10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-K

___________________

[ ]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 29, 2012

Commission File Number: 000-53641

SA RECOVERY CORP.

(Name of small business issuer in its charter)

Oklahoma	26-3090646
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

3908 Minnesota St., Bartlesville, OK 74006

(Address of principal executive offices)

(877) 488-8380

(Issuer's telephone number)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.  x

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	Accelerated filer	o
Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

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

As of June 11, 2012, the registrant had 31,073,593 shares of common stock, $.0001 par value, issued and  outstanding.

TABLE OF CONTENTS

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  12

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORS INDEPENDENCE      

PART I.  CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE LITIGATION REFORM ACT OF 1995. Statements contained in this filing that are not based on historical fact, including without limitation statements containing the words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect" and similar words, constitute "forward-looking statements". These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events, or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements.

ITEM 1.  BUSINESS

Company Overview

SA Recovery Corp.  is a development stage company engaged in the business of designing a mobile unit that removes contaminants from sand [herein referred to as “Mobile Unit”].  SA Recovery Corp. incorporated in Oklahoma on July 28, 2008. As of the date of this filing, we have not completed the development of the Mobile Unit.  As a development stage company we have not generated any revenues as of our recent fiscal year.  The Company will need to raise additional funding to continue the development of the Mobile Unit.

On July 28, 2008, the Company purchased the Sand Extraction Prototype I [herein referred to as “Prototype Unit”] from CGJ Holding, LLC, a Nevada Limited Liability Company (“CGJ”) for the sum of $15,000. The Prototype Unit is an apparatus designed to remove contaminants from sand. Concurrently, the Company entered into a two (2) year License Agreement with CGJ for the sum of $10,000 that granted the Company the exclusive right to make, use, and ultimately sell Mobile Units of the Prototype Unit.  On August 1, 2010, the parties mutually agreed not to renew the License Agreement.  The parties originally entered the License Agreement under the expectation that the Prototype Unit could be readily fabricated and sold as a Mobile Unit.  The parties have since discovered that the Prototype Unit did not perform as anticipated.  As a result of the cancellation of the License Agreement, the Company has no obligation to pay a royalty fee on any future development of the Prototype Unit.  

As of the date of this 10-K, the development of the Mobile Unit is not complete. Since 2008, the Prototype Unit has faced multiple problems, such as leaking under pressure, overly complex and clogging of the valves from the sand.  The Company is currently seeking additional funding to further finance additional modifications to the Unit to attempt to address the current problems.  

In December, 2010, upon ceasing attempts to seek financing to rectify the problems with the Mobile Unit, we became a company with minimal assets and operations.   As such, management has concluded that we are a shell company as defined in Rule 12b-2 of the Exchange Act.

Prior Parent Company:

On July 28, 2008, all officers and Directors of AMS were replaced by James Ditanna as the sole officer and Director.  In addition, the Company underwent a 1/670 reverse stock split that reduced the number of outstanding shares of common stock to 15,000.  Concurrently, the Company’s former operations of nutritional supplements were sold to a third party competitor.  As part of the Plan, the third party purchaser was allowed to keep the name “AMS Health Sciences, Inc.”.  As a result, AMS was required to implement a name change to Jacob Acquisition Corp.  All proceeds from the sale of the former operations of AMS went directly to the Liquidating Trust established by the Bankruptcy.  Pursuant to the Plan, on July 28, 2008, AMS Health issued 25,000,000 restricted shares of common stock to IACE Investments Two, Inc.; issued 6,000,000 shares of restricted shares of common stock to four investors; issued 50,000 shares of common stock to the Bankruptcy Trustee; and 100 shares of common stock to each allowed class 6 and class 7 claim holder approved by the Bankruptcy Trustee.  AMS did not receive any of the proceeds from the sale of the business or issuance of stock.  All proceeds were directed to the Liquidating Trustee to be used for the benefit of the creditors.

Prior to the Bankruptcy, AMS was engaged in the sale of vitamins and weight loss supplements.  Pursuant to the Plan, on July 31, 2008, AMS completed its sale of its operating assets to a third party company owned by a secured creditor, Laurus Master Fund, Ltd.  The Operating Assets sold to the third party included all of the assets of the AMS, including:  (i) the Debtor's books and records; (ii) all furniture, fixtures and equipment used in the AMS’S ordinary course of business and described in the Bankruptcy Schedules or on hand as of the Effective Date; (iii) all Real Property described in the Plan; (iv) all the  inventory and supplies as of the Effective Date; (v) all the Cash on hand on the Effective Date; (vi) all trademarks identified in the Plan; (vii) all contracts assumed and assigned to the third Party pursuant to the Plan, including the real property; (viii) all Pass Thru Contracts assigned to the third Party pursuant to the Plan; (ix) all rights to the Company’s list of customers and sales associates; (x) the right to use the name AMS Health Sciences, Inc.; and (xi) all other property of the Debtor, tangible or intangible, but excluding the AMS’s rights and interest in AMS Manufacturing Inc. and any other direct or indirect subsidiary or affiliate of the Debtor.   The Bankruptcy Trustee, retained all proceeds from the sale

of the former assets and stock for the use and benefit of the creditors.  SA Recovery Corp. did not receive any proceeds from the sale of the former operations of AMS.  Following the sale of the assets, Laurus Master Fund, Ltd., created AMS Health Sciences, Inc. as a Delaware Corporation.  Any sales of the products related to AMS are now under the Delaware company and are not related to SA Recovery Corp.

On July 28, 2008, the Company underwent a Holding Company Reorganization pursuant to section 1081(g) of the Oklahoma General Corporation Act. Pursuant to the reorganization, on July 28, 2008, AMS caused SA Recovery Corp. to be incorporated in the State of Oklahoma, as a direct, wholly-owned subsidiary of AMS and caused Jacob Acquisition, Corp., to also be incorporated in the State of Oklahoma as a direct wholly-owned subsidiary of SA Recovery Corp.  Under the terms of the Reorganization, AMS was merged into Jacob Acquisition. Upon consummation of the Reorganization, each issued and outstanding share of AMS was converted into and exchanged for a share of common stock of SA Recovery Corp. (on a share-for-share basis), having the same designations, rights, powers and preferences, qualifications, limitations, and restrictions as the shares of AMS being converted.  There was no spin-off and AMS corporate existence ceased.  Under the Reorganization, all AMS shareholders became shareholders of SA Recovery Corp in the same proportion.   Immediately following the reorganization on July 28, 2008, SA Recovery terminated its ownership of  Jacob Acquisition Corp to the Bankruptcy Trustee.  

