UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
☐QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2010
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to _______
Commission File Number 000-53337
FERO INDUSTRIES INC.
(Name of small business issuer in its charter)
Colorado |
| 01-0884561 |
(State of incorporation) |
| (I.R.S. Employer Identification No.) |
254-16 Midlake Boulevard SE
Calgary Alberta, Canada T2X 2X7
(Address of principal executive offices)
(403) 383-2338
(Registrant’s telephone number)
with a copy to:
Carrillo, Huettel & Zouvas, LLP
3033 Fifth Ave. Suite 400
San Diego, CA 92103
Telephone (619) 546-6100
Facsimile (619) 546-6060
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 ☐ No
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 ☐No (Not required)
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 ☐ Accelerated Filer ☐ | |
Non-Accelerated Filer ☐ Smaller Reporting Company ☐ |
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes ☐No
As of March 1, 2011, there were 149,350,000 shares of the registrant’s $0.001 par value common stock issued and outstanding.
FERO INDUSTRIES, INC.*
TABLE OF CONTENTS
|
|
|
| Page | |
|
| |
PART I. FINANCIAL INFORMATION |
| |
|
| |
ITEM 1. | FINANCIAL STATEMENTS |
|
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|
ITEM 3. | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK |
|
ITEM 4. | CONTROLS AND PROCEDURES |
|
|
| |
PART II. OTHER INFORMATION |
| |
|
| |
ITEM 6. | EXHIBITS |
|
Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Fero Industries, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "FROI" refers to Fero Industries, Inc.
PART I: FINANCIAL INFORMATION
FINANCIAL STATEMENTS
FERO INDUSTRIES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
Balance Sheets (Unaudited)
| (Restated) |
|
|
| December 31, |
| June 30, |
| 2010 |
| 2010 |
ASSETS | (Unaudited) |
| (Audited) |
|
|
|
|
Current Assets: |
|
|
|
Cash | $ - |
| $ - |
Prepaid expenses | 32,807 |
| - |
Total Current Assets | $ 32,807 |
| $ - |
|
|
|
|
Total Assets | $ 32,807 |
| $ - |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
Accounts payable | $ 28,765 |
| $ 6,150 |
Accrued interest payable | 5,813 |
| - |
Advances from shareholder | 107,992 |
| 36,255 |
Promissory note payable | 250,000 |
| 250,000 |
Total Current Liabilities | 392,570 |
| 292,405 |
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit): |
|
|
|
Preferred stock, $.001 par value; authorized 10,000,000, none issued | - |
| - |
Common stock, $.001 par value; 100,000,000 shares authorized |
|
|
|
132,750,000 shares issued and outstanding at December 31, 2010 |
|
|
|
127,500,000 shares issued and outstanding at June 30, 2010 | 132,750 |
| 127,500 |
Additional paid in capital | 113,850 |
| (90,900) |
Restated Accumulated deficit During Development Stage | (606,363) |
| (329,005) |
|
|
|
|
Total Stockholders' Equity (Deficit) | (359,763) |
| (292,405) |
|
|
|
|
Total Liabilities and Stockholders' Equity (Deficit) | $ 32,807 |
| $ - |
|
|
|
|
FERO INDUSTRIES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
Statements of Operations (Unaudited)
|
|
|
|
|
|
|
|
|
|
| From |
|
|
|
|
| December 11, |
| For the | For the | For the | For the | 2000 |
| three | three | six | six | (Date of |
| months | months | months | months | inception) |
| ended | ended | ended | ended | to |
| Dec 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, |
| 2010 | 2009 | 2010 | 2009 | 2010 |
| (Restated) |
| (Restated) |
| (Restated) |
|
|
|
|
|
|
Revenue: | $ - | $ - | $ - | $ - | $ - |
Total Revenue | - | - | - | - | - |
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
General & administrative | 48,373 | �� 1,750 | 61,545 | 14,155 | 140,550 |
Professional fees | - | - | 210,000 | - | 210,000 |
Impairment of bioceutical assets | - | - | - | - | 250,000 |
Total Operating Expenses | 48,373 | 1,750 | 271,545 | 14,155 | 600,550 |
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
Interest expense | 5,813 | - | 5,813 | - | 5,813 |
Total Other (Expense) | 5,813 | - | 5,813 | - | 5,813 |
|
|
|
|
|
|
NET LOSS | $ (54,186) | $ (1,750) | $ (277,358) | $ (14,155) | $ (606,363) |
|
|
|
|
|
|
Weighted Average Shares |
|
|
|
|
|
Common Stock Outstanding | 127,500,000 | 127,500,000 | 127,500,000 | 127,500,000 |
|
|
|
|
|
|
|
Net Loss Per Share |
|
|
|
