Bespoke Extracts, Inc. - Annual Report: 2011 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2011
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number 000-52759
FIRST QUANTUM VENTURES, INC.
(Name of small business issuer in its charter)
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Nevada
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20-4743354
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(State or other jurisdiction ofincorporation or organization)
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(I.R.S. EmployerIdentification No.)
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2101 Vista Parkway., Suite 292
West Palm Beach, Florida
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33411
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(Zip Code)
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Issuer’s telephone number:(561) 228-6148
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, Par Value $0.001 Per Share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes o No x
Indicate by check mark whether the issuer (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 x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large 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.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes x No o
Of the 29,429,232 shares of voting stock of the registrant issued and outstanding as of June 30, 2011, 90,632 shares were held by non-affiliates. The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing bid price of its Common Stock as reported on the OTC Bulletin Board on July 20, 2011: $13,595.
Transitional Small Business Disclosure Format (check one):
Yes o No x
1
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
The following discussion should be read in conjunction with the Company’s audited financial statements and notes thereto and Item 6 included herein. In connection with, and because the Company desires to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on its behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on the Company’s behalf. Without limiting the generality of the foregoing, words such as "may", "anticipate", "intend", "could", "estimate", or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. The Company disclaims any obligation to update forward-looking statements.
Item 1. Description of Business
Business of the Company
First Quantum Ventures, Inc., (“FQVI”) was originally formed as Cine-Source Entertainment, Inc., (“Old Corporation”) a Colorado Corporation, on July 29, 1988. Pursuant to a Plan of Merger dated February 24, 2004, the Old Corporation filed Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging the Old Corporation into Cine-Source Entertainment, Inc., (“The Surviving Corporation”), a Colorado Corporation. A previous controlling shareholder group of the Old Corporation arranged the merger for business reasons that did not materialize. On April 26, 2004, the Company effected a 1-for-200 reverse stock split. Thereafter, the name of the surviving corporation was changed to First Quantum Ventures, Inc., on April 27, 2004. On April 13, 2006 the Surviving Corporation formed a wholly owned subsidiary, a Nevada Corporation named First Quantum Ventures, Inc., and on May 5, 2006 merged Surviving Corporation into First Quantum Ventures, Inc., the Nevada Corporation.
The Company is a start-up, developmental stage company and has not yet generated or realized any revenues from business operations. The Company's auditors have issued a going concern opinion in our audited financial statements for the fiscal year ended June 30, 2011. This means that our auditors believe there is doubt that the Company can continue as an on-going business for the next twelve months unless it obtains additional capital to pay its bills. This is because the Company has not generated any revenues and no revenues are anticipated. Accordingly, we must raise cash from sources such as investments by others in the Company and through possible transactions with strategic or joint venture partners. In the event we raise cash, we will likely use such funds to develop a new business plan, which is as yet undetermined. We do not plan to use any capital raised for the purchase or sale of any plant or significant equipment. The following discussion and analysis should be read in conjunction with the financial statements of the Company and the accompanying notes appearing subsequently under the caption "Financial Statements".
Our principal place of business is 2101 Vista Parkway, Suite 292, West Palm Beach, Florida 33411, and our telephone number at that address is (561) 228-6148.
2
Employees
As of June 30, 2011, the Company employed no full time and no part time employees. None of the Company's employees are represented by labor unions. The Company believes its relationship with employees is excellent and does not believe that unionization is likely to happen. We anticipate hiring additional employees over the next twelve months if we are successful in implementing a new plan of operations or completing a business combination with an operating company.
Subsidiaries
We do not have any subsidiaries.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
Available Information
Information regarding the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, are available to the public from the SEC's website at http://www.sec.gov as soon as reasonably practicable after the Company electronically files such reports with the Securities and Exchange Commission. Any document that the Company files with the SEC may also be read and copied at the SEC's public reference room located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.
You should consider each of the following risk factors and any other information set forth in this Form 10-K and the other Company’s reports filed with the Securities and Exchange Commission (“SEC”), including the Company’s financial statements and related notes, in evaluating the Company’s business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company’s operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occur, the Company’s business and financial condition, results or prospects could be harmed.
Risks Associated With the Company’s Prospective Business And Operations
The Company lacks meaningful operating history and will require substantial capital if it is to be successful. We will require additional funds for our operations.