Our common stock is currently traded on the Pink Sheets under the symbol SARY.  Prior to November 20, 2008, our common stock was traded on the Pink Sheets under the symbol AMSI.  

EMPLOYEES

The Company has no full time employees.

COMPETITION

As a development stage company, we face fierce competition. Our competition includes large and mid-sized independent companies, as well as major companies with international operations and local municipalities that have access to free or cheap disposal sites.  We believe that the principal competitive factor in the market area is the price paid to dispose of contaminated sand.  In the future, we will face competitive pressures from numerous actual and potential competitors. Many of our current and potential competitors in the environmental sector industry have substantial competitive advantages than we have, including:

· longer operating histories;

· significantly greater financial, technical and marketing resources;

· greater brand name recognition;

· better distribution channels;

· existing customer bases; and

· Equipment necessary to remove and dispose of contaminated sand

We are a minor participant in the industry and with many other companies having far greater financial, technical and other resources.  

ITEM 1A.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

The Company does not own or rent any real property.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not a party to any suit or threatened suit.

ITEM 4.  REMOVED AND RESERVED.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER

   PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock trades on the OTC Markets under the symbol “SARY”. As of October 26, 2010, the bid price of the Company’s shares was $.07 per share (last sale of common stock occurred  October 26, 2010.)

The following table shows the high and low sale prices per share for the common stock as reported by NASDAQ:

Quarter Ended		High		Low	Shares Traded
05/31/09	$	2.10	$	2.10	-
08/31/09		2.10		0.10	321
11/30/09		0.10		0.10	-
02/28/10		0.10		0.10	-
05/31/10		0.10		0.10	160
08/31/10		0.10		0.07	100
11/30/10		0.07		0.05	188
02/28/11		0.07		0.05	-

Holders of Our Common Stock

As of February 29, 2012, we had 258 shareholders of our common stock.

Stock Option Grants

To date, we have not granted any stock options.

Registration Rights

We have not granted registration rights to the selling shareholders or to any other persons.

ITEM 6.  SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

  OPERATIONS

Forward Looking Statements

There are statements in this report that are not historical facts.  These “forward-looking statements” can be identified by the use of terminology such as “believe”, “hope”, “may”, “anticipate”, “should”, “intend”, “plan”, “will”, “expect”, “estimate”, “project”, “position”, “strategy” and similar expressions.  You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control.  Although management believes that the assumptions underlying the forward-looking statements included in this report are reasonable, they do not guarantee our future performance and actual results could differ from those contemplated by these forward-looking statements.  The assumptions used for purposes of the forward-looking statements specified in the following information represents estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.  As a result, the identification, interpretation of data, other information, and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment.  To the extent that the assumed events do not occur, the outcome may vary substantially from anticipate or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements.  In the light of the risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this report will in fact transpire.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as their dates.  We do not undertake any obligation to update or revise any forward-looking statements.

Overview

Results of Operations

Liquidity and Capital Resources

At February 29, 2012, SA Recovery Corp. had $737 in cash and no other assets.  Our activities currently consist principally of keeping the Company current with our Exchange Act filings.  These costs have been met by cash loans by our principal shareholder.

For the year ended February 29, 2012, the Company had an operating loss of $24,930.

Plan of Operation

The plan of operation for the next 12 months is either to seek approximately $160,000 to address the technical problems with the Mobile Unit, to undertake other business activities, or to merge with another operating company.   

Because the Company lacks funds, it may be necessary for officers, directors and shareholders to advance funds to the Company and to accrue expenses for Exchange Act compliance costs until such time as a successful business consolidation can be accomplished. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, directors will defer any compensation until such time as the Company generates sufficient revenue to pay expenses. However, if the Company engages outside advisors or consultants in its search for business opportunities, it may be necessary to attempt to raise additional funds. As of the date hereof, the Company has not made any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital.

If the Company needs to raise capital, most likely the only method available would be the private sale of securities. Because the Company is a development stage company, it is unlikely that it could make a public sale of securities or be able to borrow any significant sum from either a commercial or a private lender. There can be no assurance that the Company will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on acceptable terms.

The Company does not intend to use any employees, with the exception of our sole officer Mr. Ditanna. Outside advisors or consultants will be used only if they can be obtained for minimal cost or on a deferred payment basis. Management is confident that it will be able to operate in this manner and to continue its search for business opportunities during the next twelve months. Also, the Company does not anticipate making any other significant capital expenditures until it can successfully complete an acquisition or merger.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

SA Recovery Corp.

We have audited the accompanying Balance Sheets of SA Recovery Corp., (a Development Stage Enterprise), as of February 29, 2012 and February 28, 2011, respectively, and the related Statements of Operations, Stockholders’ Equity (Deficit), and Cash Flows for the years then ended and the period from July 28, 2008 (inception) through February 29, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based upon our audit.

We conducted our audit in accordance with 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.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 SA Recovery Corp. as of February 29, 2012 and February 28, 2011, and the results of its operations and its cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has no current source of income or cash. These matters raise substantial doubt about the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. See note 2 to the financial statements for further information regarding this uncertainty.

/s/ M&K CPAS, PLLC

M&K CPAS, PLLC

www.mkacpas.com

Houston, TX

June 11, 2012

SA RECOVERY CORP.

 (A DEVELOPMENT STAGE ENTERPRISE)

INDEX TO FINANCIAL STATEMENTS

Our financial statements included in this Form 10-K are as follows:
	Report of Independent Registered Public Accounting Firm
F-1	Balance Sheets as of February 29, 2012 and February 28, 2011;
F-2	Statements of Operations for the years ended February 29, 2012 and February 28, 2011 and the period from July 28, 2008 (inception) to February 29, 2012;
F-3	Statements of Cash Flows for the years ended February 29, 2012 and February 28, 2011 and the period from July 28, 2008 (inception) to February 29, 2012;
F-4	Statement of Stockholder’s Deficit from inception (July 28, 2008) through February 29, 2012;
F-5	Notes to Financial Statements.

