Agr Tools (AGRT) 10-Q 2011 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2010

or

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

For the transition period from ______________________ to ______________________

Commission File Number: 000-52043

AGR Tools, Inc.

(Exact name of registrant as specified in its charter)

Nevada	98-0480810
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 Lido Circle, Suite C-1

Lakeway, TX 78724

(Address of principal executive offices)

936-539-5744

(Registrant’s telephone number, including area code)

_____________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer o   Smaller reporting company þ

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.   Yes o   No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of November 12, 2010 the registrant’s outstanding common stock consisted of 86,386,636 shares.

Table of Contents

PART I – FINANCIAL INFORMATION	2
Item 1.Financial Statements	2
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.Quantitative and Qualitative Disclosures About Market Risk	5
Item 4.Controls and Procedures	5
PART II – OTHER INFORMATION	6
Item 1.Legal Proceedings	6
Item 2.Unregistered Sales of Equity Securities	6
Item 3.Defaults Upon Senior Securities	6
Item 4.(Removed and Reserved)	6
Item 5.Other Information	6
Item 6.Exhibits	6

1

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

Consolidated Balance Sheets (unaudited)	F-1
Consolidated Statements of Operations (unaudited)	F-2
Consolidated Statements of Stockholders’ Deficit (unaudited)	F-3
Consolidated Statements of Cash Flows (unaudited)	F-4
Notes to the Consolidated Financial Statements (unaudited)	F-5

2

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Consolidated Balance Sheets

	September 30, 2010 $			June 30, 2010 $
	(unaudited)
ASSETS
Current assets
Cash		29,728			11,396
Accounts receivable		7,823			2,492
Inventory		276,082			300,698
Prepaid expenses and deposits		5,748			9,866
Total current assets		319,381			324,452
Property and equipment, net		13,013			40,466
Advances receivable, net		9,928			10,568
Total assets		342,322			375,486
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Bank indebtedness		18,921			19,532
Accounts payable		223,433			219,273
Accrued liabilities		11,309			3,843
Customer deposits		184,238			144,029
Due to related party		392,845			426,882
Current portion of loans payable		-			9,406
Total current liabilities		830,746			822,965
Loans payable, long-term		-			18,025
Loans payable to related party, long term		123,000			70,000
Total liabilities		953,746			910,990
Stockholders’ deficit
Common stock  Authorized: 200,000,000 shares, par value  $0.001 per share    Issued and outstanding: 81,186,516 shares (June 30, 2010 – 106,186,516 shares)		81,187			106,187
Additional Paid in Capital		519,063			494,063
Accumulated deficit		(1,211,674	)		(1,135,754	)
Total stockholders’ deficit		(611,424	)		(535,504	)
Total liabilities and stockholders’ deficit		342,322			375,486

(The accompanying notes are an integral part of these consolidated financial statements)

F-1

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Consolidated Statements of Operations

Unaudited

	For the three months ended September 30, 2010 $			For the three months ended September 30, 2009 $
Revenue		205,443			116,806
Cost of goods sold		123,135			72,735
Gross profit		82,308			44,071
Operating expenses
Advertising and promotion		14,370			10,370
Automotive		1,604			2,663
Bad debts		(500	)		(5,450	)
Consulting fees		1,500			8,256
Depreciation		3,600			2,753
Insurance		3,216			2,690
Office and miscellaneous		5,910			8,829
Professional fees		40,922			3,151
Rent and utilities		25,251			24,189
Telephone and internet		4,000			4,803
Travel		127			1,648
Wages and benefits		54,197			9,785
Total operating expenses		154,197			73,687
Loss from operations		(71,889	)		(29,616	)
Other income(expenses)
Interest income		910			-
Interest and bank charges		(7,812	)		(5,109	)
Gain on disposal of property and equipment		2,871			-
Total other expenses		(4,031	)		(5,109	)
Loss before income taxes		(75,920	)		(34,725	)
Income taxes (recovery)		-			-
Net loss for the period		(75,920	)		(34,725	)
Net loss per share, basic and diluted		(0.00	)		(0.00	)
Weighted average number of shares outstanding		98,306,081			46,731,516