3
At June 30, 2011, we had working capital of approximately $831. We will require significant cash during fiscal 2012, in order to implement any acquisitions. No assurances can be given that the Company will be able to obtain the necessary funding during this time to make any acquisitions. The inability to raise additional funds will have a material adverse affect on the Company’s business, plan of operation and prospects. Acquisitions may be made with cash or our securities or a combination of cash and securities. To the extent that we require cash, we may have to borrow the funds or sell equity securities. The issuance of equity, if available, would result in dilution to our stockholders. We have no commitments from any financing source and we may not be able to raise any cash necessary to complete an acquisition. If we fail to make any acquisitions, our future growth may be limited. If we make any acquisitions, they may disrupt or have a negative impact on our business.
The terms on which we may raise additional capital may result in significant dilution and may impair our stock price. Because of our cash position, our stock price and our immediate cash requirements, it is difficult for us to raise capital for any acquisition. We cannot assure you that we will be able to get financing on any terms, and, if we are able to raise funds, it may be necessary for us to sell our securities at a price that is at a significant discount from the market price and on other terms which may be disadvantageous to us. In connection with any such financing, we may be required to provide registration rights to the investors and pay damages to the investor in the event that the registration statement is not filed or declared effective by specified dates. The price and terms of any financing which would be available to us could result in both the issuance of a significant number of shares and significant downward pressure on our stock price.
The Company’s officers and directors may have conflicts of interest and do not devote full time to the Company’s operations.
The Company’s officers and directors may have conflicts of interest in that they are and may become affiliated with other companies. In addition, the Company’s officers do not devote full time to the Company’s operations. Until such time that the Company can afford executive compensation commensurate with that being paid in the marketplace, its officers will not devote their full time and attention to the operations of the Company. No assurances can be given as to when the Company will be financially able to engage its officers on a full time basis.
We have not voluntarily implemented various corporate governance measures in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.
Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and Nasdaq are those that address board of directors' independence, audit committee oversight, and the adoption of a code of ethics. While our board of directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not yet listed on a national securities exchange or Nasdaq, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
4
Provisions of our Articles of Incorporation and Bylaws may delay or prevent take-over which may not be in the best interest of our stockholders.
Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Florida Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders. In addition, our articles of incorporation authorize the issuance of up to 10,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors, of which 0 shares of Preferred Stock are issued and outstanding as of August 20, 2011. Our board of directors may, without stockholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock. As a result, our board of directors can issue such stock to investors who support our management and give effective control of our business to our management.
We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on the company's internal controls over financial reporting in their annual reports, including Form 10-K. In addition, the independent registered public accounting firm auditing a company's financial statements must also attest to and report on management's assessment of the effectiveness of the company's internal controls over financial reporting as well as the operating effectiveness of the company's internal controls.
While we expect to expend significant resources in developing the necessary documentation and testing procedures required by SOX 404, there is a risk that we will not comply with all of the requirements imposed thereby. At present, there is no precedent available with which to measure compliance adequacy. Accordingly, there can be no positive assurance that we will receive a positive attestation from our independent auditors. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner or we are unable to receive a positive attestation from our independent auditors with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.
Risks Related to the Company’s Common Stock
The Company does not expect to pay dividends in the foreseeable future.
The Company has never paid cash dividends on its common stock and has no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business.
5
“Penny stock” rules may make buying or selling the common stock difficult and severely limit their market and liquidity.
Trading in the Company’s common stock is subject to certain regulations adopted by the SEC commonly known as the “Penny Stock Rules”. The Company’s common stock qualifies as penny stock and is covered by Section 15(g) of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), which imposes additional sales practice requirements on broker/dealers who sell the Company’s common stock in the market. The “Penny Stock” rules govern how broker/dealers can deal with their clients and “penny stock”. For sales of the Company’s common stock, the broker/dealer must make a special suitability determination and receive from clients a written agreement prior to making a sale. The additional burdens imposed upon broker/dealers by the “penny stock” rules may discourage broker/dealers from effecting transactions in the Company’s common stock, which could severely limit its market price and liquidity. This could prevent investors from reselling Echo common stock and may cause the price of the common stock to decline.