SA RECOVERY CORP.

(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEETS

			Year Ended,
			Feb 29, 2012		Feb 28, 2011
ASSETS
Current Assets
	Cash	$	737	$	2,238
	Total current assets		737		2,238
TOTAL ASSETS		$	737	$	2,238
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
	Accounts payable	$	2,679	$	7,450
	Accrued director salary		15,000		10,000
	Note payable - related party		49,375		33,375
	Convertible notes and interest payable – in default		76,629		73,379
	Total current liabilities		143,683		124,204
	TOTAL LIABILITIES		143,683		124,204
Shareholders' deficit
	Common stock, par value $0.001; 495 million shares authorized; 31,073,593 shares issued and outstanding at February 29, 2012 and February 28, 2011		3,107		3,107
	Additional paid in capital		68,454		64,504
	Deficit accumulated during the development stage		(214,507)		(189,577)
	Total shareholders' deficit		(142,946)		(121,966)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT		$	737	$	2,238

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

F1

SA RECOVERY CORP.

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF OPERATIONS

			Year Ended				Inception (07/28/08) to 2/29/12
			Feb 29, 2012		Feb 28, 2011
REVENUES		$	-	$	-	$	-
EXPENSES
	Director salary		5,000		5,000		15,000
	General and administrative		12,730		31,416		67,762
	Research and development		-				46,500
	Asset impairments		-		-		2,055
	Interest		7,200		5,551		83,190
	Total expenses		24,930		41,967		214,507
	Net Loss	$	(24,930)	$	(41,967)	$	(214,507)
	Weighted average shares outstanding		31,073,593		31,073,593
	Loss per share (basic and fully diluted)	$	-	$	-

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

F2

SA RECOVERY CORP.

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF CASH FLOWS

			Year Ended				Inception (07/28/08) to 2/29/12
			Feb 29, 2012		Feb 28, 2011
OPERATING ACTIVITIES:
Net loss		$	(24,930)	$	(41,967)	$	(214,507)
Adjustments to reconcile net loss to cash flows from (used in) operations:
	Amortization of discount on note payable		-		-		65,000
	Amortization of intangible		-		-		7,945
	Asset impairment		-		-		2,055
	Interest imputed on related-party note		3,950		2,301		6,561
Changes in operating assets and liabilities
	Accounts payable and accrued liabilities		3,479		15,509		29,308
	Cash used in operating activities		(17,501)		(24,157)		(103,638)
INVESTING ACTIVITIES
	Purchase of license permit		-		-		(10,000)
	Cash used in investing activities		-		-		(10,000)
FINANCING ACTIVITIES
	Proceeds from note payable		-		-		65,000
	Proceeds from related-party note payable		16,000		24,225		49,375
	Cash provided by financing activities		16,000		24,225		114,375
	Net increase in cash and cash equivalents during the year		(1,501)		68		737
	Cash and cash equivalents at beginning of period		2,238		2,170		-
	Cash and cash equivalents at end of period	$	737	$	2,238	$	737
SUPPLEMENTAL CASH FLOW DISCLOSURES
	Cash paid for interest	$	-	$	-	$	-
	Cash paid for income taxes		-		-		-

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

F3

SA RECOVERY CORP.

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF STOCKHOLDERS’ DEFICIT

From the Period for Inception (July 28, 2008) to February 29, 2012

	Date	Capital Stock				Additional Paid In Capital		Accumulated Loss		Total
		Shares		Amount
Balances, 7/28/08		-	$	-	$	-	$	-	$	-
Shares issued to former shareholders of AMS Health Sciences, Inc.	07/28/08	13,593		1		(1)				-
Founders' shares	07/28/08	31,000,000		3,100		(3,100)				-
Shares issued to escrow agents for settlements with creditors of AMS Health Sciences, Inc.	07/28/08	60,000		6		(6)				-
Discount on note payable						65,000				65,000
Net loss, inception (7/28/08) to 2/28/09								(92,663)		(92,663)
Balances, 2/28/09		31,073,593		3,107		61,893		(92,663)		(27,663)

The accompanying notes are an integral part of these financial statements

F4

13

SA RECOVERY CORP.

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF STOCKHOLDERS’ DEFICIT

From the Period for Inception (July 28, 2008) to February 29, 2012

(Continued)

	Date	Capital Stock				Additional Paid In Capital		Accumulated Loss		Total
		Shares		Amount
Interest imputed on related party advances						310				310
Net loss, year ended 2/28/10								(54,947)		(54,947)
Balances, 02/28/10		31,073,593		3,107		62,203		(147,610)		(82,300)
Interest imputed on related party advances						2,301				2,301
Net loss, year ended 2/28/11								(41,967)		(41,967)
Balances, 2/28/11		31,073,593	$	3,107	$	64,504	$	(189,577)	$	(121,966)
Interest imputed on related party advances						3,950				3,950
Net loss, year ended 2/29/12								(24,930)		(24,930)
Balances, 2/29/12		31,073,593	$	3,107	$	68,454	$	(214,507)	$	(142,946)

The accompanying notes are an integral part of these financial statements

F5

SA RECOVERY CORP.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

Note 1 – Organization, Nature of Operations and Basis of Presentation

Organization and History

SA Recovery Corp. was incorporated on July 28, 2008 in the State of Oklahoma. Our former parent company, AMS Heath Sciences, Inc., (“AMS”) was originally incorporated on May 22, 1987.  On December 27, 2007, AMS filed a voluntary Petition for Relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Western District of Oklahoma, Case no. 07-14678. On July 15, 2008, the Bankruptcy Court issued an Order Confirming the First Amended Plan of Reorganization with an effective date of July 28, 2008.