|
|
(Basic and Fully Dilutive) | $ - | $ - | $ - | $ - |
|
|
|
|
|
|
|
FERO INDUSTRIES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
Statements of Cash Flows (Unaudited)
|
|
| From |
|
|
| December 11, |
| For the | For the | 2000 |
| six | six | (Date of |
| months | months | inception) |
| ended | ended | to |
| Dec 31, | Dec 31, | Dec 31, |
| 2010 | 2009 | 2010 |
| (Restated) |
| (Restated) |
Cash Flows Used in Operating Activities: |
|
|
|
Net Loss | $ (277,358) | $ (14,155) | $ (606,363) |
Adjustments to reconcile net (loss) to net cash |
|
|
|
provided by operating activities: |
|
|
|
Impairment of bioceutical assets |
|
| 250,000 |
Issuance of stock for services rendered | 210,000 | - | 211,600 |
(Increase) in prepaid expense | (32,807) | - | (32,807) |
Increase in accounts payable | 22,615 | 14,155 | 28,765 |
Increase in accrued interest | 5,813 | - | 5,813 |
|
|
|
|
Net Cash Used in Operating Activities | (71,737) | - | (142,992) |
|
|
|
|
Cash Flows from Investing Activities: | - | - | - |
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
Issuance of common stock for cash | - | - | 35,000 |
Advances from shareholder | 71,737 | - | 107,992 |
|
|
|
|
Net Cash Provided by Financing Activities | 71,737 | - | 142,992 |
|
|
|
|
Net Increase (Decrease) in Cash | - | - | - |
|
|
|
|
Cash at Beginning of Period | - | - | - |
|
|
|
|
Cash at End of Period | $ - | $ - | $ - |
|
|
|
|
Non-Cash Investing & Financing Activities |
|
|
|
Issuance of stock for management services rendered | $ 210,000 | $ - | $ 211,600 |
Acquisition of bioceutical assets for promissory note | $ - | $ - | 250,000 |
|
|
|
|
FERO INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
NATURE OF OPERATIONS
Fero Industries, Inc. (the “Company”) was incorporated under the laws of the State of Colorado on December 11, 2000. The Company’s activities to date have been limited to organization and capital formation. The Company is a “development stage company”.
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars.
The accompanying unaudited financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the interim periods have been made and are of a normal, recurring nature. Operating results for the three months ended December 31, 2010 are not necessarily indicative of the results that may be expected for any interim period or the entire year. For further information, these financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended June 30, 2010 included in the Company’s report on Form 10-K.
NOTE 2 – NATURE OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company recognizes revenue at the time services are performed.
USE OF ESTIMATES
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s short-term financial instruments consist of cash and cash equivalents and accounts payable. The carrying amounts of these financial instruments approximate fair value because of their short-term maturities. The Company does not hold or issue financial instruments for trading purposes nor does it hold or issue interest rate or leveraged derivative financial instruments.
F-4
FERO INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
EARNINGS PER SHARE
Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants. Basic and diluted EPS are the same for the Company, as of December 31, 2010, as the Company does not have any common share equivalents outstanding.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s short-term financial instruments consist of cash and cash equivalents and accounts payable. The carrying amounts of these financial instruments approximate fair value because of their short-term maturities. The Company does not hold or issue financial instruments for trading purposes nor does it hold or issue interest rate or leveraged derivative financial instruments.
EARNINGS PER SHARE
Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants. Basic and diluted EPS are the same for the Company, as of December 31, 2010, as the Company does not have any common share equivalents outstanding.
INCOME TAXES
The Company uses the asset and liability method of accounting, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of certain assets and liabilities. Deferred income tax assets and liabilities are computed annually for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities.