Although publicly traded, the Company’s common stock has substantially less liquidity than the average trading market for a stock quoted on other national exchanges, and our price may fluctuate dramatically in the future.
Although the Company’s common stock is listed for trading on the Over-the-Counter Electronic Bulletin Board, the trading market in the common stock has substantially less liquidity than the average trading market for companies quoted on other national stock exchanges. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Due to limited trading volume, the market price of the Company’s common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company’s performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company’s common stock, and the current market price may not be indicative of future market prices.
Item 2. Description of Property
The Company’s current executive offices are at 2101 Vista Parkway, Suite 292, West Palm Beach, Florida 33411. The property consists of approximately 100 square feet of finished office space. We pay no rent or other fees for the use of the mailing address as these offices are used virtually full-time by other businesses of our shareholder. We believe that the foregoing space is adequate to meet our current needs and anticipate moving our offices during the next twelve (12) months if we are able to execute a new business plan.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of our shareholders, through the solicitation of proxies or otherwise during the fourth quarter of our fiscal year ended June 30, 2011, covered by this report.
6
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information. There is no established trading market in our Common Stock. The Company's common stock is traded only on the OTC Bulletin Board (OTC: FQVE).
(b) Holders. As of June 30, 2011, there were approximately thirty-five (35) holders of record of our common stock, which excludes those shareholders holding stock in street name.
(c) Dividend Policy. We have not declared or paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings, if any, to finance our operations.
(d) Equity Compensation Plans. We have not authorized any compensation plans (including individual compensation arrangements) under which our equity securities have been authorized for issuance as of the end of the most recently completed fiscal year ended June 30, 2011. We have not authorized any such plan for the fiscal year ended June 30, 2011.
Recent Sales of Unregistered Securities.
We did not sell any securities during the period covered by this report that were not registered under the Securities Act of 1933, as amended.
Item 7. Management's Discussion and Analysis
Discussion and Analysis
The following discussion and analysis should be read in conjunction with the financial statements of the Company and the accompanying notes appearing subsequently under the caption "Financial Statements."
This report on Form 10-K contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements and from historical results of operations. Among the risks and uncertainties which could cause such a difference are those relating to our dependence upon certain key personnel, our ability to manage our growth, our success in implementing the business strategy, our success in arranging financing where required, and the risk of economic and market factors affecting us or our customers. Many of such risk factors are beyond the control of the Company and its management.
7
FOR THE YEAR ENDED JUNE 30, 2011 AND 2010
Results of operations
For the twelve months ended June 30, 2011 and 2010, we had no significant operations.
Net Operating Revenues
There was no operating revenue for the twelve months ended June 30, 2011, and 2010 respectively.
Operating Expenses and Charges
The significant operating expenses for the twelve months ended June 30, 2011, included $10,231 in general and administrative expenses and $25,733 in professional fees. For the twelve months ended June 30, 2010, the significant expenses were $213,705 in general and administrative expenses and $19,000 in professional fees.
Financial Condition, Liquidity and Capital Resources
For the twelve months ended June 30, 2011 and 2010, the Company has not generated cash flow from operations. Consequently, the Company has been dependent upon third party loans to fund its cash requirements.
As of June 30, 2011, the Company had cash of $831. The Company's total assets were $831 and $17,295 as of June 30, 2011 and 2010, respectively. At June 30, 2011, total liabilities increased from $33,270 to $56,844. This increase is attributable to the new borrowing of $19,500 of convertible debt and accrued interest into shares of common stock. As of June 30, 2011, the Company had no outstanding debt other than a long-term line of credit. The Company is seeking to raise capital to implement the Company's business strategy. In the event additional capital is not raised, the Company may seek a merger, acquisition or outright sale.
Business Plan and Strategy
The Company is a the development stage enterprise. The Company is currently seeking certain opportunities.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. We have a stockholders deficit of $380,929 and a working capital of $831 at June 30, 2011, and net losses from operations of $40,647 and $239,634, respectively, for the years ended June 30, 2011 and 2010. These conditions raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Use of Estimates. The financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the year then ended. Actual results may differ significantly from those estimates.
Start-Up Costs. Costs of start-up activities, including organization costs, are expensed as incurred, in accordance with Statement of Position (SOP) 98-5.
