s common stock as contract incentive shares which will vest over 60 months. The shares will be issued on a monthly basis, with 4,166,667 shares issued to each director each month.





Option Grants, Exercise and Values





The Company does not currently have an adopted Stock Option Plan but hopes to formalize and adopt a plan for executives and key employees and recruits in 2011. There were no stock option grants or exercises during the fiscal year ended December 31, 2010.





Committees: Meetings of the Board





The Company does not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are done by the Board of Directors meeting as a whole. The Company’s Board of Directors held both in person meetings during the fiscal year ended December 31, 2010 and meetings by telephone. All corporate actions by the Board of Directors were either consented to in writing by all Directors or were agreed to unanimously at a meeting where proper notice had been given and a quorum was present.





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Audit Committee





The board of directors has not established an audit committee. The functions of the audit committee are currently performed by the entire board of directors. The Company is under no legal obligation to establish an audit committee and has elected not to do so at this time so as to avoid the time and expense of identifying independent directors willing to serve on the audit committee. The Company may establish an audit committee in the future if the board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation.





As the board of directors does not have an audit committee, it therefore has no “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-B. except its chief financial officer. In general, an “audit committee financial expert” is an individual member of the audit committee who:





*
understands generally accepted accounting principles and financial statements,*
is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,*
has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,*
understands internal controls over financial reporting, and*
understands audit committee functions.





Board of Directors Independence





None of the Company’s directors are “independent” within the meaning of definitions established by the Securities and Exchange Commission or any self-regulatory organization. The Company is not currently subject to any law, rule or regulation requiring that all or any portion of its board of directors include “independent” directors.





Director Nominees





The Company does not have a nominating committee. The board of directors, sitting as a board, selects those individuals to stand for election as members of our board. Since the board of directors does not include a majority of independent directors, the decision of the board as to director nominees is made by persons who have an interest in the outcome of the determination. The board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Until otherwise determined, not less than 90 days prior to the next annual board of directors’ meeting at which the slate of board nominees is adopted, the board accepts written submissions that include the name, address and telephone number of the proposed nominee, along with a brief statement of the candidate’s qualifications to serve as a director and a statement of why the shareholder submitting the name of the proposed nominee believes that the nomination would be in the best interests of shareholders. If the proposed nominee is not the security holder submitting the name of the candidate, a letter from the candidate agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a resume supporting the nominee’s qualifications to serve on the board of directors, as well as a list of references.





The board identifies director nominees through a combination of referrals, including by management, existing board members and security holders, where warranted. Once a candidate has been identified the board reviews the individual’s experience and background, and may discuss the proposed nominee with the source of the recommendation. If the board believes it to be appropriate, board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of management’s slate of director nominees submitted for shareholders for election to the board.





Among the factors that the board considers when evaluating proposed nominees are their experience in the information technology industry, knowledge of and experience with and knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The board may request additional information from the candidate prior to reaching a determination. The board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.





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Security Holder Communications with our Board of Directors





The Company provides an informal process for security holders to send communications to our board of directors. Security holders who wish to contact the board of directors or any of its members may do so by writing to Team Nation Holdings Corporation, 4667 MacArthur Boulevard, Suite 310, Newport Beach, CA 92660.





Correspondence directed to an individual board member is referred, unopened, to that member. Correspondence not directed to a particular board member is referred, unopened, to the President and CEO.





Code of Ethics





Under the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission’s related rules, the Company is required to disclose whether it has adopted a code of ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company has adopted a code of ethics that applies to its Chief Executive Officer, Principal Financial Officer and other officers, legal counsel and to any person performing similar functions. The Company has made the code of ethics available and intends to provide disclosure of any amendments or waivers of the code within five business days after an amendment or waiver on the Company’s website wwww.teamnationholdings.com.





Compensation Discussion and Analysis





The following Compensation Discussion and Analysis (CD&A) provides information on the compensation programs established for our “Named Executive Officers” during our fiscal year ended December 31, 2010. All information provided herein should be read in conjunction with the tables provided below.





Our Board of Directors is responsible for establishing, implementing and monitoring the policies governing compensation for our executives. Currently our Board does not have a compensation committee. Our officers are members of our Board of Directors and are able to vote on matters of compensation. We are not currently under any legal obligation to establish a compensation committee and have elected not to do so at this time. In the future, we may establish a compensation committee if the Board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation. During the year ended December 31, 2010 our Board did not employ any outside consultants to assist in carrying out its responsibilities with respect to executive compensation, although we have access to general executive compensation information regarding both local and national industry compensation practices. In future periods we may participate in regional and national surveys that benchmark executive compensation by peer group factors such as company size, annual revenues, market capitalization and geographical location.





