Frelii, Inc. - Quarter Report: 2011 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2011

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

For the transition period from _______ to ______

Commission File Number 333-107179 &000-51210

VICAN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

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 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 [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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 [ ] 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).

Yes [] No [X]

As of October 31, 2011, there were 114,840,019 outstanding shares of the registrant's common stock, $0.001 par value per share. The registrant has submitted an application to the Financial Industry Regulatory Authority in connection with a reverse split of its outstanding shares on a 1-for-100 basis and described in the Registrant’s Information Statement on Schedule 14C filed on August 11, 2011, but such action has not yet been declared effective.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q

The Financial Statements of the Company are prepared as of September 30, 2011.

VICAN RESOURCES, INC.

(formerly Tremont Fair, Inc.)

Notes to the Consolidated Financial Statements

September 30, 2011

(Unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Vican Resources, Inc. ("the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K for the year ended December 31, 2010. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the year ended December 31, 2011. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent year 2010 as reported in Form 10-K have been omitted.

2. GOING CONCERN

The Company has a working capital deficit at September 30, 2011 and has not established a recurring source of revenues sufficient to cover its operating costs. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon its ability to obtain capital through the sales of equity and attaining additional profitable operations. Currently the Company is receiving cash advances from related parties, including stockholders and their affiliates, to cover operating expenses. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

3. EQUITY TRANSACTIONS

On February 7, 2011, the Company issued 1,053,334 shares of common stock to current and former members of its Board of Directors and a former member of the Company’s Advisory Board in payment of fees related to services provided in connection therewith.

On March 2, 2011, the Company converted $25,000 in loans payable into 10,000,000 shares of common stock valued at $400,000, based on fair market value using quoted market prices on the date of issuance. The difference between the value of the debt and the fair market value of the common stock was $375,000 which was treated as a loss on extinguishment of debt.

On March 31, 2011, the Company issued 225,000 shares to John D. Thomas, the President of the Company, in relation to the entitlement of $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter by serving as an independent board director prior to becoming President of the Company. The 225,000 shares includes the $5,000 worth of shares as well as the $2,000 in cash for the quarter ended March 31, 2011, which were converted into common stock.

On April 15, 2011, the Company redeemed and canceled 70,798,500 shares of common stock held by Cumbria Capital, L.P. in exchange for 100,000 shares of Series A Preferred Stock of the Company (“Series A Preferred Stock”) and a convertible promissory note of the Company in the original principal amount of $700,000. The Series A Preferred Stock carries no dividend,

VICAN RESOURCES, INC.

(formerly Tremont Fair, Inc.)

Notes to the Consolidated Financial Statements

September 30, 2011

(Unaudited)

distribution, liquidation, or rights of conversion into common stock. However, each share of Series A Preferred Stock holds 10,000 votes per share, giving the holder thereof an aggregate of 1,000,000,000 voting rights and, therefore, voting control over the election of the Company’s board of directors and other substantive matters requiring consent of holders of a majority of the voting shares of the Company. Also on April 15, 2011, the Company filed a Certificate of Designation to its Articles of Incorporation with the State of Nevada specifying the terms of the Series A Preferred Stock.

On April 28, 2011, the Company issued 45,000,000 shares of common stock valued at $675,000 to various service providers of the Company.

On April 28, 2011, the Company issued 5,000,000 shares of Series B Preferred Stock (“Series B Preferred Stock”) to a corporation controlled by a former executive officer and member of the Company's Board of Directors Each share of the Series B Preferred Stock may be converted into six shares of the Company’s common stock and may vote on an as-converted basis with the holders of common stock of the Company. The fair value of the Series B Preferred Stock was $450,000 on the date of issuance. Also on April 28, 2011, the Company filed a Certificate of Designation to its Articles of Incorporation with the State of Nevada specifying the terms of the Series B Preferred Stock.