Net loss per share. Basic loss per weighted average common share excludes dilution and is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company applies Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 123).
Fair value of financial instruments. The carrying values of cash and accrued liabilities approximate their fair values due to the short maturity of these instruments.
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements. We do not anticipate entering into any off-balance sheet arrangements during the next 12 months.
8
Item 8. Financial Statements and Supplementary Data
Our financial statements have been examined to the extent indicated in their reports by Malcolm L. Pollard, Inc. for the two years ended June 30, 2011 and 2010, and have been prepared in accordance with generally accepted accounting principles and pursuant to Regulation S-X as promulgated by the Securities and Exchange Commission and are included herein, on Page F-1 hereof in response to Part F/S of this Form 10-K.
9
INDEX TO FINANCIAL STATEMENTS
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Reports of Independent Registered Public Accounting Firms
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F-2 |
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Balance Sheet
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F-3 |
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Statements of Operations
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F-4 |
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Statements of Stockholders’ Equity
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F-5 |
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Statements of Cash Flows
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F-6 |
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Notes to Financial Statement
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F-7 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
First Quantum Ventures, Inc.
West Palm Beach, Florida
We have audited the accompanying balance sheet of First Quantum Ventures, Inc., as of June 30, 2011, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the two years in the period ended June 30, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Quantum Ventures, Inc. as of June 30, 2011, and the results of its operations and its cash flows for the two years in the period ended June 30, 2011, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that First Quantum Ventures, Inc. will continue as a going concern. As discussed in Note 2 to the financial statements, First Quantum Ventures, Inc. suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Malcolm Pollard, Inc.
Malcolm Pollard, Inc.
Erie, PA
September 28, 2011
F-2
First Quantum Ventures, Inc.
(an development stage enterprise)
Balance Sheet
June 30,
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2011
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2010
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ASSETS
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CURRENT ASSETS
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Cash
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$ | 831 | $ | 13,545 | ||||
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Prepaid expenses
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0 | 3,750 | ||||||
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Total current assets
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831 | 17,295 | ||||||
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OTHER ASSETS
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Other assets
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0 | 0 | ||||||
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Total other assets
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0 | 0 | ||||||
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Total Assets
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$ | 831 | $ | 17,295 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES
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Accounts payable and accrued liabilities
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$ | 0 | $ | 0 | ||||
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Accrued interest payable
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7,344 | 3,270 | ||||||
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Total current liabilities
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7,344 | 3,270 | ||||||
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LONG-TERM LIABILITIES
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Long-term line of credit payable
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49,500 | 30,000 | ||||||
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Total long-term liabilities
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49,500 | 30,000 | ||||||
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Total Liabilities
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56,844 | 33,270 | ||||||
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STOCKHOLDERS’ EQUITY
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Common stock, $0.001 par value, authorized 500,000,000 shares; 29,429,232 issued and outstanding
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29,429 | 29,429 | ||||||
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Additional paid-in capital
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295,487 | 295,487 | ||||||
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Deficit accumulated during the pre-exploration stage
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(380,929 | ) | (340,891 | ) | ||||
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Total stockholders’ equity
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(56,013 | ) | (15,975 | ) | ||||
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Total Liabilities and Stockholders’ Equity
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$ | 831 | $ | 17,295 | ||||
F-3
First Quantum Ventures, Inc.
(an development stage enterprise)
Statements of Operations
Year Ended June 30,
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2010
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2010
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Cumulative from February 24, 2004 (inception) to June 30, 2011
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REVENUES
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$ | 0 | $ | 0 | $ | 0 | ||||||
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OPERATING EXPENSES:
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General and administrative expenses
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10,231 | 213,705 | 305,688 | |||||||||
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Interest expense
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4,383 | 6,929 | 32,508 | |||||||||
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Professional fees
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25,733 | 19,000 | 42,733 | |||||||||
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Total expenses
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40,347 | 239,634 | 380,929 | |||||||||
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Net income (loss)
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$ | (40,347 | ) | $ | (239,634 | ) | $ | (380,929 | ) | |||
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Income (loss) per weighted average common share
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$ | 0.00 | $ | 0.00 | ||||||||
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Number of weighted average common shares outstanding
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29,429,232 | 29,429,232 | ||||||||||
F-4
First Quantum Ventures, Inc.
