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, 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 ___________________
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
- ---------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
1286 Homer Street, 4th Floor
Vancouver, British Columbia, Canada V6B 2Y5
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(Address of Principal Executive Offices)
(604) 689-5255
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Issuer's Telephone Number
210-580 Hornby Street
Vancouver, British Columbia,Canada V6C 3B6
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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:
August 15, 2002
Common - 15,850,000 common shares
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 Balance Sheet
July 31, April 30,
2002 2002
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 238,652 4,645
- ------------------------------------------------------------------------------------------------------
Total Assets 238,652 4,645
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 36,476 33,750
Accrued liabilities 600 550
Note payable (Note 4) - 35,000
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Total Liabilities 37,076 69,300
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Contingency (Note 1)
Commitment (Note 5)
Stockholders' Equity
Common Stock: $0.0001 par value; authorized 100,000,000 common shares;
15,850,000 and 15,600,000 shares issued and outstanding respectively 1,585 1,560
Additional Paid-in Capital 309,415 24,440
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311,000 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 (109,424) (90,655)
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Total Stockholders' Equity 201,576 (64,655)
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Total Liabilities and Stockholders' Equity 238,652 4,645
======================================================================================================
(See Accompanying Notes to the Interim Financial Statements)
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, 2002 2002 2001
$ $ $
(unaudited) (unaudited) (unaudited)
Revenue -
- ----------------------------------------------------------------------------------------------
Expenses
Accounting and legal 47,173 12,589 3,255
Business development 5,000 5,000 -
Consulting fees 15,000 - -
License written-off 35,000 - -
Office 1,915 398 448
Transfer agent and filing fees 5,336 782 858
- ----------------------------------------------------------------------------------------------
Net loss (109,424) (18,769) (4,561)
==============================================================================================
Net Loss Per Share - -
==============================================================================================
Weighted Average Number of Shares Outstanding
(stock split applied retroactively) 15,624,000 15,600,000
==============================================================================================
(Diluted loss per share has not been presented as the result is anti-dilutive)
(See Accompanying Notes to the Interim Financial Statements)
FAR Group, Inc.
(A Development Stage Company)
Interim Statements of Cash Flows
Three months ended
July 31, July 31,
2002 2001
$ $
(unaudited) (unaudited)
Cash Flows From Operating Activities
Net loss (18,769) (4,561)
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 2,776 2,407
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Net Cash Used by Operating Activities (15,993) (2,154)
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Cash Flows From Financing Activities
Common shares issued 250,000 -
- -------------------------------------------------------------------------------------------
Increase (Decrease) In Cash 234,007 (2,154)
Cash - Beginning of Period 4,645 2,361
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Cash - End of Period 238,652 207
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Non-Cash Financing Activities
A $35,000 note payable was assumed by the Company for the
acquisition of a License from a director which was forgiven on
July 12, 2002 (Notes 3 and 4) - -
===========================================================================================
Supplemental Disclosures
Interest paid - -
Income tax paid - -
(See Accompanying Notes to the Interim Financial Statements)
FAR Group, Inc.
A Development Stage Company)
Notes to the Interim Financial Statements
July 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 currently developing a marketing strategy to offer personal
care products through a kiosk-based ordering system. Once the kiosk-based
marketing strategy is developed, it will serve as another distribution
network for both of its product lines.
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. During
fiscal 2001, the Company sold and issued 1,000,000 common shares at $0.01
per share for cash proceeds of $10,000. During the period, the Company
pursuant to a private placement issued 250,000 common shares at $1.00 per
share for cash proceeds of $250,000. 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 initially 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.
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 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 Transaction
The License referred to in Note 3 was assigned to the Company by the former
sole director and former President of the Company for consideration of the
assumption of a note payable of $35,000 to Vitamineralherb.com. On December
12, 2000, on behalf of the Company, the former President of the Company
repaid the note payable to Vitamineralherb.com for which the Company issued
a note payable of $35,000 to the former President of the Company. The
$35,000 note payable to the former President of the Company was unsecured,
non-interest bearing and was repayable by December 31, 2010. On July 12,
2002, the former President of the Company forgave the note payable and
released the Company from all obligations. The License was recorded at the
transferor's cost of $35,000, which was also fair market value at the time.
The Grantor of the License is not related to the Company.
5. 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 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
(a) The Company's Board of Directors approved a six for one forward split
with a record date of August 31, 2001.
(b) During the period ended July 31, 2002, pursuant to a private
placement, the Company issued 250,000 common shares at $1.00 per share
for total cash consideration of $250,000.
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
- -------------------
During the period from March 24 2000 through July 31, 2002, FAR Group has
engaged in no significant operations other than organizational activities,
acquisition of the rights to market Vitamineralherb, preparation for
registration of its securities under the Securities Act of 1933, as amended,
preparation of a supplementary business plan and completing a private placement
to fund this secondary division. No revenues were received by FAR Group during
this period.
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.
The Company is presently in negotiations to extend its license for an additional
three years to market vitamins, minerals, nutritional supplements and other
health and fitness products in Minnesota through the Vitamineralherb.com web
site. The current license expires in April 2003. There can be no assurance
that the Company will be successful in extending its license to market through
Vitamineralherb.com although the Company has been assured that the extension is
forthcoming.