Deferred income taxes may arise from temporary differences resulting from income and expanse items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
F-5
FERO INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash. During the year the Company did not maintain cash deposits at financial institution in excess of the $100,000 limit covered by the Federal Deposit Insurance Corporation.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect that the adoption of recent accounting pronouncements will have a material impact on its financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned and majority owned subsidiaries, including businesses acquired since their respective dates of acquisition. All intercompany transactions and balances have been eliminated.
NOTE 3 – ACQUISITION OF DOMAIN NAMES AND DEPOSITS
On April 20, 2007, the Company entered into an asset purchase and sale agreement with Mr. Jerry Capehart of Grand Prairie, Texas whereby he sold to us a 100% undivided right title and interest in seventeen internet domain names for a total purchase price of $180,000. Terms of the purchase are as follows: $5,000 to Mr. Capehart and 12,500,000 shares of our common stock as a non-refundable deposit (recorded as Deposits on the Balance Sheet) and an additional $75,000 on or before June 30, 2008. All domain names are fully valid and registered and ready for construction. The Company did not execute this contract by the closing date of June 30, 2010. As such, the Company has not recorded the liability or corresponding asset related to this sale agreement in its financial statements.
NOTE 4– ACQUISITION OF SUCANON
On May 23, 2010, Fero Industries, Inc., a Colorado corporation, (the "Company") entered that certain Asset Acquisition Agreement (the "Agreement") with Gvest, Inc., (“Gvest”) an Ontario, Canada corporation. Pursuant to the terms and conditions of the Agreement, the Company acquired certain assets directly related to the manufacturing, sale and distribution of that certain product known as Sucanon, which is an herbal remedy for Type II Diabetes. The acquired assets include all of the intellectual property rights, training, and “know how” to manufacture and produce Sucanon, including sources and suppliers of Sucanon ingredients and mixing equipment; certain associated trademarks and patents ("Acquired Assets"). The Acquired Assets include the exclusive world-wide rights to manufacture, sell and distribute Sucanon. The Company purchased the Acquired Assets for an aggregate purchase price of $250,000. The Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. Breaches of the representations and warranties were subject to customary indemnification provisions, subject to specified aggregate limits of liability. This transaction closed on July 7, 2010.
F-6
FERO INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
NOTE 5 – COMMON STOCK
On December 11, 2000 the Company issued 15,000,000 shares of its common stock to its President and Chief Executive Officer, Kyle Schlosser at a deemed price of $0.001 per share or $600 in return for his time effort and expense of forming the company and keeping it in good standing.
On December 28, 2006 the Company issued 12,500,000 shares of our common stock to our Secretary/Treasurer and Chief Financial Officer, Leigh-Ann Squire at a deemed price of $0.001 per share or $500 in return for her agreement to join our Board of Directors, become an officer of the registrant and his agreement to provide the computer and internet expertise in constructing our websites and providing the server for operation of the sites, at no charge.
As referred to in Note 4 above, on April 20, 2007 the Company issued 12,500,000 shares of our common stock to Mr. Jerry Capehart of Grand Prairie, Texas at a deemed price of $0.001 per share, or $500, as a good faith deposit for seventeen domain names relating to the oil and gas industry.
On April 30, 2007 the Company issued 77,500,000 shares of our common stock to thirty-one non US persons at a price of $0.01 per share.
On May 10, 2007 the Company issued 10,000,000 shares of our common stock to three US individuals (one representing a Grandchildren’s Trust), at a price of $0.01 per share.
On November 18, 2008 the Board of Directors of the registrant passed unanimously a resolution authorizing a forward split of the authorized and issued and outstanding common shares on a five to one (5 – 1) basis bringing the total common shares issued and outstanding to 25,500,000. The forward split has been retroactively recorded in the financial statements of the Company as if the forward split had occurred at the inception of the Company and the authorized common shares have been increased to 500,000,000.
On April 15, 2010 the Board of Directors of Fero Industries (the Registrant) passed a resolution declaring a stock dividend of four (4) shares of common stock for each share held, of record as of April 20, 2010. The common shares of the Registrant will be considered Ex Dividend on April 21, 2010. This brings the total issued and outstanding common shares to 127,500,000. All share references in these financial statements have been retroactively adjusted for this stock dividend.