(an development stage enterprise)
Statement of Stockholders’ Equity (Deficit)
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Number of
Shares
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Common
Stock
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Additional
Paid-in Capital
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Deficit
Accumulated
During the
Development
Stage
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Total
Stockholders’
Equity
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BEGINNING BALANCE, July 1, 2005
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34,030,390 | $ | 34,030 | $ | 0 | $ | (34,030 | ) | $ | 0 | ||||||||||
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Net loss
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0 | 0 | 0 | (8,582 | ) | (8,582 | ) | |||||||||||||
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BALANCE, June 30, 2006
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34,030,390 | 34,030 | 0 | (42,612 | ) | (8,582 | ) | |||||||||||||
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Net loss
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0 | 0 | 0 | (8,205 | ) | (8,205 | ) | |||||||||||||
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BALANCE, June 30, 2007
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34,030,390 | 34,030 | 0 | (50,817 | ) | (16,787 | ) | |||||||||||||
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1 for 100 reverse split
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(33,690,086 | ) | (33,690 | ) | 33,690 | 0 | 0 | |||||||||||||
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Net loss
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0 | 0 | 0 | (24,549 | ) | (24,549 | ) | |||||||||||||
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BALANCE, June 30, 2008
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340,632 | 340 | 33,690 | (75,366 | ) | (41,336 | ) | |||||||||||||
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Net loss
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0 | 0 | 0 | (25,582 | ) | (25,582 | ) | |||||||||||||
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BALANCE, June 30, 2009
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340,632 | 340 | 33,690 | (100,948 | ) | (66,918 | ) | |||||||||||||
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Shares issued for services
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20,000,000 | 20,000 | 180,000 | 0 | 200,000 | |||||||||||||||
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shares issued to settle debt & interest
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9,088,600 | 9,089 | 81,797 | 0 | 90,886 | |||||||||||||||
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Net loss
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0 | 0 | 0 | (239,634 | ) | (239,634 | ) | |||||||||||||
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BALANCE, June 30, 2010
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29,429,232 | 29,429 | 295,487 | (340,582 | ) | (15,666 | ) | |||||||||||||
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Net loss
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0 | 0 | 0 | (40,347 | ) | (40,347 | ) | |||||||||||||
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ENDING BALANCE, June 30, 2011
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29,429,232 | $ | 29,429 | $ | 295,487 | $ | (380,929 | ) | $ | (56,013 | ) |
F-5
First Quantum Ventures, Inc.
(an development stage enterprise)
Statements of Cash Flows
Year Ended June 30,
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2011
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2010
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Cumulative from February 24, 2005 (inception) to June 30, 2011
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CASH FLOWS FROM OPERATING ACTIVITIES:
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||||||||||||
|
Net loss
|
$ | (40,347 | ) | $ | (239,634 | ) | $ | (380,929 | ) | |||
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
||||||||||||
|
Common stock issued for services
|
0 | 200,000 | 225,000 | |||||||||
|
Changes in operating assets and liabilities
|
||||||||||||
|
(Increase) decrease in prepaid expenses
|
3,750 | (3,750 | ) | 0 | ||||||||
|
Increase (decrease) in accounts payable - trade
|
0 | 0 | 0 | |||||||||
|
Increase (decrease) in accrued interest
|
4,383 | 6,929 | 21,074 | |||||||||
|
Net cash provided (used) by operating activities
|
(32,214 | ) | (36,455 | ) | (134,855 | ) | ||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
|
Deposit on options
|
0 | 0 | 0 | |||||||||
|
Net cash provided (used) by investing activities
|
0 | 0 | 0 | |||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
|
Common stock issued for cash
|
0 | 0 | 9,030 | |||||||||
|
Proceeds from line of credit payable
|
19,500 | 50,000 | 126,656 | |||||||||
|
Payments on notes payable
|
0 | 0 | 0 | |||||||||
|
Net cash provided by financing activities
|
19,500 | 50,000 | 135,686 | |||||||||
|
Net increase (decrease) in cash
|
(12,714 | ) | 13,545 | 831 | ||||||||
|
CASH, beginning of period
|
13,545 | 0 | 0 | |||||||||
|
CASH, end of period
|
$ | 831 | $ | 13,545 | $ | 831 | ||||||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||||||
|
Non-Cash Financing Activities:
|
||||||||||||
|
Common stock issued to settle debt and accrued interest
|
$ | 0 | $ | 90,886 | ||||||||
F-6
First Quantum Ventures, Inc.