 As part of the reorganization, AMS caused SA Recovery Corp., to be incorporated as a wholly owned subsidiary.  On July 28, 2008, AMS completed the reorganization and merger.  The assets and operations of AMS were sold under the Bankruptcy Court Plan.  Under the terms of the reorganization, each issued and outstanding share of AMS Health Science, Inc. was converted into a share of SA Recovery Corp., having the same designations, rights, powers, and preferences, and qualifications, limitations, and restrictions.  The former name “AMS Health Sciences, Inc.” was severed during the Bankruptcy proceedings and is not related to SA Recovery Corp.

Nature of Operations

SA Recovery Corp. is an environmental equipment company that manufacturers a mobile unit that removes contaminants from sand.  We are a development stage company that has not generated any revenues as of our most recent fiscal year.

On July 28, 2008, the Company purchased the Sand Extraction Prototype I  from CGJ Holding, LLC, a Nevada Limited Liability Company (“CGJ”) for the sum of $15,000. The Sand Extraction Prototype I is an apparatus designed to remove contaminants from sand.

The Sand Extraction Prototype I is capable of washing two cubic yards of contaminated sand per hour.  Our technology utilizes a fluidized bed, vibrating feeds in a counter-flow of wash water in the sand cleaning process. During that hour, the machine is capable of producing two cubic yards of cleaner sand.  Typically, during a natural disaster, environmental spill, or industrial accident, the sand must be removed and replaced with additional sand.  The process of removing and replacing large quantities of sand can be cumbersome and difficult because of the size and volume of the sand required, which must be moved by multiple loads of large trucks into the location.  Our commercial unit will be mobile and outfitted onto a standard 50-foot trailer to send directly to an environmental disaster, accident, or cleanup site. The mobile unit will consist of all the equipment necessary to remove contaminants from sand at the  location. The mobile unit will require two people to operate.  The Sand Extraction Prototype I is still in the development stage.  

However, in December, 2010, upon ceasing attempts to seek financing to rectify certain problems with the Mobile Unit, we became a company with minimal assets and operations.   As such, management has concluded that we are a shell company as defined in Rule 12b-2 of the Exchange Act.

Development Stage

The Company has not earned revenue from planned principal operations since inception (July 28, 2008). Accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as American Standards of Codification (“ASC”) Codification Topic 915, Development Stage Entities.  Among the disclosures required by Topic 915 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity (deficit) and cash flows disclose activity since the date of the Company's inception.

14

Basis of Presentation and Summary of Significant Accounting Policies

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash and Cash Equivalents:  For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. As of February 29, 2012 and February 28, 2011, there were no cash equivalents.

Property and Equipment:   New property and equipment are recorded at cost.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Revenue Recognition:  SA Recovery recognizes revenue when persuasive evidence of an agreement exists, services have been rendered, the sales price of a unit is fixed or determinable, and collectability is reasonable assured.  Since our inception on July 28, 2008 to our fiscal year ended February 29, 2012, SA Recovery had no revenues.

Valuation of Long-Lived Assets:  We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

Stock Based Compensation:  Stock-based awards to non-employees are accounted for using the fair value method in accordance with ASC Codification Topic 718 – Share-Based Payments.

We adopted the provisions of Topic 718 which requires that companies measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements.  

Accounting For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock: We account for obligations and instruments potentially to be settled in the Company’s stock in accordance with ASC Codification Topic 815 – Derivatives and Hedging.  This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company’s own stock.

Fair Value Measurements:   The Company adopted FASB ASC Topic 820, “Fair Value Measurement and Disclosure,” at inception.  ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosure of fair value measurements. FASB ASC Topic 820 applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new faire value measurements.  FASB ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, FASB ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

·

Level 1.  Observable inputs such as quoted market prices in active markets.

·

Level 2.  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, and

·

Level 3.  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The FASB’s ASC Topic 825, “Financial Instruments,” became effective for the Company on July 28, 2008.  FASB ASC Topic 825 establishes a fair value option that permits entities to choose to measure eligible financial instruments an certain other items at fair value at specified election dates.  A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date.  Fo the year ended February 29, 2012, there were no applicable items on which the fair value option was elected.

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The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of February 29, 2012 and February 28, 2011:

Fair Value Measurement at February 29, 2012 and February 28, 2011

	Level 1	Level 2	Level 3
Financial Instruments	$         -	$         -	$         -

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the years ended February 29, 2012 and February 28, 2011.

Earnings per Common Share: Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and shares issuable upon the conversion of our Preferred Stock. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented.

There were no common equivalent shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding for the years ended February 29, 2012 and February 28, 2011.

Income Taxes:  We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

Deferred income taxes are recorded in accordance ASC Codification Topic 740 – Income Taxes. Under this guidance, deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse.

Topic 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.

Recent Accounting Pronouncements:  In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

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In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

Note 2 – Going Concern

The accompanying financial statements have been prepared assuming that SA Recovery Corp. will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations of $103,638 for the period from inception (July 28, 2008) to February 29, 2012, and a working capital deficit of $142,946 at February 29, 2012.  These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.  Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.

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Note 3 – Capital Structure

Common Stock

We are authorized to issue up to 495 million shares of common stock.  At February 29, 2012, we have issued 31,073,593 shares, all of which have been treated for accounting purposes as founders’ shares.

Preferred Stock

We are authorized to issue up to 5 million shares of preferred stock.  At February 29, 2012, none of these shares has been issued and none is outstanding.

Potentially Dilutive Securities

As is discussed in Note 4, On August 1, 2008, we issued a $65,000 note payable which, at the option of the holder, may be converted to 2 million shares of common stock (equivalent to $0.0325 per share).

Note 4 – Notes Payable

On August 1, 2008, the Company borrowed $65,000 for working capital purposes and we issued a one-year note payable.  The note matured on August 1, 2009 and bears interest at 5% per year.  The holder has the right, with proper notice to convert the note into two-million shares of common stock at the conversion price of $0.0325/share (2,000,000 shares for $65,000).

On July 28, 2009, the maturity date of this note payable was extended until February 29, 2012.  As of the date of the filing of this report, the promissory note is in default.

Note Discount

In accounting for this note payable, we applied guidance contained in ASC Codification Topic 470 - Debt.  Topic 470 requires issuers of convertible debt instruments that may be settled in cash upon conversion to account separately for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.