On May 26, 2011, the Company entered into an agreement to acquire all of the outstanding shares of Vican Trading, Inc., a Delaware corporation (hereafter, “Vican-Delaware”), in exchange for 25,000,000 shares of restricted common stock of the Company and 5,000,000 shares of Series B Preferred Stock of the Company (such transaction is hereafter referred to as the “Acquisition”). Vican-Delaware is a purchaser and seller of metals, ores, and other commodities throughout North America. Prior to the Acquisition, Vican-Delaware was wholly-owned by 6961916 Canada Inc. (hereafter¸ "696"), a corporation organized pursuant to the Canada Business Corporations Act that is beneficially owned and controlled by Lorne Kalisky, who was thereafter appointed as an executive officer and director of the Company.

4. OTHER EVENTS

Effective May 1, 2011, the Company is no longer managing the Braes Hollow Apartments, as the owners determined to self-manage the property. The decision was mutually agreed by the Company and such owners as being in the best interest of the property. The current management agreement for the property was otherwise set to expire on August 31, 2011.

On April 19, 2011, the Company experienced a change of control, as Cumbria Capital, L.P., the holder of the Series A Preferred Stock described in the preceding paragraph, sold these shares to Sierra Vista Holdings, Inc., a Florida corporation (hereafter, “Sierra”).

On April 28, 2011, Cyrus Boga resigned from the Company’s Board of Directors (the “Board”) and as an officer of the Company. Also on April 28, 2011, the Board appointed Mark D. Klok as its Chairman and John D. Thomas as the Company’s President and Secretary. Mr. Klok is the owner of Sierra Vista Holdings, Inc., the controlling shareholder of the Company, and Mr. Thomas is a former independent director of the Company.

VICAN RESOURCES, INC.

(formerly Tremont Fair, Inc.)

Notes to the Consolidated Financial Statements

September 30, 2011

(Unaudited)

On May 26, 2011, Sierra sold 50,000 of its 100,000 shares of Series A Preferred Stock to 6961916 Canada Inc., a corporation beneficially owned and controlled by Lorne Kalisky, an executive officer and director of the Company.

On May 31, 2011, John D. Thomas resigned as an officer and director of the Company.

On May 31, 2011, the Board of Directors appointed Lorne Kalisky as the Company’s Chief Executive Officer, President, and a member of the Board, Chene Gardner as the Company’s Chief Financial Officer and Treasurer, and Corey Safran as the Company’s Executive Vice President and Secretary.

On May 31, 2011, the Company sold all of its shares in Tremont Fair Holdings, Inc., a Texas corporation, in exchange for forgiveness of $155,000 owed to Cyrus Boga, the Company’s former Chief Executive Officer and a principal beneficial shareholder of the Company. Tremont Fair Holdings, Inc. is a real estate investment services and management company focusing on distressed multifamily properties in the greater Houston area.

On May 31, 2011, the Company amended and restated its Articles of Incorporation providing for a change in the Company’s name from “Tremont Fair, Inc.” to “Vican Resources, Inc.” and to increase the number of authorized shares of common stock from 200,000,000 to 400,000,000 shares.

On May 31, 2011, the Company amended and restated its Bylaws, providing for a change in the Company’s name from “Tremont Fair, Inc.” to “Vican Resources, Inc.” and other non-material changes.

On July 19, 2011, the Company engaged Morrill & Associates, LLC, independent registered accountants, as our independent accountant following the dismissal of GBH CPAs, P.C.

5. SUBSEQUENT EVENTS

On August 3, 2011, the Company approved a reverse split of the Company’s Common Stock on a 100 for 1 basis, for all shareholders of record on August 3, 2011 (the “Record Date”), meaning, that each 100 shares of Common Stock on the Record Date will be consolidated into 1 share of Common Stock following the reverse split. Fractional shares will be rounded up to the nearest whole share. The Company has submitted an application to the Financial Industry Regulatory Authority in connection with the reverse split but such action has not been declared effective.

On October 2, 2011, Mark Klok resigned from the Board of Directors of Vican Resources, Inc.

On October 12, 2011, the Board approved the issuance of 8,000,000 shares of Series C Preferred Stock. The Series C Preferred Stock contains certain rights, preferences, privileges, restrictions and other characteristics as further detailed in the Certificate of Designation to the Company’s Articles of Incorporation.

VICAN RESOURCES, INC.

(formerly Tremont Fair, Inc.)

Notes to the Consolidated Financial Statements

September 30, 2011

(Unaudited)

On October 12, 2011, the Board of Directors appointed Corey Safran to fill the vacancy left by the resignation of Mark Klok.

