Cannabis Bioscience International Holdings, Inc. - Quarter Report: 2008 March (Form 10-Q)

UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

Commission File Number: 333-146758

FIDELITY AVIATION CORPORATION

(Exact name of registrant as specified in its charter)


Colorado		16-1718190
(State or other jurisdiction of incorporation)		(IRS Employer Identification Number)

1175 Osage Street, Suite 204 Denver, Colorado 80204
(Address of principal executive offices)
303-623-5400
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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. [ X ] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ X ] Yes [ ] No

As of May 1, 2008 the Issuer had 3,295,500 shares of common stock issued and outstanding.

PART I-FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

The consolidated financial statements of Fidelity Aviation Corporation (the "Company"), a Colorado corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-KSB for the fiscal year ended December 31, 2007.

FIDELITY AVIATION CORPORATION

FINANCIAL STATEMENTS

PERIOD ENDED MARCH 31, 2008


INDEX TO FINANCIAL STATEMENTS:	Page

Balance Sheet (Unaudited)	3

Statements of Operations (Unaudited)	4

Statements of Cash Flows (Unaudited)	5-6

Notes to Unaudited Financial Statements	7-8


FIDELITY AVIATION CORPORATION
BALANCE SHEETS



			Dec. 31, 2007	Mar. 31, 2008 (Unaudited)

	ASSETS

		Current assets
		Cash	$ 40,521	$ 33,851
		Total current assets	40,521	33,851

		Total Assets	$ 40,521	$ 33,851


	LIABILITIES & STOCKHOLDERS' EQUITY

		Current liabilities
		Related party payables	$ 33,108	$ -
		Total current liabilities	33,108	-

		Total Liabilities	33,108	-

		Stockholders' Equity
		Preferred stock, no par value;
		10,000,000 shares authorized;
		No shares issued & outstanding	-	-
		Common stock, no par value;
		100,000,000 shares authorized;
		3,295,500 shares issued & outstanding	87,400	87,400
		Additional paid in capital	-	31,608
		Accumulated deficit	(79,987)	(85,157)

		Total Stockholders' Equity	7,413	33,851

		Total Liabilities and Stockholders' Equity	$ 40,521	$ 33,851



The accompanying notes are an integral part of the financial statements.


FIDELITY AVIATION CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)


		Three Months	Three Months
		Ended	Ended
		Mar. 31, 2007	Mar. 31, 2008


	Sales - net of returns	$ -	$ -
	Cost of goods sold

	Gross profit	-	-

	Operating expenses:
	General and administrative	19,113	5,170
		19,113	5,170

	Income (loss) from operations	(19,113)	(5,170)

	Other income (expense):
	Interest expense	(260)	-
		(260)	-

	Income (loss) before
	provision for income taxes	(19,373)	(5,170)

	Provision for income tax	-	-

	Net income (loss)	$ (19,373)	$ (5,170)

	Net income (loss) per share
	(Basic and fully diluted)	$ (0.01)	$ (0.00)

	Weighted average number of
	common shares outstanding	2,548,000	3,295,500


The accompanying notes are an integral part of the financial statements.


FIDELITY AVIATION CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)

		Three Months	Three Months
		Ended	Ended
		Mar. 31, 2007	Mar. 31, 2008
	Cash Flows From Operating Activities:
	Net income (loss)	$ (19,373)	$ (5,170)

	Adjustments to reconcile net loss to
	net cash provided by (used for)
	operating activities:
	Related party payables		(1,500)
	Net cash provided by (used for)
	operating activities	(19,373)	(6,670)


	Cash Flows From Investing Activities:	-	-

	Net cash provided by (used for)
	investing activities	-	-

	Cash Flows From Financing Activities:
	Deferred offering costs	(2,500)
	Net cash provided by (used for)
	financing activities	(2,500)	-

	Net Increase (Decrease) In Cash	(21,873)	(6,670)

	Cash At The Beginning Of The Period	20,295	40,521

	Cash At The End Of The Period	$ (1,578)	$ 33,851


	Schedule Of Non-Cash Investing And Financing Activities

	In 2008 the Company retired a related party payable of $33,108 for $1,500 in cash, resulting
	in an increase to paid in capital from related party debt relief of $31,608.


Continued on next page


FIDELITY AVIATION CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)

	Supplemental Disclosure

	Cash paid for interest	$ -	$ -
	Cash paid for income taxes	$ -	$ -









The accompanying notes are an integral part of the financial statements.