On September 22, 2010, the Company issued 5,250,000 shares of stock for legal and consulting services, valued at $.04 per share, which was the closing price of the stock on that date.
NOTE 6- ADVANCES
As of December 31, 2010 and June 30, 2010, the Company has received advances from a shareholder in the amount of $107,992 and $36,255, respectively. These advances are non-interest bearing, unsecured, and have no fixed terms of repayment.
F-7
FERO INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2010
NOTE 7- PROMISSORY NOTE
On June 24, 2010, we issued a Two Hundred Fifty Thousand Dollars ($250,000) Promissory Note (the “Note”) in favor of Mr. Peter Hogendoorn (the “Lender”). The Note contains standard representations, and warranties and affirmative and negative covenants. The Note memorializes a loan made by the Lender to the Company, in order for the Company to close that certain Asset Acquisition Agreement with Gvest. The Note accrues simple interest at a rate equal to 1% over the average Canadian Prime Rate and is due 30 days from the date executed, or thereafter by mutual agreement of the parties hereto, the principal and all accrued interest thereon shall be due and payable within ten (10) days of written demand by Holder. Additionally, the Note may be repaid in whole or in part by the Company without penalty or premium at any time and from time to time prior to the Maturity Date.
NOTE 8- PREPAID EXPENSES
During the quarter ended December 31 2010 the company advanced to Pharmaroth SA de CV $32,807,
for the future production of the Sucanon Type II Diabetes treatment.
NOTE 9 RESTATEMENT
The Company is restating its December 31, 2010 balance sheet to reclassify and account for advances from shareholders.. The Company is restating its statements of operations and cash flows to reflect the correct amount of expenditures during the period. The Company is also restating its footnotes to add a subsequent events footnote for a registration statement filed on Form S-8 and further advances from shareholders all of which occurred in January and February 2011.
Balance Sheet / December 31, 2010 | ||||||
|
|
|
| Restatement |
|
|
|
| Originally reported |
| Adjustment |
| Correct Amount |
Prepaid Expenses | $ | 28,000 |
| 4,807 |
| 32,807 |
Total Assets | $ | 28,000 |
| 4,807 | $ | 32,807 |
Total Liabilities and |
|
|
|
|
|
|
Stockholders’ Equity | $ | 28,000 |
| 4,807 | $ | 32,807 |
Deficit accumulated) | $ | (567,490) | $ | (38,873) | $ | (606,363) |
F-8
Statement of Operations / For the Three Months Ended December 31, 2010 | ||||||||
|
|
|
|
| Restatement |
|
| Correct Amount |
|
| Originally reported |
|
| Adjustment |
|
|
|
General and Administrative | $ | 9,500 |
|
| 38,873 |
|
| 48,373 |
Total operating expenses | $ | 9,500 |
|
| 38,873 |
|
| 48,373 |
|
|
|
|
|
|
|
|
|
Net (loss) as reported (restated) | $ | (15,313) |
| $ | (38,873) |
| $ | (54,186) |
Weighted average of |
| 132,750,000 |
|
| 0 |
|
| 132,750,000 |
Shares, common stock outstanding |
|
|
|
|
|
|
|
|
Net loss per share: |
| - |
|
| - |
|
| - |
Basic and diluted (restated) | $ | - |
| $ | - |
| $ | - |
Statement of Operations / For the Six Months Ended December 31, 2010 | ||||||||
|
|
| �� |
| Restatement |
|
| Correct Amount |
|
| Originally reported |
|
| Adjustment |
|
|
|
General and Administrative | $ | 22,672 |
|
| 38,873 |
|
| 61,555 |
Professional Fees |
| 210,000 |
|
| - |
|
| 210,000 |
Total operating expenses | $ | 232,672 |
|
| 38,873 |
|
| 271,555 |
Net (loss) as reported (restated) | $ | (238,485) |
| $ | (38,873) |
| $ | (277,358) |
Weighted average of |
| 132,750,000 |
|
|
|
|
| 132,750,000 |
Shares, common stock outstanding |
|
|
|
|
|
|
|
|
Net loss per share: |
| - |
|
| - |
|
| - |
Basic and diluted (restated) | $ | - |
| $ | - |
| $ | - |
F-9
Statement of Operations / For the Period From December 11, 2000 (Inception) to December 31, 2010 | ||||||||
|
|
|
|
| Restatement |
|
| Correct Amount |
|
| Originally reported |
|
| Adjustment |
|
|
|
General and Administrative | $ | 101,677 |
|
| 38,873 |
|
| 140,550 |
Professional Fees |
| 210,000 |
|
| - |
|
| 210,000 |
Impairment of Bioceutical Assets |
| 250,000 |
|
| - |
|
| 250,000 |
Total Operating Expenses | $ | (561,677) |
| $ | (38,873) |
