U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended July 31, 2001
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File No. 000-32089
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FAR GR0UP INC.
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(Name of Small Business Issuer in its Charter)
Washington 91-2023071
- ---------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
Suite 210, 580 Hornby Street
Vancouver, British Columbia, Canada V6C 3B6
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(Address of Principal Executive Offices)
(604) 662-7000
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Issuer's Telephone Number
N/A
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(Former Name or Former Address, if changed since last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date:
July 31, 2001
Common - 2,600,000 common shares (See Note 7(b) of the Interim Financial
Statements attached as Part I Item 1).
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item
6 of this Report.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Company required to be filed with this 10-QSB
Quarterly Report were prepared by management and commence on the following page,
together with related Notes. In the opinion of management, the Financial
Statements fairly present the financial condition of the Company.
FAR GROUP INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
JULY 31, 2001
(Unaudited)
FAR Group, Inc.
(A Development Stage Company)
Interim Balance Sheet
July 31, April 30,
2001 2001
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 207 2,361
- ------------------------------------------------------------------------------------------------------
Total Assets 207 2,361
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 6,856 4,199
Accrued liabilities 500 750
Note payable (Note 4) 35,000 35,000
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Total Liabilities 42,356 39,949
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Contingency (Note 1)
Stockholders' Equity (Deficit)
Common Stock: $0.0001 par value; authorized 100,000,000 common shares;
2,600,000 shares issued and outstanding respectively (Note 7(b) 260 260
Additional Paid-in Capital 25,740 25,740
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26,000 26,000
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Preferred Stock: $.0001 par value; authorized 20,000,000 preferred shares;
none issued - -
- ------------------------------------------------------------------------------------------------------
Deficit Accumulated During the Development Stage (68,149) (63,588)
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Total Stockholders' Deficiency 42,149 (37,588)
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Total Liabilities and Stockholders' Equity (Deficiency) 207 2,361
======================================================================================================
(See Accompanying Notes to the Interim Financial Statements)
F-1
FAR Group, Inc.
(A Development Stage Company)
Interim Statements of Operations
Accumulated From
March 24, 2000 Three months ended
(Date of Inception) July 31, July 31,
to July 31, 2001 2001 2000
$ $ $
(unaudited) (unaudited) (unaudited)
Revenue - - -
- ------------------------------------------------------------------------------------------------
Expenses
Accounting and legal 23,806 3,255 -
Bank charges 55 10 -
Consulting fees 5,000 - -
License written-off 35,000 - -
Office 1,100 438 -
Transfer agent and filing fees 3,188 858 -
- ------------------------------------------------------------------------------------------------
Net loss (68,149) (4,561) -
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Net Loss Per Share (Basic and diluted) - -
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Weighted Average Number of Shares Outstanding 2,600,000 1,600,000
================================================================================================
(See Accompanying Notes to the Interim Financial Statements)
F-2
FAR Group, Inc.
(A Development Stage Company)
Interim Statements of Cash Flows
Three months ended
July 31, July 31,
2001 2000
$ $
(unaudited) (unaudited)
Cash Flows From Operating Activities
Net loss (4,561) -
Items not requiring outlay of cash:
Legal and organizational costs - -
License written-off - -
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 2,407 -
- ---------------------------------------------------------------------------------------------------
Net Cash Used by Operating Activities (2,154) -
- ---------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Common shares issued - -
- ---------------------------------------------------------------------------------------------------
Decrease In Cash (2,154) -
Cash at Beginning of Period 2,361 -
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Cash at End of Period 207 -
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Non-Cash Financing Activities
A total of 1,600,000 shares were issued to a director at a fair market
value of $0.01 per share for legal and organizational expenses paid - -
A note payable was assumed by the Company for the acquisition of a
License from a director (Notes 3 and 5) - -
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- -
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Supplemental Disclosures
Interest paid - -
Income tax paid - -
(See Accompanying Notes to the Interim Financial Statements)
F-3
FAR Group, Inc.
A Development Stage Company)
Notes to the Interim Financial Statements
July 31, 2001
(unaudited)
1. Development Stage Company
FAR Group, Inc. herein (the "Company") was incorporated in the State of
Washington, U.S.A. on March 24, 2000. The Company acquired a license to
market and distribute vitamins, minerals, nutritional supplements, and
other health and fitness products in which the grantor of the license
offers these products for sale from various suppliers on their Web Site.