We therefore initially accounted for conversion feature as equity by discounting the note in its entirety (recording a discount in the amount of $65,000) and crediting “Additional Paid-In Capital”.  As of February 28, 2010, we have fully amortized the discount to interest expense.

Related-Party Note Payable

For the years ended February 29, 2012 and February 28, 2011, we received $18,700 and $9,150, respectively, in cash from an affiliate to pay our operating costs.  Additionally, during the year ended February 29, 2012, this affiliate paid $3,525 of our operating expenses which have been added to the balance of the note.  These advances are not evidenced by a promissory note.  We therefore imputed interest at 8%, crediting Additional Paid-In Capital for $2,301 and charging Interest Expense.

Note 5 – Intangibles:  License Permits and Agreement with CGJ Holding, LLC

On July 28, 2008, the Company purchased the Sand Extraction Prototype I from CGJ Holding, LLC, a Nevada Limited Liability Company (“CGJ”) for the sum of $15,000.  We included the cost of this prototype in Research and Development Expenses for the year ended February 28, 2009.

The Sand Extraction Prototype I is an apparatus designed to remove contaminants from sand. Concurrently, the Company entered into a two (2) year License Agreement with CGJ for the sum of $10,000  that grants the Company the exclusive right to make, use, and ultimately sell commercial units capable of removing contaminants, including asphalt, from sand or rock composite.  We have capitalized the cost of this intangible asset in “Intangible – license permit” and are amortizing this cost over the two-year life of our agreement with CGJ.  For the period from inception (July 28, 2008) to February 28, 2010 and 2009, we have amortized $10,000 and $2,945, respectively, of this cost to expense.

The License is renewable in the event that the Company is able to sell a commercial version of the Sand Extraction Prototype I.  Pursuant to the License Agreement, the Company is required to pay a ten percent (10%) royalty fee for each commercial unit sold.

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The License Agreement contains a languishing clause that terminates the License Agreement in the event that the Company is unable to design, manufacturer and sell a commercial unit during the two year time period.

Note 6 - Commitments and Contingencies

We have no outstanding commitments for office rental or other obligations for which we would require payout disclosures.  Our only commitment is our 10% royalty fee, explained in Note 5, which does not begin until commercialization.  

Note 7 – Related-Party Transactions

As is discussed in Note 4, we borrowed funds from an affiliate to pay operating expenses.

Note 8 – License Agreement with CGL Holdings, LLC

On August 1, 2010, the Company and CGL Holding, LLC mutually agreed to not extend the License Agreement that expired on July 28, 2010.  The parties originally anticipated that the Prototype Unit purchased on July 28, 2008, would be readily and cheaply converted into larger units for sale.  The parties have agreed that any development of the Mobile Unit shall remain exclusively with the Company and shall not require any Royalty payments.  In the event that the Company elects to fabricate the original Prototype Unit as a product, then the Company would be required to obtain a new license agreement.  The Company has no intent of fabricating Prototype Units for sale.  Instead, the Company will focus on developing a Mobile Unit.

Note 9 – Income Taxes

Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses.  The Company accounts for income taxes pursuant to ASC 740 – Income Taxes.

At February 29, 2012 and February 28, 2011 the Company had approximately $207,946 and $186,966 respectively  in unused federal net operating loss carry-forwards, which begin to expire principally in the year 2023.  The resulting deferred taxes assets (shown in the table below) have been fully reserved because of the uncertainty of realizing the benefits of such assets.

Deferred tax asset and the valuation account are as follows:

		Feb 29 2012		Feb 28 2011
Deferred tax asset	$	70,702	$	63,568
Valuation allowance		(70,702)		(63,568)
Net deferred tax asset	$	-	$	-

Note 10 – Subsequent Events

We have evaluated subsequent events through the date of this report.  No material subsequent events have been noted.

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

   DISCLOSURE

None.

PART 9A.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report.

Our management has evaluated the effectiveness of our disclosure controls and procedures as of February 29, 2012 (under the supervision and with the participation of the Chief Executive Officer and the Principal Accounting Officer), pursuant to Rule13a-15(b) promulgated under the Exchange Act. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Company's Chief Executive Officer and Principal Accounting Officer have concluded that our Company's disclosure controls and procedures were not effective as of February 29, 2012 due to lack of employees to segregate duties related to preparing the financial reports.  Management is attempting to correct this weakness by raising additional funds to hire additional employees.    Management with the assistance of its Securities Counsel will closely monitor all future filings to ensure that the company filings are made on a timely manner.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management has determined that the Company did not maintain adequate controls in the following areas:

As of February 29, 2012, we did not maintain effective controls over the control environment. Specifically, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 207(d)(5)(ii) of Regulation S-B. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

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As of February 29, 2012, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

As of February 29, 2012, effective controls over impairment transactions were not maintained. Specifically, controls were not designed and in place to ensure that impairments were properly reflected.  Accordingly, management has determined that this control deficiency constitutes a material weakness.

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 the attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

The Company’s management carried out an assessment of the effectiveness of the Company’s internal control over financial reporting as of February 29, 2012. The Company’s management based its evaluation on criteria set forth in the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management has concluded that the Company’s internal control over financial reporting was not effective as of February 29, 2012.

 (b) Changes in Internal Control, Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal year ended February 29, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

(a)

Identifying Directors and Executive Officers

The following table describes certain information about our executive officers and directors as of February 29, 2012.

Name	Age	Position	Director Since
James Ditanna	58	President, Chief Executive Officer	July 28, 2010

Set forth below is a brief description of the background and business experience of our sole executive officer and director.

James Ditanna is a graduate of Drexel University, Philadelphia, Pennsylvania, receiving a Bachelor of Science degree in Business Administration with an accounting and taxation major. Mr. Ditanna graduated from the University of Pennsylvania with dual masters degrees (MBA/MGA) Magna Cum Laude. Mr. Ditanna is also affiliated with American Financial International Group, which has offices throughout the United States and in London, England. Mr. Ditanna has no prior relationship with the Debtors, their officers and directors, any substantial creditors of the debtors or the professionals retained by the Debtors or the Committee. Mr. Ditanna served as a Director in New Harvest Capital Corporation n/k/a Azur Holdings, Inc.; was the CFO and a Director of Tuff Coat Manufacturing, Inc. f/k/a Osage Acquisition Corporation; CFO of Nexmed, Inc.; a Director of Ideal Accents, Inc., and Dexterity Surgical, Inc.