(an development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a) The Company First Quantum Ventures, Inc.. is a Nevada chartered development stage corporation which conducts business from its headquarters in West Palm Beach, Florida.
|
The following summarize the more significant accounting and reporting policies and practices of the Company:
|
(b) Use of estimates The financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the year then ended. Actual results may differ significantly from those estimates.
|
|
(c) Start-up costs Costs of start-up activities, including organization costs, are expensed as incurred, in accordance with Statement of Position (SOP) 98-5.
|
|
(d) Stock compensation for services rendered The Company may issue shares of common stock in exchange for services rendered. The costs of the services are valued according to generally accepted accounting principles and have been charged to operations.
|
|
(e) Net income (loss) per share Basic loss per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period.
|
|
(f) Property and equipment All property and equipment are recorded at cost and depreciated over their estimated useful lives, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
|
|
(g) Cash and equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents
|
F-7
First Quantum Ventures, Inc.
(an development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s financial position and operating results raise substantial doubt about the Company’s ability to continue as a going concern, as reflected by the net loss of $380,929 accumulated through June 30, 2011. The ability of the Company to continue as a going concern is dependent upon commencing operations, developing sales and obtaining additional capital and financing. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company is currently seeking additional capital to allow it to begin its planned operations
NOTE 3 - NOTES PAYABLE
The Company has entered into a convertible line of credit payable, which bears a 10% interest rate, a maturity date of December 31, 2011 and is unsecured. The line allows for draws up to $100,000, of which the Company has drawn $126,656 and converted $77,156 into shares of common stock. At June 30, 2011, the Company has $50,500 which can be drawn. It is convertible at the option of the holder at the lesser of 60% of the 3 day prior closing price, $0.01 or the price shares are sold to a third party.
NOTE 4 – STOCKHOLDERS EQUITY
At June 30, 2011, the Company has 500,000,000 shares of par value $0.001 common stock authorized and 29,429,232 issued and outstanding.
In March 2010, the Company issued 20,000,000 shares in exchange for services valued at $200,000, or $0.01 per share, the then current market price. In May 2010, the Company issued 9,088,600 shares of common stock to settle $77,156 of then outstanding convertible debt and $13,730 of accrued interest thereon, after a fairness hearing in the Circuit Court of the 18th Judicial Circuit, in and for Seminole County, Florida.
F-8
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
In October 2010, we changed auditors from Larry O’Donnell, CPA, PC to Malcolm Pollard, Inc.
Item 9A. CONTROLS AND PROCEDURES.
Management’s Report on Internal Control Over Financial Reporting
(a) Evaluation of Disclosure Controls and Procedures
Management of the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934) pursuant to Rile 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is communicated to management and the Company’s Board of Directors, to allow timely decisions regarding required disclosure.
Based upon that evaluation, management concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2011.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reposting and the assessment of the effectiveness of internal control over financial reporting. As defined by the SEC, internal control over financial reporting is a process designed by, or under the supervision of our principal executive officer and principal financial officer and implemented by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
It should be noted that the Company’s management do not expect that the Company’s internal controls will necessarily prevent all errors or fraud. A control system, no matter how well conceived or operated, can only provide 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.
As of June 30, 2011, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.
A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based upon this assessment, management concluded that our internal control over financial reporting was effective as of June 30, 2011.
10
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. The Company’s internal controls over financial reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
PART III
(a) Set forth below are the names, ages, positions, with the Company and business experiences of the executive officers and directors of the Company.
| Name | Age | Position(s) with Company | ||
| Andrew Godfrey | 48 | President, Chief Executive Officer, Secretary and Director |
Business Experience
Andrew Godfrey has been our President, Chief Executive Officer and Chairman of the Board of Directors since April 24, 2009. Since November 2003 Mr. Godfrey has been a Consultant in international business procedures to IPC Corporate Services, an international management service company. Concurrently, Mr. Godfrey is a Utilities Inspector and Supervisor for the Department of Housing and Planning in Belize.