FIDELITY AVIATION CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Fidelity Aviation Corporation ("Fidelity" or the "Company"), is a company engaged in the business of acquiring used large jet airframes and salvaging them for parts intended to be resold in the aviation used parts market.

The Company was originally formed as a Colorado limited liability company in February 2003 under the name of Fidelity Aircraft Partners LLC ("Fidelity LLC"), for the purpose of and engaged in the same business as Fidelity. Effective January 1, 2006, Fidelity LLC was converted into a Colorado C-corporation by the filing of a statement of conversion and articles of incorporation, and renamed Fidelity Aviation Corporation.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

Accounts receivable

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. At March 31, 2008 the Company had no balance in its allowance for doubtful accounts.

Property and equipment

Property and equipment are recorded at cost and depreciated under straight line or accelerated methods over each item's estimated useful life.

FIDELITY AVIATION CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

Revenue recognition

Revenue is recognized on an accrual basis as earned under contract terms. Specifically, revenue from product sales is recognized when delivery occurs. Sales returns and allowances are recorded upon return of merchandise, at full sales price.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 could differ from those estimates.

Income tax

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net income (loss) per share

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

Financial Instruments

The carrying value of the Company’s financial instruments, as reported in the accompanying balance sheets, approximates fair value.

ITEM 2.

MANAGEMENT’S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Overview and Recent Developments

Fidelity’s business was launched in 2003 when it borrowed $125,000 to purchase two non-flying, narrow-body DC-9-51 airframes without engines and thrust reversers. We salvaged the rotable parts and systems from those airframes, and our business has since consisted of selling them to the aviation industry. We chose those later-model, advanced DC-9 airframes in large part because many of the parts also had MD-80 part numbers, which means that they could be installed in MD-80 aircraft. The MD-80 essentially replaced the DC-9 family of narrow-body large jets and is a more modern and desirable aircraft.

Aviation customers for Fidelity’s parts are primarily 1) aircraft operators, including leasing companies, charter airlines and scheduled-service airlines that operate DC-9 and MD-80 aircraft, as well as 2) the maintenance and repair organizations (MRO’s) which service those aircraft.

Fidelity has consigned all salvaged parts to an aviation parts company based in Charlotte, North Carolina, which maintains and markets our parts for a commission. Some parts are sold in as-is condition, and some are refurbished to service-ready status in compliance with stringent FAA regulations. The consignee can refurbish (re-tag) certain parts and must have some re-tagged by third parties. Fidelity has granted the consignee discretion as to which parts to re-tag and which to sell in as-is condition. Fidelity believes this consignment arrangement is in its best interests, in large part

based upon the skill, reputation and facilities of the consignee.

Fidelity does not own or operate any facility for storing or selling aviation parts, and has no current intention of purchasing or leasing any facilities. No such facilities are needed due to the consignment arrangement in place, which results in considerable cost savings to Fidelity by not requiring warehouse or repair facilities, nor any sales, warehouse or mechanic staff. Were Fidelity to cancel the consignment arrangement in order to dispense with the consignee’s commission, it is management’s belief that the costs incurred by Fidelity to warehouse, market, refurbish and deliver the parts would greatly exceed consignment commissions paid. For these reasons, Fidelity currently has no plan to enter the salvage business directly, but will continue to market through a consignee for the foreseeable future.

Operating revenues to date have consisted solely of sales of our parts through our consignee, which remits to us the net sale receipts after deduction of the consignment commission and repair and recertification costs.

Fidelity’s cost structure, on the other hand, is extremely low, primarily due to the consignment arrangement. We have no employees other than management, and we do not pay a salary to management members (only a one-time salary has ever been paid), nor do we pay directors for service. We also incur no labor, materials and freight charges, nor any rent or similar charges for facilities. Fidelity operates at no charge out of the offices of a shareholder and thus incurs no cost for offices or telephone. We have no fixed overhead and operate with close to no expense, a considerable advantage over the typical business, since we can weather long periods of little or no revenue.

Because the most desirable parts tend to sell the quickest, aircraft salvage inventory becomes depleted over time, leaving the salvager with increasingly less-sought parts. Thus the revenue trend drops over time, and it can be reliably anticipated that the largest revenues will be realize in the first couple of years following salvage.