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Consolidated Statements of Stockholder’s Deficit

For the three month period ended September 30, 2010

	Common stock
	Number			Amount $			Additional Paid in Capital $		Accumulated deficit $			Total stockholders’ deficit $
Balance, June 30, 2010		106,186,516			106,187			494,063		(1,135,754	)		(535,504	)
Shares cancelled from former
director		(25,000,000	)		(25,000	)		25,000					–
Net loss for the period (unaudited)		–			–			–		(75,920	)		(75,920	)
Balance, September 30, 2010
(unaudited)		81,186,516			81,187			519,063		(1,211,674	)		(611,424	)

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Consolidated Statements of Cash Flows

Unaudited

	For the three months ended September 30, 2010 $			For the three months ended September 30, 2009 $
Operating activities
Net loss for the period		(75,920	)		(34,725	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		3,600			2,753
Gain on disposal of property and equipment		(2,871	)		–
Changes in operating assets and liabilities:
Accounts receivable		(5,331	)		(3,285	)
Advances receivable		640			2,750
Inventory		24,616			29,650
Prepaid expenses and deposits		4,118			(8,674	)
Accounts payable		3,453			(3,244	)
Accrued liabilities		7,466			(1,843	)
Due to related parties		(34,037	)		–
Customer deposits		40,209			(3,890	)
Corporate taxes		–			18,044
Net cash used in operating activities		(34,057	)		(2,464	)
Investing activities
Purchase of property and equipment		–			(2,844	)
Net cash used in investing activities		–			(2,844	)
Financing activities
Bank indebtedness, net		(611	)		903
Loans payable, net		–			5,057
Loans provided by related parties, net		53,000			1,092
Net cash provided by financing activities		52,389			7,052
Change in cash		18,332			1,744
Cash, beginning of period		11,396			3,683
Cash, end of period		29,728			5,427
Non-cash investing and financing activities:
Cancellation of shares		25,000			–
Supplemental disclosures:
Interest paid		4,392			4,570
Income taxes paid		–			–

F-4

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

1.  Interim Financial Statements

While the information presented in the accompanying three months to September 30, 2010, interim consolidated financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with the accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.  It is suggested that these financial statements be read in conjunction with the Company’s financial statements for the year ended June 30, 2010. Operating results for the three months ended September 30, 2010 are not necessarily indicative of the results that can be expected for the year ending June 30, 2011.

2.  Nature of Operations and Continuance of Business

Laburnum Ventures Inc. (the “Company”) was incorporated in the State of Nevada on March 11, 2004. On June 22, 2004, the Company acquired a 100% interest in five mineral claims located in the Similkameen Mining Division in British Columbia, Canada. In 2007, the Company abandoned these mineral claims. On September 10, 2009, the Company changed its name to AGR Tools, Inc. The Company is an exploration stage company, as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”.

AGR Stone & Tools USA, Inc. (“AGR USA”) was incorporated in the State of Texas on December 23, 2004, and is a manufacturer of diamond tooling and related products. The Company specializes in producing consumable tools for the natural stone, engineered stone, concrete and masonry industries.

Effective May 27, 2010, the Company closed a share exchange agreement with AGR USA, whereby the Company acquired all of the issued and outstanding shares of AGR USA. For financial statement reporting purposes, the share exchange was treated as a reverse acquisition with AGR USA deemed the accounting acquirer and the Company deemed the accounting acquiree under the purchase method of accounting in accordance with ASC 805-10-40, “Business Combinations – Reverse Acquisitions”. The reverse merger is deemed a recapitalization and the consolidated financial statements represent the continuation of the financial statements of AGR USA (the accounting acquirer/legal subsidiary) except for its capital structure, and the consolidated financial statements reflect the a ssets and liabilities of AGR USA, recognized and measured at their carrying value before the combination and the assets and liabilities of the Company (the accounting acquiree/legal parent). The equity structure reflects the equity structure of the Company, the legal parent, and the equity structure of AGR USA, the accounting acquirer, as restated using the exchange ratios established in the share exchange agreement to reflect the numbers of shares of the legal parent.