Term of Office. Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

(b)

Significant Employees.

We have no significant employees other than James Ditanna.

(c)

Family Relationships.

There are no family relationships among the directors, executive officers or persons nominated or chosen by SA Recovery Corp. to become directors or executive officers.

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(d)

Certain Legal Proceedings

No director or executive officer has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.

(e)

Compliance with Section 16(A) of the Exchange Act

James Ditanna did not file a Form 3 upon becoming a director/officer of the Company. No Form 4 or Form 5 was filed with respect to the foregoing.

(f)

Audit Committee Financial Expert

We do not have an audit committee financial expert. Management believes the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, management believes the services of a financial expert are not warranted.

(g)

Identification of Audit Committee

We do not have a separately designated standing audit committee. Instead, our Director performs the required functions of an audit committee. James Ditanna is the only member of our Board of Directors and is its functional-equivalent of an audit committee. Our director does not meet the independent requirements for an audit committee member. The Director selects our independent public accountant, establishes procedures for monitoring and submitting information or complaints related to accounting, internal controls or auditing matters, engages outside advisors, and makes decisions related to funding the outside auditory and non-auditory advisors engaged by the Board. We have not adopted an audit committee charter, as the current system is deemed by management to be sufficient to meet our requirements at this time.

(h)

Disclosure Committee and Charter

We have no disclosure committee or disclosure committee charter, as we have not been operating and have only one officer and director.

(i)

Code of Ethics

We do not have a formal Code of Ethics as we have not been operating and have had no reason to adopt such a code at this time.

ITEM 11.  EXECUTIVE COMPENSATION

Name and Principal Position	Fiscal Year	Salary	Bonus	Other Annual	Restricted Stock Awards	Securities Underlying Options	All Other Compensation
James Ditanna, President and Sole Director	2012	$            -	$            -	$            -	$            -	$            -	$                  -
	2011	-	-	-	-	-	-

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

    STOCKHOLDER MATTERS

Section 16(a) Beneficial Ownership Reporting Compliance.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors and those persons who beneficially own more than 10% of the Company’s outstanding shares of common stock to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission. Officers, directors, and greater than 10% beneficial owners are also required by rules promulgated by the SEC to furnish us with copies of all Section 16(a) forms they file.

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Based solely upon a review of the copies of such forms furnished to the Company, except for Forms 3 that were omitted to be filed, we believe that during the years ended February 29, 2012 and 2011, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.

James Ditanna as the sole director and executive officer does not own any SA Recovery Corp. common stock.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORS INDEPENDENCE

There are certain conflicts of interest between the Company and our officers and directors.  Mr. Ditanna has other business interests to which he currently devotes attention, and may be expected to do so although management time should be devoted to our business.  As a result, conflicts of interest may arise that can be resolved only through their exercise of judgment in a manner which is consistent with their fiduciary duties to the company.

For the years ended February 29, 2012 and February 28, 2011, we received $18,700 and $9,150, respectively, in cash from an affiliate to pay our operating costs.  Additionally, during the year ended February 29, 2012, this affiliate paid $3,525 of our operating expenses which have been added to the balance his promissory note.  These advances are not evidenced by a promissory note.  We therefore imputed interest at 8%, crediting Additional Paid-In Capital for $2,301 and charging Interest Expense.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed by our independent auditors, for the audit of our annual  financial statements was $10,150 and $8,500 for fiscal years ended February 29, 2012 and February 28, 2011, respectively.

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit Number	Description
31	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this Annaul Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  June 11, 2012 By: SA RECOVERY CORP.
/s/ James A. Ditanna James A. Ditanna President, Chief Executive Officer and Sole Director

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EX-31

EXHIBIT 31

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, James A. Ditanna, certify that:

1.	I have reviewed this Form 10-K of SA Recovery Corp.:
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this report;
4.	The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have:
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding there liability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
(c)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the small business issuer’s internal control over financing reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
5.	The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involved management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
Date:  June 11, 2012
/s/   James A. Ditanna
James A. Ditanna President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Chairman of the Board of Directors

EX-32

EXHIBIT 32

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the accompanying quarterly report on Form 10-K of SA Recovery Corp. for the period ending February 29, 2012, I, James A. Ditanna, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Chairman of the Board of Directors of SA Recovery Corp. hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

1.	Such annual report of Form 10-K for the period ending February 29, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in such annual report of Form 10-K for the year ending February 29, 2012, fairly represents in all material respects, the financial condition and results of operations of SA Recovery Corp.

Date:  June 11, 2012

SA Recovery Corp.

By: /s/   James A. Ditanna

James A. Ditanna

President, Chief Executive Officer, Chief Financial Officer,

Principal Accounting Officer and Chairman of the Board of Directors

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Income Taxes

12 Months Ended

Feb. 29, 2012

Income Taxes:

Income Tax Disclosure

Note 9 – Income Taxes

Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses.  The Company accounts for income taxes pursuant to ASC 740 – Income Taxes.

At February 29, 2012 and February 28, 2011 the Company had approximately $207,946 and $186,966 respectively  in unused federal net operating loss carry-forwards, which begin to expire principally in the year 2023.  The resulting deferred taxes assets (shown in the table below) have been fully reserved because of the uncertainty of realizing the benefits of such assets.

Deferred tax asset and the valuation account are as follows:

		Feb 29 2012		Feb 28 2011
Deferred tax asset	$	70,702	$	63,568
Valuation allowance		(70,702)		(63,568)
Net deferred tax asset	$	-	$	-

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Equity

12 Months Ended

Feb. 29, 2012

Equity:

Schedule of Stock by Class

Note 3 – Capital Structure

Common Stock

We are authorized to issue up to 495 million shares of common stock.  At February 29, 2012, we have issued 31,073,593 shares, all of which have been treated for accounting purposes as founders’ shares.

Preferred Stock

We are authorized to issue up to 5 million shares of preferred stock.  At February 29, 2012, none of these shares has been issued and none is outstanding.