Committees of the Board of Directors
We presently do not have an audit committee, compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committees. However, our board of directors may establish various committees during the current fiscal year.
Compensation of Directors
Our directors receive no cash compensation.
Terms of Office
Our directors are appointed for one-year terms to hold office until the next annual general meeting of the holders of our Common Stock or until removed from office in accordance with our by-laws. Our officers are appointed by our board of directors and hold office until removed by our board of directors.
11
Involvement in Certain Legal Proceedings
Except as indicated above, no event listed in Sub-paragraphs (1) through (4) of Subparagraph (d) of Item 401 of Regulation S-K, has occurred with respect to any of our present executive officers or directors or any nominee for director during the past five years which is material to an evaluation of the ability or integrity of such director or officer.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
For companies registered pursuant to section 12(g) of the Exchange Act, Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of reports furnished to us and written representations that no other reports were required, Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were not complied with on a timely basis for the period which this report relates.
Code of Ethics
We have not yet adopted a Code of Ethics and Business Conduct.
Conflicts of Interest
None of our officers will devote more than a portion of his time to our affairs. There will be occasions when the time requirements of our business conflict with the demands of the officers other business and investment activities. Such conflicts may require that we attempt to employ additional personnel. There is no assurance that the services of such persons will be available or that they can be obtained upon terms favorable to us.
Our officers, directors and principal shareholders may actively negotiate for the purchase of a portion of their common stock as a condition to, or in connection with, a proposed merger or acquisition transaction, if any. In the event that such a transaction occurs, it is anticipated that a substantial premium may be paid by the purchaser in conjunction with any sale of shares by our officers, directors and principal shareholders made as a condition to, or in connection with, a proposed merger or acquisition transaction. The fact that a substantial premium may be paid to members of our management to acquire their shares creates a conflict of interest for them and may compromise their state law fiduciary duties to the our other shareholders. In making any such sale, members of Company management may consider their own personal pecuniary benefit rather than the best interests of the Company and the Company's other shareholders, and the other shareholders are not expected to be afforded the opportunity to approve or consent to any particular buy-out transaction involving shares held by members of Company management.
12
It is not currently anticipated that any salary, consulting fee, or finders fee shall be paid to any of our directors or executive officers, or to any other affiliate of us except as described under Executive Compensation below.
Although management has no current plans to cause us to do so, it is possible that we may enter into an agreement with an acquisition candidate requiring the sale of all or a portion of the Common Stock held by our current stockholders to the acquisition candidate or principals thereof, or to other individuals or business entities, or requiring some other form of payment to our current stockholders, or requiring the future employment of specified officers and payment of salaries to them. It is more likely than not that any sale of securities by our current stockholders to an acquisition candidate would be at a price substantially higher than that originally paid by such stockholders. Any payment to current stockholders in the context of an acquisition involving us would be determined entirely by the largely unforeseeable terms of a future agreement with an unidentified business entity.
Item 11. Executive Compensation
The following table shows all the cash compensation paid by the Company, as well as certain other compensation paid or accrued, during the fiscal years ended June 30, 2011 and 2010 to the Company’s President and highest paid executive officers. No restricted stock awards, long-term incentive plan payouts or other types of compensation, other than compensation identified in the chart below, were paid to these executive officers during these fiscal years
|
LONG TERM COMPENSATION
|
||||||||||||||||
|
ANNUAL COMPENSATION
|
AWARDS
|
PAYOUTS
|
||||||||||||||
|
NAME AND
POSITION
|
YEAR
|
SALARY
|
BONUS
|
OTHER
ANNUAL
COMPENSATION
|
RESTRICTED
STOCK AWARDS
|
SECURITIES
UNDERLYING
OPTIONS/SARS
|
LTIP
PAYOUTS
|
ALL
OTHER
COMPENSATION
|
||||||||
|
A Godfrey
|
2011 |
0
|
||||||||||||||
| 2010 | 0 | |||||||||||||||
| 2009 | 0 | |||||||||||||||
| 2008 | 0 | |||||||||||||||
Compensation of Directors
We have no standard arrangements for compensating our board of directors for their attendance at meetings of the Board of Directors.