The executive employment market in general is very competitive due to the number of companies with whom we compete to attract and retain executive and other staff with the requisite skills and experience to carry out our strategy and to maintain compliance with multiple Federal and State regulatory agencies. Many of these companies have significantly greater economic resources than our own. Our Board has recognized that our compensation packages must be able to attract and retain highly talented individuals that are committed to our goals and objectives, without at this time paying cash salaries that are competitive with some of our peers with greater economic resources. Our compensation structure is weighted towards equity compensation in the form of options to acquire common stock, which the Board believes motivates and encourages executives to pursue strategic opportunities while managing the risks involved in our current business stage, and aligns compensation incentives with value creation for our shareholders.





Components of Our Executive Compensation Program





Our current executive compensation program is entirely salary based. In the future we intend to incorporate additional components we believe are necessary in order for the Company to provide a competitive compensation package relative to our peers and to provide an appropriate mix between short-term and long-term cash and non-cash compensation. Elements of our future executive compensation are likely to include:




o
Base Salaryo
Stock Awardso
Other benefits available to all employeeso
Items specific to our President and Chief Executive Officer per an employment agreement





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Base Salary:   At present we do not have a salary structure for employees and Executives, and amounts are based on skill set, knowledge and responsibilities. Base salaries may be established as necessary. During the year ended December 31, 2010 some of our Named Executive Officers received a salary increase.





Stock Awards:   A portion of compensation paid to our executives will be equity based. We believe equity compensation helps align the interests of our executives with the interests of our shareholders. In that regard, our executives’ compensation is subject to downside risk in the event that our common stock price decreases. In addition, we believe stock awards provide incentives to aid in the retention of key executives. No stock compensation awards were granted during the year ending December 31, 2010.





Other Benefits:   Our Executive Officers and employees receive no other benefits.





ITEM12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




The following table shows the share ownership of officers, directors and 5% or greater shareholders as of April 8, 2011. There are 1,778,008,187 common shares at April 8, 2011.


Name & Address (1)

No. Of Common Shares


% of OutstandingDennis R. Duffy (2)


260,053,412



14.63%Daniel J. Duffy (3)


260,101,252



14.63%Norm Francis (4)


260,057,348



14.63%Janis D. Okerlund


257,731,116



14.50%Officers and Directors as a Group(four persons)


1,037,943,128



58.38%





(1)
C/o Team Nation Holding Corporation, 4667 MacArthur Boulevard, Suite 310, Newport Beach, CA 92660(2)
Held in the name of Dennis R. Duffy, Charlotte K. Duffy, his wife, and KE Enterprises, Inc.   Mr. Duffy disclaims any beneficial ownership of the shares held by KE Enterprises, Inc., but under Rule 13-d(3), beneficial ownership of these shares may be attributed to him(3)
Held in the name of Daniel J,. Duffy and One Track Management, Inc.   Mr. Duffy disclaims any beneficial ownership of the shares held by One Track Management, Inc., but under Rule 13-d(3), beneficial ownership of these shares may be attributed to him.(4)
Held in the name of Norman J. Francis and Louise K. Oshiro, his wife.





On December 23, 2009, the Company issued 15 shares each of its authorized Series A Convertible Preferred Stock to Dennis R. Duffy, Janis Okerlund, Esq., Daniel J. Duffy, and Norman J. Francis in consideration of their performance in fiscal 2009 and as an inducement to continue service in 2010.  Sixty shares were authorized under the designation of preferences and each shares has a stated value of $1000 USD.  Each share of the Series A Preferred Stock has voting rights equal to one percent (1%) of the Company’s outstanding Common Stock as of the record date for any vote of the Company’s Common Stock.  Each share of the Series A Preferred Stock is convertible into one percent (1%) of the Company’s outstanding Common Stock as of the date of the notice of conversion.  The Series A Preferred Stock does not accrue or be paid any dividends nor does it carry liquidation preferences over the Company’s Common Stock.





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ITEM13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





Due To/From Affiliate





Relationship with Affiliate   CalCounties Title Nation





TEAM's sole significant revenue source from July 1, 2009 through December 31, 2010 has been derived by providing transaction related services to a related entity, CalCounties Title Nation ("CCTN").  CCTN is a Southern California title company owned by TEAM's four directors.


In 2007, TEAM, then a privately owned company, lent its four directors, two who serve as its sole officers, all of the funds necessary to acquire all of the outstanding shares of CCTN.  For all periods presented herein, TEAM is dependent on CCTN for working capital advances and is its only source of revenue.  This reliance on CCTN raises substantial doubt about the Company's ability to continue as a going concern.