3.  Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations. As at September 30, 2010, the Company has a working capital deficit of $511,365 and has an accumulated deficit of $1,211,674 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adj ustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

F-5

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

4.  Summary of Significant Accounting Policies

a)Basis of Presentation

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America.

b)Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, inventory valuation, the useful lives and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be r easonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c)Reclassification in prior period

Certain reclassifications to the financial statements have been made to prior period amounts to conform to the presentation of the current period.

d)Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.  There were no cash equivalents at September 30, 2010, and June 30, 2010.

e)Accounts Receivable

The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on the age of receivables and the specific identification of receivables the Company considers at risk. The allowance for doubtful accounts was $0 at September 30, 2010, and June 30, 2010.

f)Advances Receivable

The Company advanced amounts to two independent contractors who earn commissions for sales generated. On October 31, 2009, the Company placed these independent contractors on the payroll and ceased all advances. The Company obtained two promissory notes, each in the amount of $61,300, from these independent contractors for the amounts owed.  The notes carry an interest rate of 3% and are reduced by semi-monthly payroll deductions of $129.17, which are composed of principal and interest. The term of the notes is 5 years and a balloon payment is due at the end of the term of the loan for any unpaid principal and interest. The payments under these notes are deducted from the employees’ paychecks on a semi-monthly basis. The Company has recorded an allowance for doubtful accounts in the amount of $110,975 and $110,975 as of September 30, 2010, and June 30, 2010, respectively. The amount reserved is equal to the balloon payment due on the notes.

F-6

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

4.  Summary of Significant Accounting Policies (continued)

g)Inventory

Inventory consists of diamond tools and is carried at the lower of cost and market value. The Company uses the FIFO inventory costing method.

h)Property and Equipment

Property and equipment are stated at cost. The Company depreciates the cost of property and equipment straight-line over their estimated useful lives:

Automotive	3 years
Computer equipment	3 years
Furniture and equipment	5 years

The depreciation expense for the three months ended September 30, 2010 and 2009 was $3,600 and $2,753, respectively.

i)Corporate Taxes Receivable

Corporate taxes receivable pertain to refundable amounts owed to the Company for corporate taxes from the United States Treasury. These amounts are recorded at the value anticipated to be received based on tax returns filed.

j)Long-lived Assets

In accordance with ASC 360, “Impairment or Disposal of Long-Lived Assets”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.  There was no impairment of long-lived assets for years ended September 30, 2010, and June 30, 2010.

k)Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

F-7

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

4.  Summary of Significant Accounting Policies (continued)

The Company files federal, state and local income tax returns in the U.S., as applicable. The open taxation years range from 2007 to 2009. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of the U.S. have not audited any of the Company’s income tax returns for the open taxation years noted above.

The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the three months ended September 30, 2010, and June 30, 2010, there were no charges for interest or penalties.

l)Revenue Recognition

The Company earns revenue from the sale of diamond tooling and related products. The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition”. Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the goods have been delivered, and collectability is reasonably assured. Sales returns are recognized as incurred.  The amount of returns is not significant and the Company evaluates the need to record an allowance for each reporting period.

m)Financial Instruments and Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures”, and ASC 825, “Financial Instruments”, require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. 

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. 

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. 