FAR Group's business plan in connection with the license to sell products
through the Vitamineralherb.com web site is to determine the feasibility of
selling products to targeted markets. In order to determine the feasibility of
its business plan, FAR Group plans for the next six months, provided it is able
to extend its license to sell through the Vitamineralherb.com web site, 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.
In addition to its Vitamineralherb business development, during the quarter
ended July 31, 2002, FAR Group initiated the development of a marketing strategy
to offer consumers high quality, competitive priced personal care products
through a kiosk-based ordering system with additional website, mail-in and phone
orders. Once developed, the Company intends to use the kiosk-based marketing
strategy as another distribution network for both its Vitamineraherb products
and the products of Health Anti-Aging Lifestyle Options, Inc. ("HALO"). Upon
completion of the development of its kiosk based marketing system, the Company
intends to enter into a marketing partnership with HALO to sell HALO's health
and wellness products. There can be no assurances that the Company will be
successful in developing its kiosk based marketing system or that it will be
able to secure products for distribution through this system.
For the current quarter ending July 31, 2002, FAR Group anticipates incurring a
loss as a result of expenses associated with setting up a company structure to
begin implementing its business plans. 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. FAR Group's balance sheet as of July
31, 2002, reflects total assets of $238,652 comprising of all cash. The Company
had total liabilities of $37,076 of which $22,000 represented advances from a
shareholder to cover the Company's operating expenses in the past. The Company
has incurred a loss of $109,424 to date. During the quarter ended July 31, 2002,
the Company issued 250,000 shares of common stock to HALO on a private placement
basis for proceeds of $250,000. The proceeds from this private placement are
intended for general working capital in connection with the development of its
kiosk based marketing system and none of the proceeds are intended to be used
towards the Vitamineralherb segment of the Company's business.
Liquidity
- ---------
The Company had cash on hand of $238,652 as at July 31, 2002. During the most
recent quarter, the Company's former sole director and officer, forgave a note
payable and released the Company in connection with a $35,000 obligation for the
initial acquisition of the Vitamineralherb license.
The Company has allocated a significant portion of the cash on hand to working
capital for the development of the kiosk marketing system and related
administrative costs. 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.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
During the quarter ended July 31, 2002, the Company issued 250,000
"unregistered" and "restricted" shares of its common stock to Health Anti-Aging
Lifestyle Options, Inc. ("HALO") pursuant to a private placement financing of
$250,000 to be used in developing a kiosk style marketing system. The Company
intends to enter into a marketing partnership with HALO to sell HALO's products
once the kiosk marketing system is in place. The Company believe that the offer
and sale of these securities was exempt from the registration requirements of
the Securities Act of 1933, as amended, pursuant to Rule 506 of Regulation D of
the Securities and Exchange Commission and from various similar state
exemptions.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On July 19, 2002, the Company held an annual general meeting of its
stockholders in Vancouver, British Columbia. At the meeting the following
persons were elected to serve as directors of the Company until the next annual
meeting of the Company's stockholders or until the election or appointment of
their successors:
- Jim Glavas
- Aaron Kirsten
- Larry Bishop
At the meeting, the stockholders also ratified and confirmed the
appointment of Manning Elliott, Chartered Accountants as the Company's
independent auditors for the fiscal year ended April 30, 2003.
Item 5. Other Information.
The Company's Board of Directors held a meeting on July 19, 2002,
immediately after the completion of the meeting of the stockholders. At the
Board meeting the following persons were elected to serve in the capacities
indicated for the ensuing year or until they are replaced by the Board:
- Jim Glavas - President, CEO and CFO
- Coreena Hansen - Secretary
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Description of Exhibit Exhibit No.
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Subscription Agreement with Health Anti-Aging
Lifestyle Options, Inc. 99.1
(b) Reports on Form 8K
- Form 8K filed on July 23,2002
DOCUMENTS INCORPORATED BY REFERENCE
None.
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: August 30, 2002 By: /s/ Jim Glavas
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Jim Glavas
President, CEO, CFO and Director
Date: August 30, 2002 By: /s/ Aaron Kirsten
-------------------- -----------------------------------
Aaron Kirsten
Director
Date: August 30, 2002 By: /s/ Larry Bishop
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Larry Bishop
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: August 30, 2002 By: /s/ Jim Glavas
-------------------- -----------------------------------
Jim Glavas
President, CEO, CFO and Director
Date: August 30, 2002 By: /s/ Aaron Kirsten
-------------------- -----------------------------------
Aaron Kirsten
Director
Date: August 30, 2002 By: /s/ Larry Bishop
-------------------- -----------------------------------
Larry Bishop
Director
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FAR Group Inc. (the "Company") on
Form 10-QSB for the period ended July 31, 2002 as filed with the Securities and
Exchange Commission on the date here of (the "Report"), I, Jim Glavas, CEO, CFO
and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the
best of our belief and knowledge:
(1) The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Dated: August 30, 2002 /s/ Jim Glavas
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Jim Glavas
CEO, CFO and President