TEAM is a variable interest entity of CCTN while CCTN is not a variable interest of TEAM.  As such, the financial statements of TEAM for all periods presented have not been consolidated with those of CCTN.  CCTN's summarized financial statements as of December 31, 2010 and 2009 and for the years ending December 31, 2010 and 2009 are presented below:




As of


As ofDecember 31,


December 31,2010


2009Current assets

$
3,649,248


$
3,938,971Total assets

$
5,465,782


$
5,153,659Current liabilities

$
2,281,659


$
2,548,060Total liabilities

$
2,977,250


$
2,934,295Stockholders' equity

$
2,488,532


$
2,219,364


For the


For theYear Ended


Year EndedDecember 31,


December 31,2010


2009Total operating revenues

$
11,878,028


$
13,172,745Total operating expenses

$
11,752,073


$
12,156,231Net income

$
468,432


$
1,106,609




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Due To/From Affiliate





The components of the due to/due from CCTN activity for the years ended December 31, 2010 and 2009 are as follows:




2010


2009Amount due (from) to CCTN, beginning of period

$
(313,321
)


332,177Satisfaction of amounts owed by CCTN to TEAM for the vendor services provided


(2,638,540
)


(1,941,141
)Operating capital advances provided by CCTN to TEAM


2,944,989



3,179,725Operating capital advances provided by TEAM to CCTN


(248,204
)


(419,374
)Facility sublease payments made by CCTN to TEAM


(84,895
)


(82,209
)Facility sublease payments made by TEAM to CCTN


107,970



112,478Transfer of liability owed CCTN to Eventus Capital (Note 9)


-



(1,089,510
)CCTN accounts payable assumed by TEAM


250,859



(405,467
)Amount due to (from) CCTN, end of period

$
18,858



(313,321
)




Notes receivable – stockholders — $2,261,350





On May 31, 2007, the Company lent its 4 directors, two who are its sole officers, a total of $2,600,000 for notes receivable from the directors.  There were four notes receivable, one per director, for the original amounts of $650,000.  Each of the related parties notes were non interest bearing through May 31, 2008, at which time the notes bore an interest rate of 5% per annum with annual interest only payments commencing on May 31, 2009 and continuing until May 1, 2014, when all principal and accrued interest becomes due in full.  The first of the interest only payments due on May 31, 2009 on all four of the notes were not made.  On November 10, 2009, the terms of the four notes were amended to provide for the interest only payments to begin on January 1, 2011.





On June 1, 2008, the Company lent its four directors, two who are its sole officers, a total of $1,000,000.  There were four individual promissory notes, each for $250,000, bearing an annual interest rate of 4.62%.  The first interest only payment on each of the notes was to be made on June 1, 2010.  As of the first payment's due date, each of the note's interest rates reset to 5% per annum until June 1, 2015, when all principal and accrued interest becomes due in full.  On November 10, 2009, the terms of the four notes were amended to provide for the interest only payments to begin on January 1, 2011.


The total notes receivable balance, including accrued interest, as of December 31, 2010, due from its four directors, two who are its sole officers, was $2,205,227.





We recorded accrued interest related to the notes receivable   related parties for the years ended December 31, 2010 and 2009 of $87,877 and $63,184 respectively.  As of April 1, 2010, the Company began compensating each of its four directors with a $4,000 per month director's fee.  Accrued directors’ fees for all four of the Company's directors were used to satisfy accrued interest on the notes receivable   related parties for the years ended December 31, 2010 and 2009 amounting to $87,877 and $56,123, respectively.




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Directors' Fees




As discussed above, on April 1, 2010 the Company began compensating each of its four directors with a $4,000 per month director's fee.  Director fee expenses totaled $394,000 and $30,000 for the years ended December 31, 2010 and 2009, respectively.





In addition to the monthly compensation to the four directors discussed above, in September 2010, the Board authorized a one-time director’s fee to three of the company’s directors totaling $10,000 ($3,333 per director). Then in November 2010, the Board authorized a one-time $60,000 director’s fee to each of the four Directors (total of $240,000).





Forgiveness of Management Fees   Related Party Payables





In June 2010, the related party affiliates forgave all management fees   related parties amounts owed to them.  A gain, net of income taxes, of $241,649 has been recognized by the Company on the debt forgiveness in the Statement of Operations.





Car Payments   Related Parties





From June 2010 through August 2010, the company paid the monthly cost of a vehicle used for company business by one of its officers. The vehicle was leased personally by an LLC 100% owned and managed by the officer. TEAM made the payment each month directly to the leasing company amounting to $1,011. Beginning September 2010 and still in effect, TEAM paid the monthly cost of a vehicle owned by the officer. The payment each month of $897 is made directly by TEAM to the officer’s lender and is structured as a month to month car lease between TEAM and the officer.





Prior to June 2010, payments totaling $10,907 over 5 months were paid to TEAM’s two officers as reimbursement for automobile expenses incurred each month.