The Company’s financial instruments consist principally of cash, accounts receivable, advances receivable, bank demand loan, accounts payable, accrued liabilities, corporate taxes payable/receivable, loans payable, and amount due to a related party. Pursuant to ASC 820, the fair value of cash is determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

F-8

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

4.  Summary of Significant Accounting Policies (continued)

n)Concentrations

As at September 30, 2010, 76% (June 30, 2010 – 89%) of accounts receivable were comprised of two customers (June 30, 2010 – four customers). As at September 30, 2010, the specific concentrations of each customer included in this total were 57% and 20%. As at June 30, 2010, the specific concentrations of each customer included in this total were 40%, 17%, 16% and 16%.  During the three month period ended September 30, 2010, the Company had three customers that totaled 54% of its revenue. The specific concentrations of each customer included in this total were 29%, 15% and 10%.

o)Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, “Compensation Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

p)Earnings (Loss) Per Share

The Company computes earnings per share (“EPS’) in accordance with ASC 260, “Earnings Per Share”.  ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g. convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of dil uted EPS. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. There Company did not have any potentially dilutive shares as of September 30, 2010 and June 30, 2010.

q)Comprehensive Loss

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2010, and June 30, 2010, the Company had no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

r)Recent Accounting Pronouncements

In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard is effective for the Company on October 1, 2009. The adoption of this amendment did not have a material effect on the Company’s financial statements.

F-9

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

4.  Summary of Significant Accounting Policies (continued)

In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on July 1, 2011. 

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the products essential functionality shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become eff ective on July 1, 2011.

In January 2010, the FASB issued an amendment to ASC 505, “Equity”, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements.

5.  Property and Equipment

	September 30,  2010 Net carrying value $		June 30, 2010 Net carrying value $
Automotive		-		27,066
Computer equipment		4,765		4,922
Furniture and equipment		8,248		8,478
		13,013		40,466

F-10

AGR TOOLS, INC.

(formerly known as Laburnum Ventures, Inc.)

Notes to the Consolidated Financial Statements

For the three months ended September 30, 2010 and 2009

6.  Bank Indebtedness

The Company has a revolving bank credit line with a limit of $24,300 which bears interest at 9.75% per annum and is secured by a personal guarantee of the Vice-President of the Company. The balance in this account at September 30, 2010, was $18,921 (June 30, 2010 – $19,532).

7.  Related Party Transactions

a)  During the three months ended September 30, 2010, the Company incurred consulting fees of $Nil (2009 – $8,256) and rent of $1,500 (2009 – $3,000) to the President of the Company. As at September 30, 2010, the Company owes $1,000 to the President of the Company.

b)  During the three months ended September 30, 2010, the Company incurred consulting fees of $Nil (2009 – $Nil) and rent of $1,500 (2009 – $1,500) to the Secretary and Treasurer of the Company.  As of September 30, 2010 the Company owes $22,037 to the Secretary and Treasurer of the Company.

c)  During the three months ended September 30, 2010, the Company cancelled 25,000,000 shares from the former President of the Company.

d)  As at September 30, 2010, the Company owes a total of $58,000 (June 30, 2010 – $59,370) to the Secretary/Treasurer of the Company which bear 4% interest, is unsecured and due on July 1, 2015.

e)  As at September 30, 2010, the Company owes $2,561 (June 30, 2010 – $900) to a director of the Company.

f)  As at September 30, 2010, the Company owes $25,000 to the President of the Company pursuant to a promissory note, maturing on July 1, 2015. The note bears interest at 4% and all accrued interest and principal is due upon maturity.

g)  As at September 30, 2010, the Company owes $391,697 to a shareholder for expenses paid on       behalf of the Company.

h)  As at September 30, 2010, the Company owes $40,000 to a shareholder pursuant to a note, maturing on July 15, 2015. The note bears an interest at 4% and all accrued interest and principal is due upon maturity.

8.  Common Stock

Stock transactions during the three months ended September 30, 2010:

a)  On September 1, 2010, the Company cancelled 25,000,000 shares from the former President of the Company.

9.  Litigation

The Company is not aware of any pending or threatened litigation through the date of these financial statements.

10.  Subsequent Events

On October 6, 2010, the Company issued 5,200,120 shares of common stock to four of its creditors to repay the amount of $520,012 owed to them as of that date.