The Company is in the development stage. In a development stage company,
management devotes most of its activities in developing a market for its
products. Planned principal activities have not yet begun. The ability of
the Company to emerge from the development stage with respect to any
planned principal business activity is dependent upon its successful
efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise
any equity financing or sell any of its products at a profit. There is
substantial doubt regarding the Company's ability to continue as a going
concern.
The Company filed an SB-2 Registration Statement with the U.S. Securities
Exchange Commission which was declared effective in January 2001. The
Company sold and issued 1,000,000 common shares at $0.01 per share for cash
proceeds of $10,000. The Company trades on the OTC Bulletin Board under the
symbol FGRI.
2. Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is April 30.
(b) License
The cost to acquire the License was capitalized. The carrying value of
the License is evaluated in each reporting period to determine if
there were events or circumstances which would indicate a possible
inability to recover the carrying amount. Such evaluation is based on
various analyses including assessing the Company's ability to bring
the commercial applications to market, related profitability
projections and undiscounted cash flows relating to each application
which necessarily involves significant management judgment. Where an
impairment loss has been determined the carrying amount is
written-down to fair market value. Fair market value is determined as
the amount at which the license could be sold in a current transaction
between willing parties. The License has been written-off to
operations due to the lack of historical cash flow of the license and
lack of a market to resell the license.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(d) Revenue Recognition
The Company will receive from the Grantor of the license, commissions
of one-half of all the profit on all sales made through the Grantor's
Web Site. The commission revenue will be recognized in the period the
sales have occurred. The Company will report the commission revenue on
a net basis as the Company is acting as an Agent for the Grantor and
does not assume any risks or rewards of the ownership of the products.
This policy is prospective in nature as the Company has not yet
generated any revenue.
F-4
2. Summary of Significant Accounting Policies
(e) Use of Estimates
The preparation of financial statements in conformity with 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 periods. Actual results could differ from
those estimates.
(f) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
3. License
The Company's asset is a license to market vitamins, minerals, nutritional
supplements and other health and fitness products through the Grantor's Web
Site. The Company desires to market these products to medical
practitioners, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
practitioners, school and other fund raising programs and other similar
types of customers in Minnesota. The license was acquired on April 13, 2000
for a term of three years. The Company must pay an annual fee of $500 for
maintenance of the Grantor's Web Site commencing on the anniversary date.
The Grantor of the license retains 50% of the profits.
The Company paid total consideration of $35,000 for the license with a note
payable of $35,000. See Note 5.
The License has been written-off to operations due to the lack of
historical cash flow and lack of a market to resell the license. However,
it is the Company's intention to conduct a survey to determine its core
target market from amongst the potential clients under its
Vitamineralherb.com license, hire commissioned sales staff, establish an
office, advertise, and begin making sales.
4. Note Payable
The note payable is unsecured, non-interest bearing and is repayable upon
the successful completion of an Initial Public Offering of the common stock
of the Company and sale of all registered shares pursuant to such offering.
As the proceeds from this offering are not sufficient to repay this loan
the President of the Company does not intend to demand repayment until
sufficient funds are in place.
5. Related Party Transaction
The License referred to in Note 4 was assigned to the Company by the sole
director and President of the Company for consideration of the assumption
of a note payable of $35,000. The License was recorded at the transferors
cost of $35,000 which was also fair market value at the time.
The Grantor of the License is not related to the Company.
6. Commitment
The Company entered into a Business Agreement with Magnum Financial Corp.
("Magnum") whereby Magnum will assist the Company with the approval of
trading on the OTC Bulletin Board. The Company has paid $5,000 upon
acceptance of this agreement and will pay $5,000 upon listing for trading
on the OTC BB and a further $5,000 three weeks after listing for trading on
the OTC BB. This agreement is to be cancelled and the amount owing will be
waived.
F-5
7. Subsequent Events
(a) The Company has paid a non-refundable fee of $10,000 to Equitrade
Securities Corporation (an investment banking firm) pursuant to an
agreement dated August 9, 2001.