Fidelity’s business is not seasonal, but the demand for aircraft parts fluctuates with the overall market for large-body jets and parts. And to a slightly lesser extent, demand for our parts can be influenced by aviation fuel prices, which can refocus demand from less fuel-efficient aircraft and aircraft that are more expensive to operate to those that are more fuel-efficient. For example, the DC-9 and MD-80 aircraft are fuel efficient and in other respects are comparatively cheap to operate (ex: require only two flight crew and can use shorter runways), thus a surge in fuel prices can create demand for those aircraft parts even in the absence of a strong aviation market in general.

Our operating results thus have fluctuated in the past and may fluctuate significantly in the future. We have not had any significant elements of income or loss that do not arise from our continuing operations. There have not been any material changes from period to period in one or more line items of our financial statements except as resulting from variations in sales revenues, which are and remain essentially beyond our control. Fidelity does not have in place any off-balance-sheet arrangements, and we do not anticipate any such arrangements.

Results of Operations

We purchased and salvaged two initial airframes in 2003, and had the most significant revenues in 2003 and 2004 as a result of the sale of the most desirable and easily marketable parts from our inventory. Since 2003 and 2004 our revenues have declined significantly. Total sales were $23,398 and $17,511 for 2005 and 2006, respectively, and we realized net operating losses for those years of $2,620 and $21,002, respectively. We did not have any sales in 2007 or in the first quarter of 2008. We realized a net operating loss of $56,365 for the fiscal year ended December 31, 2007 and a net operating loss of $5,170 for the period ended March 31, 2008.

Because we had no sales in 2007, the value of our remaining parts inventory, which was $8,414 as of December 31, 2006, was written off as of December 31, 2007.

We expect to continue to have little or no revenue, and to continue to incur losses, until we are able to replenish our parts inventory through the purchase and salvage of additional airframes. There is no assurance that we will be able to locate additional airframes for purchase and salvage. But, if and when we are able to locate available any available airframes, we will require financing to complete the acquisition.

Liquidity and Capital Resources

As of March 31, 2008, the Company’s balance sheet reflects total assets of $33,851, all of which is in the form of cash, and no liabilities.. As of March 31, 2008, the Company had a cumulative deficit of $85,157.

We have no current sources of liquidity other than cash on hand and sales revenues. We do not have in place any line of credit or other credit facility, and our lack of revenue and our lack of assets with which to collateralize a loan would make any borrowing difficult. For this reason, we believe that our only feasible source of funds for the acquisition of airframes is from an offering of equity securities, or debt securities convertible into equity securities.

On or about March 27, 2008, our shares were approved for trading on the OTC Bulletin Board under the symbol FAVC. To date there has been no trading activity in the shares and there is not currently any market for our shares. However, now that our shares have been approved for public trading, we intend to seek to establish a limited public trading market for our outstanding common stock and thereafter to seek to sell equity capital in order to obtain funds necessary to acquire an additional inventory of used aircraft parts through purchase and salvage of additional airframes.

If we are successful in raising sufficient cash through an equity offering, of which there can be no assurance, we believe that we can acquire airframes and salvage them, thereby generating new streams of revenue as parts are sold. Depending on price and availability we would either buy an advanced-series DC-9 which has a high proportion of MD-80 parts, an MD-80 series or a Boeing 737-200 series. Contingent on obtaining necessary financing, it is most like that we will seek to purchase a Boeing 737-200 airframe. The 737-200 airframes are currently available without engines and thrust reversers for approximately $250,000, and Boeing 737 parts are currently in high demand around the world due to the large number of the various 737 models in service.

If on the other hand we are unable to raise sufficient cash for the purchase of additional airframes, we

expect our sales revenues to continue their historical decline. We note that our independent auditor’s report on Fidelity for the fiscal year ended December 31, 2007, contained a reservation as to whether Fidelity would be able to continue as a going concern if it is unable to generate more revenue in the future; which in turn depends on raising additional funds for the purchase of airframes for salvage.

Fidelity has no commitments of any kind for capital expenditures, and our only cash requirement is for the acquisition of additional airframes, salvaging the parts and shipping them to our consignee.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable

ITEM 4T.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended March 1, 2008, that has materially affected, or is reasonably likely to materially affect, the Company's

internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 1A. RISK FACTORS.

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

31.1

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* filed herewith

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.

FIDELITY AVIATION CORPORATION

By: /S/ John Schoenauer

John Schoenauer, Chief Executive Officer, Chief Financial Officer, Director

Date: May 13, 2008