F-11

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this quarterly report, the terms "we", "us" and "our" mean AGR Tools, Inc., unless otherwise indicated. All currency references in this report are to U.S. dollars unless otherwise noted.

Forward Looking Statements

This quarterly report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.

Business Overview

We were incorporated under the name “Laburnum Ventures Inc.” on March 11, 2004, under the laws of the State of Nevada. Until recently, we were a pre-exploration stage company engaged in the acquisition and exploration of mineral properties. We formerly owned a 100% undivided interest in a mineral property located in the Province of British Columbia, Canada known as the Sum Mineral Claim, but we decided not to pursue this claim.

On July 21, 2009, we entered into a share exchange agreement (the “Original Share Exchange Agreement”) with AGR Stone & Tools USA, Inc., a private Texas company (“AGR USA”).  Pursuant to the terms of the Original Share Exchange Agreement, we agreed to acquire all of the outstanding shares of AGR USA from its shareholders in exchange for our shares on a one-for-one basis which, if completed, would result in AGR USA becoming our wholly owned subsidiary.  

On September 15, 2009, in contemplation of the completion of the share exchange with AGR USA, we completed a name change from Laburnum Ventures Inc. to AGR Tools, Inc. in accordance with Nevada law.

On October 29, 2009, pursuant to the terms of the Original Share Exchange Agreement, we agreed to terminate the Original Share Exchange Agreement with AGR USA and enter into a new share exchange agreement (the “New Share Exchange Agreement”). Under the New Share Exchange Agreement, we agreed to carry out the exchange of shares with the shareholders of AGR USA through a statutory process pursuant to Part 5 of the Texas Business Corporation Act in order to effect the transaction in a more efficient manner.

The closing of the transactions contemplated by the New Share Exchange Agreement occurred on May 27, 2010, at which time AGR USA became our wholly-owned operating subsidiary and we adopted the business of AGR USA. In connection with the closing, we issued 46,186,516 shares of our common stock to the shareholders of AGR USA and our former sole officer and director, Thomas Brown, cancelled 25,000,000 shares of our common stock held in his name.

We are now a Texas-based company in the business of manufacturing and selling tooling and accessories to the construction, building, maintenance and demolition industries in the United States and Canada. Tooling is the consumable disposal portion of a tool that makes the tool work.  It wears out as the tool is operated, and as a result, demand for our products is driven by the need for original and replacement tool parts, not the tools themselves. We currently sell more than 700 products through our stocking dealer network, which consists of 29 dealers in 23 U.S. states and territories, and three dealers in two Canadian provinces. Our products include diamond-based blades, diamond drill bits, diamond cup wheels, resin polyesters, glues, inks, resin-based waterproof grinding stones and diamond polishing pads, all of which are manufactured in a number of different sizes.

Our products are manufactured in China on a contract basis, and we subject them to strict manufacturing standards. We field test these products by using them in construction, building and demolition projects, and also test them alongside the products of our competitors both in the field and in our testing facility. All of our products are accompanied by a warranty against defects in workmanship.

We currently focus on sales through our stocking dealers. We also sell a number of our products through our website, which are delivered to customers either through our storage centers or our stocking dealers. Our stocking dealers act as face-to-face contacts for our customers and provide support to one another by sharing order fulfillment with our storage centers. We train and provide training manuals to our stocking dealers and require each one to be familiar with at least 200 of our products during their initial training. We currently do not have brokers or commission sales representatives involved in the distribution of our products.

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Results of Operations

Revenues

We generated revenue of $205,443 during the three months ended September 30, 2010, compared to revenue of $116,806 during the three months ended September 30, 2009. The increase in revenue between the two periods was primarily due to an increase in our building activities in the current fiscal year. During the same periods our cost of goods sold increased to $123,135 from $72,735 as a result of the aforementioned increase in building activities. Consequently, we yielded gross profit of $82,308 during the three months ended September 30, 2010, compared to gross profit of $44,071 during the same period in 2009.