Management Agreements





Management fee revenues





TEAM manages all of CCTN's operations by providing management, title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services.  TEAM's monthly management fee from January 1, 2009 forward is a semi variable fee of $40,000 per month plus $60 per open title order.  The Company's management fee revenue   related party from CCTN for the years ended December 31, 2010 and 2009 was $2,638,540 and $1,949,940, respectively.  The related TEAM title plant fees expense for the years ended December 31, 2010 and 2009 were $744,474 and $994,595, respectively.





In December 2010, TEAM and CCTN agreed to a one time management fee charge of $997,120.  The charge was recorded to reflect the actual costs that TEAM was incurring to process title orders, which was not consistent with the contract between TEAM and CCTN.  As a result, on January 3, 2011, the contract between TEAM and CCTN was amended to increase the semi variable fee of $40,000 per month to $50,000 per month and to increase the fee per open title order from $60 to $80 per open title order.




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Management fee expenses





On July 1, 2009, the Company entered into management agreements with affiliates of two of the Company's four directors.  These two individuals are the sole TEAM officers.  For managing the Company's operations, human resources, accounting services, sales, and marketing efforts, each of the affiliates of the officers were compensated at a rate of $25,200 per month per agreement.  The two officers had separate compensation arrangements with their individual affiliates and did not receive any salary compensation from the Company for the period from July 1, 2009 through December 31, 2009.  Total management fee   related parties expenses were $100,800 and $302,400 for the years ended December 31, 2010 and 2009. The related parties' management fee agreements were terminated in February 2010.





On January 3, 2011, the Company entered into new management agreements with affiliates of all four of the Company's directors.  Two of the individuals are the sole TEAM officers.For managing the Company's operations, human resources, accounting services, sales, and marketing efforts, each of the affiliates of the officers are going to be compensated at a rate of $10,000 per month per agreement.  In addition to the monthly accrued fees, each of the four contracts stipulates that each affiliate will receive 250 million shares of TEAM’s common stock as contract incentive shares over 60 months. The shares will be issued on a monthly basis, with 4,166,667 shares issued to each director each month.





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.





Shares Issued





As discussed in Note 12, in July 2009, the Company issued 14,109,338 shares of its common stock to its four directors in exchange for the individual's satisfaction of bank debt of $423,280.  The related party individuals surrendered four certificates of deposit that had been pledged as collateral for the Company's credit facility with Professional Business Bank.  The surrender of the related parties' certificates of deposit facilitated the eventual settlement of the Company's dispute with the bank.  The dispute arose in part because of the Company being declared in default on the unpaid balance due the bank on the line of credit in July 2009.





In two November 2009 transactions, Sunderland Capital, LLC (Sunderland) bought and then converted a total of $20,000 of the Company's recently modified related party convertible payables.  In each of the transactions, Sunderland converted a $10,000 tranche of the related party convertible payable 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 separate 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 at an average of $0.015 per share.





On December 23, 2009, the Company issued its four 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 outstanding as of the date of conversion.  The preferred shares do not have liquidation preferences.  Each Series A Convertible Preferred share has voting right that represent 1% of all the Company's outstanding shares.





In four separate 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 averaging $0.011 per share.





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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.





ITEM14 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a)
(1)
See attached Financial Statements.(2)
Not applicable.(3)
See (b) below.





(b)

Exhibits filed with this annual report.





EXHIBIT NO.
DESCRIPTION





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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ITEM15. PRINCIPAL ACCOUNTING FEES AND SERVICES




The aggregate fees billed for professional services by our independent registered public accounting firm for the years ended December 31, 2010 and 2009 were as follows:
  2010


2009Audit Fees

$
33,750


$
45,850Audit Related Fees (1)

$
18,650


$
19,975Tax Fees

$
2,000


$
2,750All Other Fees

$
-0-


$
-750-Total

$
54,400


$
69,325
  (1)
First, second, and third quarter review fees for 2010 and 2009.
  It is our board’s policy and procedure to approve in advance all audit engagement fees and terms and all permitted non-audit services provided by our independent registered public accounting firm.  We believe that all audit engagement fees and terms and permitted non-audit services provided by our independent registered public accounting firm described in the above table were approved in advance by our board.


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SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) 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 CorporationDate: April 8, 2011
By:
/s/ Dennis R. DuffyDennis R. Duffy

Chief Executive Officer





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date: April 8, 2011
By:
/s/ Janis D. OkerlundJanis D. Okerlund

Principal Financial Officer





DIRECTORS


Date: April 8, 2011
By:
/s/ Dennis R. DuffyDennis R. Duffy

DirectorDate: April 8, 2011
By:
/s/ Daniel J. DuffyDaniel J. Duffy

DirectorDate: April 8, 2011
By:
/s/ Norman J. FrancisNorman J. Francis

DirectorDate: April 8, 2011
By:
/s/ Janis OkerlundJanis Okerlund

Director





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