On October 12, 2011, the “Company” entered into an agreement with 696, a corporation owned and controlled by Lorne Kalisky, our Chief Executive Officer and controlling shareholder, granting 696 the right and option (the “Option”) to purchase all of the shares of Vican Trading, Inc. held by the Company. The Option granted to 696 becomes exercisable in the event that the Company does not raise at least $250,000 in a private placement of its debt or equity securities within 60 days. The exercise price to be paid by 696 in the event of an exercise of the Option is the redemption and cancellation of all of the shares of common, Series B, and Series C Preferred Stock held by 696.

On October 12, 2011, the Company entered into an agreement with 696, the Company’s controlling shareholder and a holding company of Lorne Kalisky, the Company’s Chief Executive Officer, to convert the Series B Preferred Stock held by 696 into such holdings into an aggregate of 300,000 shares of common stock of the Company upon the approval of the Financial Industry Regulatory Authority of a 100-1 reverse split of the Company’s outstanding shares that was requested in August, 2011.

On October 13, 2011, the Company canceled 5,000,000 shares of Series B Preferred Stock originally issued to a corporation controlled by a former executive officer and member of the Board of Directors as described above.

On October 13, 2011, the Board of Directors approved the cancellation of 5,000,000 shares of Series "B" preferred stock originally issued to Sierra Vista Holdings, Inc., a corporation controlled by a former executive officer and member of the Company's Board of Directors

The Company has evaluated subsequent events of the period of September 30, 2011 through the date the financial statements were issued, and concluded there were no other events or transactions occurring during this period that required recognition or disclosure in its consolidated financial statements.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the Risk Factors section included in this Report on Form 10-Q.

Plan of Operation

Prior to July 31, 2009, we were a development stage company named “Cancer Detection Corporation” which sought to provide research and development to potential cancer and related pathogen vaccines. This business was discontinued in July 2009, when the Company reorganized under the name of “Tremont Fair, Inc.” and operated as a real estate services company. In May 2011, the Company was further reorganized when we acquired all of the outstanding shares of Vican Trading, Inc., a Delaware corporation (hereafter, “Vican-Delaware”). Vican-Delaware is a purchaser and seller of metals, ores, and other commodities throughout North America. In connection with the acquisition of Vican Delaware, we changed our name from “Tremont Fair, Inc.” to “Vican Resources, Inc.” and appointed Lorne Kalisky, Chene Gardner, and Corey Safran as our Chief Executive Officer, Chief Financial Officer, and Secretary, respectively. We expect that the business of Vican Delaware will predominate within the consolidated group in the future.

Liquidity and Capital Resources

As of September 30, 2011, the Company’s primary source of liquidity consisted of $70,437 in cash and cash equivalents. The Company holds most of its cash reserves in local sweep accounts with local financial institutions. Since inception, the Company has financed its operations through a combination of short and long-term loans, and through the private placement of its common stock.

The Company has sustained significant net losses which have resulted in a total stockholders’ deficit at September 30, 2011 of $3,822,224 and is currently experiencing a substantial shortfall in operating capital which raises doubt about the Company’s ability to continue as a going concern. The Company anticipates a net loss for the year ended December 31, 2011 and with the expected cash requirements for the coming months, without additional cash inflows from an increase in revenues combined with continued cost-cutting or a receipt of cash from capital investment, there is substantial doubt as to the Company’s ability to continue operations.

There is presently no agreement in place with any source of financing for the Company and there can be no assurance that the Company will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds will materially affect the Company and its business, and may cause the Company to cease operations. Consequently, shareholders could incur a loss of their entire investment in the Company.

Results of Operations

Until the reorganization of the Company in July 2009, we were considered a development stage company for accounting purposes, since we had not yet received any revenues from operations. Effective September 1, 2009, Tremont Fair Holdings, Inc. acquired two property management agreements from Creekstone Equity Management, a company controlled by Cyrus Boga (the “Management Agreements”).

Revenues. For the three months ended September 30, 2011, net revenues were $11,049,129 compared to $38,325 for the three months ended September 30, 2010. For the nine months ended September 30, 2011, net revenues were $16,852,874 compared to $120,221 for the nine months ended September 30, 2010. The increase is due to the acquisition Vican Trading, Inc. during the second quarter of 2011. The Company expects that revenues will continue to remain at these levels in the future.