Bonuses and Deferred Compensation
We do not have any bonus, deferred compensation or retirement plan. Such plans may be adopted by us at such time as deemed reasonable by our board of directors. We do not have a compensation committee, all decisions regarding compensation are determined by our board of directors.
Stock Option and Stock Appreciation Rights.
We do not currently have a Stock Option or Stock Appreciation Rights Plan. No stock options or stock appreciation rights were awarded during the fiscal year ended June 30, 2011, or the period ending on the date of this Report.
13
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to be received from us, with respect to any person named in cash compensation set out above which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person's employment with us or our subsidiaries, or any change in control of us, or a change in the person's responsibilities following a changing in control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of June 30, 2011, information with respect to the beneficial ownership of our common stock by (i) persons known by us to beneficially own more than five percent of the outstanding shares, (ii) each director, (iii) each executive officer and (iv) all directors and executive officers as a group.
| Common Stock Beneficially Owned | ||||||
|
Name and Address
|
Title of Class | Number | Percent (1) | |||
|
Kesgood Company, Inc.*
|
Common |
20,000,000
|
67.96 %
|
|||
|
Centreville House, 4th Floor
|
||||||
|
Nassau, Bahamas
|
||||||
|
* not an officer or director
|
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on June 30, 2011. As of June 30, 2011, there were 29,429,232 shares of our common stock issued and outstanding.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information as of June 30, 2011, with respect to compensation plans (including individual compensation arrangements) under which our common stock is authorized for issuance, aggregated as follows: (i) all compensation plans previously approved by security holders; and (ii) all compensation plans not previously approved by security Holders:
None.
14
Item 13. Certain Relationships and Related Transactions
Except as described below, none of the following persons has any direct or indirect material interest in any transaction to which we are a party during the past two years, or in any proposed transaction to which the Company is proposed to be a party:
(A) any director or officer;
(B) any proposed nominee for election as a director;
(C) any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or
(D) any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary.
Item 14. Principal Accounting Fees and Services.
|
Audit Fees
|
Audit-Related Fees
|
Tax Fees
|
All Other Fees | |
| 2011 |
$8,000
|
none | none | none |
| 2010 |
$8,000
|
none | none | none |
| 2009 |
$8,000
|
none | none | none |
| 2008 |
$8,000
|
none | none | none |
We have no formal audit committee. However, our entire Board of Directors (the "Board") is our defacto audit committee. In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and us that might bear on the auditors' independence as required by Independence Standards Board Standard No. 1, "Independence Discussions with Audit Committees." The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors' independence. The Board also discussed with management, the internal auditors and the independent auditors the quality and adequacy of its internal controls. The Board reviewed with the independent auditors their management letter on internal controls.
The Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in Statement on Auditing Standards No. 61, as amended, "Communication with Audit Committees". The Board reviewed the audited consolidated financial statements of the Company as of and for the year ended June 30, 2010 with management and the independent auditors. Management has the responsibility for the preparation of the Company's financial statements and the independent auditors have the responsibility for the examination of those statements. Based on the above-mentioned review and discussions with the independent auditors and management, the Board of Directors approved the Company's audited consolidated financial statements and recommended that they be included in its Annual Report on Form 10-K for the year ended June 30, 2011, for filing with the Securities and Exchange Commission. The Board also approved the reappointment of Malcolm Pollard, Inc. as independent auditor.
15
PART IV
Item 15. Exhibits and Reports on Form 8-K.
(a) The exhibits required to be filed herewith by Item 601 of Regulation S-K, as described in the following index of exhibits, are incorporated herein by reference, as follows:
|
Exhibit No.
|
Description
|
|
|
31.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
| 32.1 |
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
* Filed herewith
|
||
(b) Reports on Form 8-K
We filed a report on Form 8-K regarding the change in auditor in January 2011.
16
SIGNATURES
In accordance with the Exchange Act, this report has been signed below by the following persons on our behalf and in the capacities and on the dates indicated.
| First Quantum Ventures, Inc. | |||
| (Registrant) | |||
|
Date: September 28, 2011
|
By:
|
/s/ Andrew Godfrey | |
| Andrew Godfrey | |||
| President and Chairman | |||
Pursuant to the requirements of the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
| /s/ Andrew Godfrey | President & Chairman | September 28, 2011 |
|
Andrew Godfrey
|
17