| $ | (600,550) |
Interest Expense | $ | 5,813 |
| $ | - |
| $ | 5,813 |
Net (loss) as reported (restated) | $ | (567,490) |
| $ | (38,873) |
| $ | (606,363) |
Statement of Cash Flows /For the Six Months ended December 31, 2010 |
|
|
| |||||
|
| Originally Reported |
|
| Restatement Adjustment |
|
| Correct Amount |
Net (Loss) | $ | (238,485) |
| $ | (38,873) |
| $ | (277,358) |
Increase (decrease) in | $ | 22,615 |
| $ | (49,122) |
| $ | 71,737 |
accounts payable and |
|
|
|
|
|
|
|
|
accrued liabilities |
|
|
|
|
|
|
|
|
Net cash used in | $ | (28,057) |
| $ | (43,860) |
| $ | (71,737) |
operations |
|
|
|
|
|
|
|
|
Total cash flows used | $ | - |
| $ | 71,737 |
| $ | 71,737 |
in investing activities |
|
|
|
|
|
|
|
|
Statement of Cash Flows / For the Period From December 11, 2000 (Inception) to December 31, 2010 |
|
| Originally Reported |
|
| Restatement Adjustment |
|
| Correct Amount |
Net (Loss) | $ | (567,490) |
| $ | (38,873) |
| $ | (606,373) |
Net Cash provided by Financing Activities | $ | 99,312 |
|
| 43,860 |
|
| 142,992 |
Net Cash used in Operations | $ | (99,312) |
| $ | (43,860) |
| $ | (142,992) |
Total cash flows used | $ | - |
| $ | _ |
| $ | _ |
in investing activities |
|
|
|
|
|
|
|
|
F-10
NOTE 10– GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has no sales and has incurred a net loss of $606,363 since inception. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classifications of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE 11-SUBSEQUENT EVENTS
On January 26, 2011 The Company filed a registration statement on Form S-8 with the Securities and Exchange Commission registering 14,000,000 shares and subsequently issued 14,000,000 shares for Legal and consulting services.
The company has received, subsequent to December 31, 2010 a total of $87,000 in advances by shareholders to pay down existing accounts payable, and to pay for on going operations of the Company.
F-11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis or Plan of Operation (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should specifically consider various factors, including the risk factors outlined below. These factors may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
We are an development stage company and have no revenues to date.
We incurred operating expenses of $48,373 and $1,750 for the three month periods ended December 31, 2010 and 2009, respectively. The increase of $46,623 is a result of an increase in consulting expenses and professional fees which have been included in general and administrative expenses.
During the three months ended December 31, 2010, we recognized a net loss of $54,186 compared to a net loss of $1,750 for the three months ended December 31, 2009. The increase was a result of the increase in operational expenses as discussed above.
Liquidity and Capital Resources
At December 31, 2010, we had total assets of $32,807 consisting of prepaid expenses. At December 31, 2010, we had total current liabilities of $392,570 consisting of accounts payable of $28,765, advances from shareholders of $107,992, and a promissory note for $250,000 and accrued interest expense of $5,813.
During the six months ended December 31, 2010, we used cash of $71,137 in operations.
During the six months ended December 31, 2010 and 2009, we did not have any cash flows from investment activities.
During the six months ended December 31, 2010, we received $71,737 from our financing activities. During the six months ended December 31, 2009, we received $0 from our financing activities.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act, as of December 31, 2010. Based on this evaluation, our principal executive officer and principal financial officer concluded as of December 31, 2010, that our disclosure controls and procedures were not effective such that the information relating to the Company, including anyconsolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to management, including our principal executive officer/principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") inInternal Control-Integrated Framework. Our management has concluded that, as of December 31, 2010, our internal control over financial reporting is not effective based on these criteria.