Potentially Dilutive Securities

As is discussed in Note 4, On August 1, 2008, we issued a $65,000 note payable which, at the option of the holder, may be converted to 2 million shares of common stock (equivalent to $0.0325 per share).

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BALANCE SHEETS (USD $)	Feb. 29, 2012	Feb. 28, 2011
SUPPLEMENTAL CASH FLOW DISCLOSURES	$ 737	$ 2,238
Total current assets	737	2,238
TOTAL ASSETS	737	2,238
Accounts payable	2,679	7,450
Accrued director salary	15,000	10,000
Note payable - related party	49,375	33,375
Convertible notes and interest payable	76,629	73,379
Total current liabilities	143,683	124,204
TOTAL LIABILITIES	143,683	124,204
Common stock, par value $0.001; 495 million shares authorized; 31,073,593 shares issued and outstanding at 02/29/2012 and 02/28/2011	3,107	3,107
Additional paid in capital	68,454	64,504
Deficit accumulated during the development stage	(214,507)	(189,577)
TOTAL SHAREHOLDERS' DEFICIT	(142,946)	(121,966)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 737	$ 2,238

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Risks and Uncertainties

12 Months Ended

Feb. 29, 2012

Risks and Uncertainties:

Uncertainty, Continued Marketability of Goods and Services

Note 2 – Going Concern

The accompanying financial statements have been prepared assuming that SA Recovery Corp. will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations of $103,638 for the period from inception (July 28, 2008) to February 29, 2012, and a working capital deficit of $142,946 at February 29, 2012.  These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.  Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.

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Commitment and Contingencies

12 Months Ended

Feb. 29, 2012

Commitment and Contingencies:

Commitments and Contingencies Disclosure

Note 6 - Commitments and Contingencies

We have no outstanding commitments for office rental or other obligations for which we would require payout disclosures.  Our only commitment is our 10% royalty fee, explained in Note 5, which does not begin until commercialization.  

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STATEMENTS OF OPERATIONS (USD $)	12 Months Ended		43 Months Ended
	Feb. 29, 2012	Feb. 28, 2011	Feb. 29, 2012
Director salary	$ 5,000	$ 5,000	$ 15,000
General and administrative	12,730	31,416	67,762
Research and development			46,500
Asset impairment			2,055
Interest	7,200	5,551	83,190
Total expenses	24,930	41,967	214,507
Net loss	$ (24,930)	$ (41,967)	$ (214,507)
Weighted average shares outstanding	31,073,593	31,073,593

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Document and Entity Information (USD $)	12 Months Ended
	Feb. 29, 2012
Document and Entity Information:
Entity Registrant Name	SA Recovery Corp.
Document Type	10-K
Document Period End Date	Feb. 29, 2012
Amendment Flag	false
Entity Central Index Key	0001462223
Current Fiscal Year End Date	--02-29
Entity Common Stock, Shares Outstanding	31,073,593
Entity Public Float	$ 8,947
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

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STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended		43 Months Ended
	Feb. 29, 2012	Feb. 28, 2011	Feb. 29, 2012
Net loss	$ (24,930)	$ (41,967)	$ (214,507)
Amortization of discount on note payable	65,000		65,000
Amortization of intangible			7,945
Asset impairment			2,055
Interest imputed on related-party note	3,950	2,301	6,561
Accounts payable and accrued liabilities	29,308	15,509	29,308
Cash used in operating activities	(17,501)	(24,157)	(103,638)
Purchase of license permit			(10,000)
Cash used in investing activities			(10,000)
Proceeds from note payable			65,000
Proceeds from related-party note payable	16,000	24,225	49,375
Cash provided by financing activities	16,000	24,224	114,375
Net increase in cash and cash equivalents during the year	(1,501)	68	737
Cash and cash equivalents at beginning of period	2,238	2,170
Cash and cash equivalents at end of period	737	2,238	737
SUPPLEMENTAL CASH FLOW DISCLOSURES	$ 737	$ 2,238	$ 737

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Development Stage Enterprises

12 Months Ended

Feb. 29, 2012

Development Stage Enterprises:

Development Stage Enterprise General Disclosures

Note 8 – License Agreement with CGL Holdings, LLC

On August 1, 2010, the Company and CGL Holding, LLC mutually agreed to not extend the License Agreement that expired on July 28, 2010.  The parties originally anticipated that the Prototype Unit purchased on July 28, 2008, would be readily and cheaply converted into larger units for sale.  The parties have agreed that any development of the Mobile Unit shall remain exclusively with the Company and shall not require any Royalty payments.  In the event that the Company elects to fabricate the original Prototype Unit as a product, then the Company would be required to obtain a new license agreement.  The Company has no intent of fabricating Prototype Units for sale.  Instead, the Company will focus on developing a Mobile Unit.

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Subsequent Events

12 Months Ended

Feb. 29, 2012

Subsequent Events:

Subsequent Events

Note 10 – Subsequent Events

We have evaluated subsequent events through the date of this report.  No material subsequent events have been noted.

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Summary of Investment Holdings

12 Months Ended

Feb. 29, 2012

Summary of Investment Holdings:

Summary of Investment Holdings, Schedule of Investments

Note 5 – Intangibles:  License Permits and Agreement with CGJ Holding, LLC

On July 28, 2008, the Company purchased the Sand Extraction Prototype I from CGJ Holding, LLC, a Nevada Limited Liability Company (“CGJ”) for the sum of $15,000.  We included the cost of this prototype in Research and Development Expenses for the year ended February 28, 2009.

The Sand Extraction Prototype I is an apparatus designed to remove contaminants from sand. Concurrently, the Company entered into a two (2) year License Agreement with CGJ for the sum of $10,000  that grants the Company the exclusive right to make, use, and ultimately sell commercial units capable of removing contaminants, including asphalt, from sand or rock composite.  We have capitalized the cost of this intangible asset in “Intangible – license permit” and are amortizing this cost over the two-year life of our agreement with CGJ.  For the period from inception (July 28, 2008) to February 28, 2010 and 2009, we have amortized $10,000 and $2,945, respectively, of this cost to expense.