Cost of Sales. Cost of sales for the three and nine months ended September 30, 2011 were $10,735,826 and $16,211,895, respectively, compared to $-0- for the three and nine months ended September 30, 2010. Cost of sales correlates with the volume of revenues for the periods.

Selling General and Administrative Expenses (“SG&A”). Our SG&A expenses for the three months ended September 30, 2011was $352,335 compared to $111,458 for the three months ended September 30, 2010. For the nine months ended September 30, 2011, SG&A expenses were $1,502,541 compared to $476,900 for the nine months ended September 30, 2010.

Other Expense. The Company had net other expenses of $4,218,211 for the nine months ended September 30, 2011. The largest item in this category was the write off of goodwill associated with the acquisition of Vican Trading Inc. which amounted to $3,837,934.

Net Loss. We had a net loss for the nine months ended September 30, 2011 of $5,054,093 compared to a net loss of $360,810 for the nine months ended September 30, 2010.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. On an on-going basis, we evaluate our estimates. Actual results may differ from these estimates if our assumptions do not materialize or conditions affecting those assumptions change.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

Revenue Recognition

Revenue from management services is recognized when service is completed.

Stock-Based Compensation

The Company sometimes grants shares of stock for services. These grants are accounted for based on the grant date fair values.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Required.

Item 4.  Controls and Procedures.

(a)   We maintain a system of controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of September 30, 2011, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective due to several adjustments proposed by our auditors.

(b)   There were no changes in our internal control over financial reporting during the quarter ended September 30, 2011 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our properties, results of operation, or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

Item 1A. Risk Factors

Since we are a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February 7, 2011, the Company issued 1,053,334 shares of common stock to current and former members of its Board of Directors and a former member of the Company’s Advisory Board in payment of fees related to services provided in connection therewith.

On March 2, 2011, the Company converted loans and interest held by an accredited investor in the amount of $25,000 into 10,000,000 shares of common stock.

On March 31, 2011, the Company issued 225,000 shares to John D. Thomas, the President of the company, in relation to the entitlement of $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter by serving as an independent board director prior to becoming President of the Company. The 225,000 shares includes the $5,000 worth of shares as well as the $2,000 in cash, which were converted into common stock.

On April 15, 2011, the Company issued 100,000 shares of Series A Preferred Stock and a convertible promissory note in the original principal amount of $700,000 as consideration for the acquisition of 70,798,500 shares of common stock held by an accredited investor.

On April 28, 2011, the Company issued 45,000,000 shares of common stock to various service providers of the Company, all of whom were accredited investors.

On May 26, 2011, the Company issued 25,000,000 shares of restricted common stock and 5,000,000 shares of Series B Preferred Stock of the Company to 6961916 Canada Inc. in connection with the acquisition of Vican-Delaware described herein.

On October 12, 2011, the Company issued an aggregate of 8,000,000 shares of Series C Preferred Stock to 6 persons in privately negotiated transactions. Two of the recipients of the Series C Preferred Stock were Corey Safran, a director and the Secretary of the Company, and 696, the Company’s controlling shareholder and a holding company of Lorne Kalisky, the Company’s Chief Executive Officer. The Series C Preferred Stock converts into common stock of the Company on a one-for-one basis upon the approval by FINRA of a 100-1 reverse split of the Company’s outstanding shares that were requested in August, 2011.

On October 12, 2011, the Company entered into an agreement with two holders of its Series B Preferred Stock, one of whom is 696, the Company’s controlling shareholder and a

holding company of Lorne Kalisky, the Company’s Chief Executive Officer, to convert such holdings into an aggregate of 300,000 shares of common stock of the Company upon the approval of the Financial Industry Regulatory Authority (“FINRA”) of a 100-1 reverse split of the Company’s outstanding shares that was requested in August, 2011.

Exemption From Registration Claimed

All of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management, through pre-existing business relationships. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. No underwriting discounts or commissions were given or paid in connection with these issuances. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, as applicable, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

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.

The following exhibits are filed with or incorporated by referenced in this report:

* 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.