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 January 31, 2002
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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
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Commission File No. 000-32089
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FAR GROUP INC.
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(Name of Small Business Issuer in its Charter)
Washington 91-2023071
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(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:
March 5, 2002
Common - 15,600,000 common shares (after a 6 for 1 forward split)
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
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F-1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
FAR Group Inc.
(A Development Stage Company)
Interim Balance Sheet
January 31, April 30,
2002 2001
$ $
(unaudited) (audited)
ASSETS
Current Asset
Cash 5,649 2,361
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Total Assets 5,649 2,361
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 32,149 4,199
Accrued liabilities 475 750
Note payable (Note 4) 35,000 35,000
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Total Liabilities 67,624 39,949
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Contingency (Note 1)
Stockholders' Deficit
Common Stock: $0.0001 par value; authorized 100,000,000 common shares;
15,600,000 and 2,600,000 shares issued and outstanding respectively (Note 6) 1,560 260
Additional Paid-in Capital 24,440 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 - -
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Deficit Accumulated During the Development Stage (87,975) (63,588)
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Total Stockholders' Deficit (61,975) (37,588)
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Total Liabilities and Stockholders' Deficit 5,649 2,361
========================================================================================================
(See Accompanying Notes to the Interim Financial Statements)
F-2
FAR Group Inc.
(A Development Stage Company)
Interim Statements of Operations
(unaudited)
Accumulated From
March 24, 2000
(Date of Inception) Three months ended Nine months ended
to January 31, January 31, January 31,
2002 2002 2001 2002 2001
$ $ $ $ $
Revenue -
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Expenses
Accounting and legal 32,793 (1,035) - 12,242 500
Bank charges 100 - 25 55 25
Consulting fees 15,000 7,500 5,000 10,000 5,000
License written-off 35,000 - - - -
Office 880 (36) - 218 -
Transfer agent and filing fees 4,202 246 1,303 1,872 1,303
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Net loss (87,975) (6,675) (6,328) (24,387) (6,828)
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Net Loss Per Share - - - -
===============================================================================================================================
Weighted Average Number of Shares
Outstanding (See Note 7 for a six new for
one old forward split applied retroactively) 15,600,000 9,600,000 15,600,000 9,600,000
===============================================================================================================================
(Diluted loss per share has not been presented as the result is anti-dilutive)
(See Accompanying Notes to the Interim Financial Statements)
F-3
FAR Group Inc.
(A Development Stage Company)
Interim Statements of Cash Flows
(unaudited)
Nine months ended
January 31,
2002 2001
$ $
Cash Flows From Operating Activities
Net loss (24,387) (6,828)
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 27,675 1,303
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Net Cash Used by Operating Activities 3,288 (5,525)
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Cash Flows From Financing Activities
Common shares issued - 10,000
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- 10,000
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Increase In Cash 3,288 4,475
Cash at Beginning of Period 2,361 -
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Cash at End of Period 5,649 4,475
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Non-Cash Financing Activities - -
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Supplemental Disclosures
Interest paid - -
Income tax paid - -
(See Accompanying Notes to the Interim Financial Statements)
F-4
FAR Group, Inc.
A Development Stage Company)
Notes to the Interim Financial Statements
January 31, 2002
(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 is listed 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 initially capitalized. The
carrying value of the License was 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 was
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-5
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 owns 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 waived the annual fee due on April 13, 2001. 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 4.
The License was 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. Related Party Transactions
(a) Transactions
The License referred to in Note 3 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.
The $35,000 note payable to the President of the Company 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.
F-6
5. Commitment
The Company entered into a Business Agreement with Magnum Financial Corp.
("Magnum") whereby Magnum was to 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 was to 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 was cancelled and the amount owing was waived.
6. Common Stock
The Company's Board of Directors 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-7
Item 2. Management's Discussion and Analysis or Plan of Operation
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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
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During the period from March 24 2000 through January 31, 2002, 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, 2002, 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 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 January 31, 2002, reflects total
assets of $5,649. The Company has incurred a loss of $87,975 to date. The
Company received $19,861 from a shareholder which was used to pay expenses of
$16,573. This resulted in an increase of cash of $3,288 and a cash balance of
$5,649. These advances are non-interest bearing, unsecured and due on demand.
The Company included in operations legal expenses of $7,993 which represented
due diligence costs spent on a possible business acquisition but due to the
uncertainties in the financial markets as a result of the September 11, 2001
events; negotiations were terminated.
The original shareholder paid legal expenses upon inception 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's Board of Directors 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-8
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-9
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: March 8, 2002 By: /s/ Frank Roberts
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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:
FAR GROUP INC.
Date: March 8, 2002 By: /s/ Frank Roberts
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Frank Roberts, President,
Secretary, Treasurer and
Director
F-10