The License is renewable in the event that the Company is able to sell a commercial version of the Sand Extraction Prototype I.  Pursuant to the License Agreement, the Company is required to pay a ten percent (10%) royalty fee for each commercial unit sold. The License Agreement contains a languishing clause that terminates the License Agreement in the event that the Company is unable to design, manufacturer and sell a commercial unit during the two year time period.

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Organization, Consolidation and Presentation of Financial Statements

12 Months Ended

Feb. 29, 2012

Organization, Consolidation and Presentation of Financial Statements:

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies

Note 1 – Organization, Nature of Operations and Basis of Presentation

Organization and History

SA Recovery Corp. was incorporated on July 28, 2008 in the State of Oklahoma. Our former parent company, AMS Heath Sciences, Inc., (“AMS”) was originally incorporated on May 22, 1987.  On December 27, 2007, AMS filed a voluntary Petition for Relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Western District of Oklahoma, Case no. 07-14678. On July 15, 2008, the Bankruptcy Court issued an Order Confirming the First Amended Plan of Reorganization with an effective date of July 28, 2008.

 As part of the reorganization, AMS caused SA Recovery Corp., to be incorporated as a wholly owned subsidiary.  On July 28, 2008, AMS completed the reorganization and merger.  The assets and operations of AMS were sold under the Bankruptcy Court Plan.  Under the terms of the reorganization, each issued and outstanding share of AMS Health Science, Inc. was converted into a share of SA Recovery Corp., having the same designations, rights, powers, and preferences, and qualifications, limitations, and restrictions.  The former name “AMS Health Sciences, Inc.” was severed during the Bankruptcy proceedings and is not related to SA Recovery Corp.

Nature of Operations

SA Recovery Corp. is an environmental equipment company that manufacturers a mobile unit that removes contaminants from sand.  We are a development stage company that has not generated any revenues as of our most recent fiscal year.

On July 28, 2008, the Company purchased the Sand Extraction Prototype I  from CGJ Holding, LLC, a Nevada Limited Liability Company (“CGJ”) for the sum of $15,000. The Sand Extraction Prototype I is an apparatus designed to remove contaminants from sand.

The Sand Extraction Prototype I is capable of washing two cubic yards of contaminated sand per hour.  Our technology utilizes a fluidized bed, vibrating feeds in a counter-flow of wash water in the sand cleaning process. During that hour, the machine is capable of producing two cubic yards of cleaner sand.  Typically, during a natural disaster, environmental spill, or industrial accident, the sand must be removed and replaced with additional sand.  The process of removing and replacing large quantities of sand can be cumbersome and difficult because of the size and volume of the sand required, which must be moved by multiple loads of large trucks into the location.  Our commercial unit will be mobile and outfitted onto a standard 50-foot trailer to send directly to an environmental disaster, accident, or cleanup site. The mobile unit will consist of all the equipment necessary to remove contaminants from sand at the  location. The mobile unit will require two people to operate.  The Sand Extraction Prototype I is still in the development stage.  

However, in December, 2010, upon ceasing attempts to seek financing to rectify certain problems with the Mobile Unit, we became a company with minimal assets and operations.   As such, management has concluded that we are a shell company as defined in Rule 12b-2 of the Exchange Act.

Development Stage

The Company has not earned revenue from planned principal operations since inception (July 28, 2008). Accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as American Standards of Codification (“ASC”) Codification Topic 915, Development Stage Entities.  Among the disclosures required by Topic 915 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity (deficit) and cash flows disclose activity since the date of the Company's inception.

Basis of Presentation and Summary of Significant Accounting Policies

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash and Cash Equivalents:  For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. As of February 29, 2012 and February 28, 2011, there were no cash equivalents.

Property and Equipment:   New property and equipment are recorded at cost.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Revenue Recognition:  SA Recovery recognizes revenue when persuasive evidence of an agreement exists, services have been rendered, the sales price of a unit is fixed or determinable, and collectability is reasonable assured.  Since our inception on July 28, 2008 to our fiscal year ended February 29, 2012, SA Recovery had no revenues.

Valuation of Long-Lived Assets:  We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

Stock Based Compensation:  Stock-based awards to non-employees are accounted for using the fair value method in accordance with ASC Codification Topic 718 – Share-Based Payments.

We adopted the provisions of Topic 718 which requires that companies measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements.  

Accounting For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock: We account for obligations and instruments potentially to be settled in the Company’s stock in accordance with ASC Codification Topic 815 – Derivatives and Hedging.  This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company’s own stock.

Fair Value Measurements:   The Company adopted FASB ASC Topic 820, “Fair Value Measurement and Disclosure,” at inception.  ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosure of fair value measurements. FASB ASC Topic 820 applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new faire value measurements.  FASB ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, FASB ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

·Level 1.  Observable inputs such as quoted market prices in active markets.

·Level 2.  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, and

·Level 3.  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The FASB’s ASC Topic 825, “Financial Instruments,” became effective for the Company on July 28, 2008.  FASB ASC Topic 825 establishes a fair value option that permits entities to choose to measure eligible financial instruments an certain other items at fair value at specified election dates.  A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date.  Fo the year ended February 29, 2012, there were no applicable items on which the fair value option was elected.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of February 29, 2012 and February 28, 2011:

                                                                                Fair Value Measurement at February 29, 2012 and February 28, 2011

	Level 1	Level 2	Level 3
Financial Instruments	$         -	$         -	$         -

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the years ended February 29, 2012 and February 28, 2011.

Earnings per Common Share: Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and shares issuable upon the conversion of our Preferred Stock. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented.

There were no common equivalent shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding for the years ended February 29, 2012 and February 28, 2011.

Income Taxes:  We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

Deferred income taxes are recorded in accordance ASC Codification Topic 740 – Income Taxes. Under this guidance, deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse.

Topic 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.

Recent Accounting Pronouncements:  In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

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Related Party Disclosures

12 Months Ended

Feb. 29, 2012

Related Party Disclosures:

Related Party Transactions Disclosure

Note 7 – Related-Party Transactions

As is discussed in Note 4, we borrowed funds from an affiliate to pay operating expenses.