Expenses

During the three months ended September 30, 2010, our total operating expenses were $154,197, compared to total operating expenses of $73,687 during the same period in our prior fiscal year. The increase in our operating expenses between the two periods was primarily due to an increase in our wages and benefits from $9,785 to $54,197, and an increase in our professional fees from $3,151 to $40,922, both of which were offset to some extent by decreases in our consulting fees. The significant increase in our professional fees (which include legal, accounting and auditing fees) occurred as a result of AGR USA’s transition from being a private company to our wholly-owned subsidiary.

We incurred a loss from operations of $71,889 during the three months ended September 30, 2010, compared to a loss from operations of $29,616 during the three months ended September 30, 2009. Our total other expenses during the three months ended September 30, 2010, were $4,031, whereas they were $5,109 during the same period in our prior fiscal year.

Net Loss

During the three months ended September 30, 2010, we incurred a net loss of $75,920, whereas we incurred a net loss of $34,725 during the same period in our prior fiscal year. We did not experience any net loss per share during either of these periods.

Liquidity and Capital Resources

As of September 30, 2010, we had $29,728 in cash, $342,322 in total assets, $953,746 in total liabilities and a working capital deficit of $511,365. As of September 30, 2010, we had an accumulated deficit of $1,211,674.

During the three months ended September 30, 2010, we spent $34,057 on operating activities, compared to spending of $2,464 on operating activities during the three months ended September 30, 2009. The increase in our expenditures on operating activities between the two periods was primarily due to an increase in our building activities as noted above as well as an increase in our net loss for the period. Customer deposits provided $40,209 in cash during the three months ended September 30, 2010, whereas we used $3,890 in cash on customer deposits during the same period in our prior fiscal year. We also spent $34,037 on amounts due to related parties during our current fiscal year and did not receive any cash from corporate taxes, compared to spending $0 and receiving $18,044 from the same sources, respectively, during the three months ended Septemb er 30, 2009.

We did not spend any cash on investing activities during the three months ended September 30, 2010, whereas we spent $2,844 on investing activities during the same period in 2009. Our only investing activities during the prior period involved purchases of property and equipment.

During the three months ended September 30, 2010, we received $52,389 from financing activities, including $53,000 in the form of loans from related parties. During the three months ended September 30, 2009, we only received $7,052 from financing activities, $5,057 of which was attributable to loans payable.

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Our plan of operations over the next 12 months is to (i) expand our stocking dealer network throughout the Unites States and Canada, (ii) monitor the quality of our products and accessories, (iii) further develop our website and online sales volume, and (iv) increase our exposure to participants in the construction, building, maintenance and demolition industries. We expect we will require approximately $3.5 million to pursue our plan of operations over this period, which will include, among others, advertising and promotion expenses, wage and benefit expenses, professional fees related to our regulatory filings throughout the year and general and administrative expenses.

We intend to raise the additional funds we require from the sale of our equity securities or loans from related parties. We do not believe we will be able to raise a material amount of capital from debt financing. There is no assurance that we will be able to secure the necessary financing from the sale of our securities or loans from related parties. If we are unable to raise sufficient funds to finance our operations our business may fail. In addition, if we are unable to raise the funds required to expand our operations, we may be forced to proceed with a scaled back business plan based on our available financial resources.

Going Concern

Our financial statements for the three months ended September 30, 2010 have been prepared on a going concern basis and contain an additional explanatory paragraph in Note 3 which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

As of November 12, 2010 we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our management concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information was not accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control

During the three months ended September 30, 2010 there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

We are not aware of any legal proceedings to which we are a party. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  (Removed and Reserved)

None.

Item 5.  Other Information

None.

Item 6.  Exhibits

Exhibit Number	Exhibit Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		AGR Tools, Inc.
		(Registrant)
Date: November 12, 2010	By:	/s/ Rock Rutherford
		Rock Rutherford
		President, Chief Executive Officer, Director

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