As a result of the above adjustments, the Balance Sheets, Statement of Operation and Statement of Cash Flows required adjustment to reflect previously unrecorded transactions that occurred during the period ended December 31, 2010
A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Specifically, management identified the following control deficiencies. (1) The Company has not properly segregated duties as one or two individuals initiate, authorize, and complete all transactions. The Company has not implemented measures that would prevent the individuals from overriding the internal control system. The Company does not believe that this control deficiency has resulted in deficient financial reporting because the Chief Financial Officer is aware of his responsibilities under the SEC's reporting requirements and personally certifies the financial reports. (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.
Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.
Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.
Remediation Plan
Addition of Staff
We have identified that additional staff will be required to properly segment the accounting duties of the Company. However, we do not currently have resources to fulfill this part of our plan and will be addressing this matter once sufficient resources are available.
ITEM 6.
EXHIBITS
Exhibit Number | Description of Exhibit | Filing |
3.01 | Articles of Incorporation | Incorporated by reference to our Registration Statement Form SB-2 filed with the SEC on October 23, 2007. |
3.01a | Amended Articles of Incorporation | Filed with the SEC on July 9, 2010 as part of our Current Report on Form 8-K. |
3.01b | Amended Articles of Incorporation | Filed with the SEC on July 9, 2010 as part of our Current Report on Form 8-K. |
3.02 | Bylaws | Incorporated by reference to our Registration Statement Form SB-2 filed with the SEC on October 23, 2007. |
4.01 | 2010 Share Incentive Plan | Filed with the SEC on September 20, 2010 as part of our Form S-8. |
4.02 | Sample Qualified Stock Option Grant Agreement | Filed with the SEC on September 20, 2010 as part of our Form S-8. |
4.03 | Sample Non-Qualified Stock Option Grant Agreement | Filed with the SEC on September 20, 2010 as part of our Form S-8. |
4.04 | Sample Performance-Based Award Agreement | Filed with the SEC on September 20, 2010 as part of our Form S-8. |
10.01 | Asset Option and Purchase Agreement between Fero Industries, Inc. and Jerry Capehart dated April 22, 2007 | Incorporated by reference to our Registration Statement Form SB-2 filed with the SEC on October 23, 2007. |
10.02 | Interim Agreement Between Fero and Pyro | Filed with the SEC on December 8, 2008 as part of our Current Report on Form 8-K. |
10.03 | Amending Agreement Between Fero and Pyro | Filed with the SEC on May 19, 2009 as part of our Current Report on Form 8-K. |
10.04 | Definitive Share Exchange Agreement Between Fero Industries, Inc. and Pyro Pharmaceuticals, Inc. | Filed with the SEC on October 14, 2009 as part of our Amended Current Report on Form 8-K/A. |
10.05 | Definitive Asset Purchase Agreement Between Fero Industries, Inc. and Pyro Pharmaceuticals, Inc. | Filed with the SEC on December 10, 2009 as part of our Current Report on Form 8-K. |
10.06 | Termination of Share Exchange Agreement Between Fero Industries, Inc. and Pyro Pharmaceuticals, Inc. | Filed with the SEC on December 10, 2009 as part of our Current Report on Form 8-K. |
10.07 | Asset Acquisition Agreement between Fero Industries, Inc and Gvest, Inc. | Filed with the SEC on May 28, 2010 as part of our Current Report on Form 8-K. |
10.08 | Promissory Note with Peter Hogendoorn executed on June 24, 2010 | Filed with the SEC on July 1, 2010 as part of our Current Report on Form 8-K. |
31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | Filed herewith. |
31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | Filed herewith. |
32.01 | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith. |
32.02 | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith. |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
| |
| FERO INDUSTRIES, INC. | ||
|
| ||
Dated: March 9, 2011 | By: /s/ Kyle Schlosser | ||
| KYLE SCHLOSSER | ||
| Chief Executive Officer and President | ||
|
| ||
|
| ||
Dated: March 9, 2011 | By: /s/ Leigh-Ann Squire | ||
| LEIGH-ANNSQUIRE | ||
| Chief Financial Officer, Secretary and Treasurer | ||