(b) The Company's Board of Directors have approved a six for one forward
split with a record date of August 31, 2001.
A total of 15,600,000 common shares are issued and outstanding as at
that date.
F-6
Item 2. Management's Discussion and Analysis or Plan of Operation
- -----------------------------------------------------------------------------
The following discussion and analysis of FAR Group's financial condition and
results of operations should be read in conjunction with the Financial
Statements and accompanying notes and the other financial information appearing
elsewhere in this report.
PLAN OF OPERATION
- -------------------
During the period from March 24 2000 through July 31, 2001, FAR Group has
engaged in no significant operations other than organizational activities,
acquisition of the rights to market Vitamineralherb and preparation for
registration of its securities under the Securities Act of 1933, as amended. No
revenues were received by FAR Group during this period.
For the current fiscal year ending April 30, 2001, FAR Group anticipates
incurring a loss as a result of expenses associated with setting up a company
structure to begin implementing its business plan. FAR Group anticipates that
until these procedures are completed, it will not generate revenues, and may
continue to operate at a loss thereafter, depending upon the performance of the
business.
FAR Group's business plan is to determine the feasibility of marketing the
Vitamineralherb products in various markets, and, if the products prove to be in
demand, begin marketing and selling Vitamineralherb products.
FAR Group remains in the development stage and, since inception, has experienced
no significant change in liquidity or capital resources or shareholders' equity.
Consequently, FAR Group's balance sheet as of July 31, 2001, reflects total
assets of $207, in the form of cash.
The original shareholder also paid for legal expenses in the amount of $16,000
for which he received 1,600,000 shares of common stock of the Company.
The Company filed an SB-2 Registration Statement with the U.S. Securities
Exchange Commission which was declared effective in January 2001. The Company
sold and issued 1,000,000 common shares at $0.01 per share for cash proceeds of
$10,000. The Company trades on the OTC Bulletin Board under the symbol FGRI.
FAR Group's business plan is to determine the feasibility of selling
Vitamineralherb.com products to targeted markets. In order to determine the
feasibility of its business plan, FAR Group plans, during the next six to twelve
months, to conduct research into these various potential target markets. Should
FAR Group determine that the exploitation of the license is feasible, it will
engage salespeople to market the products. Based primarily on discussions with
the licensor, FAR Group believes that during its first operational quarter, it
will need a capital infusion of approximately $85,000 to achieve a sustainable
sales level where ongoing operations can be funded out of revenues. This capital
infusion is intended to cover costs of advertising, hiring and paying two
salespeople, and administrative expenses. In addition, FAR Group will need
approximately $260,000 in the event it determines that its market will not pay
in advance and it will have to extend credit. FAR Group will have to obtain
additional financing through an offering or capital contributions by current
shareholders.
FAR Group will need additional capital to carry out its business plan or to
engage in a business combination. No commitments to provide additional funds
have been made by management or other shareholders. Accordingly, there can be no
assurance that any additional funds will be available on terms acceptable to FAR
Group or at all. FAR Group has no commitments for capital expenditures.
In addition, FAR Group may engage in a combination with another business. FAR
Group has engaged in discussions concerning potential business combinations, but
has not entered into any agreement for such a combination.
The Company has paid a non-refundable fee of $10,000 to Equitrade Securities
Corporation (an investment banking firm) pursuant to an agreement dated August
9, 2001.
The Company's Board of Directors have approved a six for one forward split with
a record date of August 31, 2001. A total of 15,600,000 common shares are issued
and outstanding as at that date.
FAR Group's failure to generate revenues and conduct operations since its
inception raise substantial doubt about FAR Group's ability to continue as a
going concern. FAR Group will require substantial working capital, and currently
has inadequate capital to fund its business. FAR Group may be unable to raise
the funds necessary for implementing its business plan, which could severely
limit its operations and cause its stock to be worthless.
F-7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
None.
DOCUMENTS INCORPORATED BY REFERENCE
None.
F-8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
FAR GROUP INC.
Date: September 11, 2001 By: /s/ Frank Roberts
--------------------------------
Frank Roberts, President,
Secretary, Treasurer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated:
Date: September 11, 2001 By: /s/ Frank Roberts
--------------------------------
Frank Roberts, President,
Secretary, Treasurer and
Director
F-9