UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
July 31, 2012
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TRANSITION REPORT UNDER 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
000-52854
FBC HOLDING, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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71-1026782
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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16213 S. Western Ave
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Gardena, CA 90247
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03820
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code
(562) 200-8478
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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None
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None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
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No
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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
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No
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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.
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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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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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
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No
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Aggregate market value of the voting stock held by non-affiliates: $1,249,690 as based on last reported sales price of such stock. The voting stock held by non-affiliates on that date consisted of 124,969,002 shares of common stock.
Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes
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No
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Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of November 13, 2012, there were 2,216,225,490 shares of common stock, par value $0.001, issued and outstanding. Approximately 1.7 billion shares were issued as collateral.
Documents Incorporated by Reference
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).
None.
FBC Holding, Inc.
TABLE
OF CONTENTS
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PART I
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4
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14
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14
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15
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15
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PART II
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17
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18
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21
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PART III
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PART IV
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29
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Explanatory Note
This Annual Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading “Management's Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Company's future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
Corporate History
FBC Holding, Inc. (“We,” “FBC” or “Company”) was incorporated in Nevada on May 31, 2006, under the name Wave Uranium, Inc. On September 24, 2009, we merged with FBC Holding, Inc., a Nevada corporation and changed our name to FBC Holding, Inc. On October 26, 2010, a majority of our shareholders and our board of directors authorized a name change to Super Rad Industries, Inc. However, the Super Rad transaction was rescinded prior to filing the name change with the State of Nevada so we have remained FBC Holding, Inc.
Business History
Iron Link Internet Protocol Television
As noted above, we were incorporated on May 31, 2006 in the State of Nevada. Subsequent to our incorporation we acquired a private company, Iron Link TV Ltd., which was controlled by one of our then directors. At the time we were a development stage company that was in the process of testing and developing IPTV based ethnic media services. IPTV, short for Internet Protocol Television, delivers television as data over a broadband connection that can be viewed on a PC or on a television set equipped with a set-top box. Iron Link is planned to deliver streaming and on-demand content to subscribers residing in the United States and Canada.
Wave Uranium Transaction
By June 2001, we had expended our funds but had not been successful in attaining a revenue-generating product and our management elected to sell our assets and change our business focus. On June 18, 2007, pursuant to an Agreement and Plan of Reorganization dated June 18, 2007, we acquired all of the capital stock of Wave Uranium, a Nevada corporation, in exchange for 2,666,667 newly issued shares of our common stock. In connection with this transaction, on June 20, 2007, we sold our Iron Link Ltd. subsidiary to our former President, Alexandre Routkovski, for cash of $14,000 and payment of $12,087.62 owed to a related party. As part of this transaction we agreed not to enter the IPTV business in the province of British Columbia for a period of five years after the date of the Agreement. At the time of entering into the Agreement we did not have any operations, but intended on entering into the uranium exploration business.
On September 20, 2007 we entered into a mining option agreement with Handley Minerals, Inc. a Nevada company, pursuant to which we acquired an option to purchase a 100% undivided interest in the Wilson Creek project which consists of ten claims situated in the country of Gila in the State of Arizona. In November 2007 we have been active in purchasing over 1,200 mineral claims in Utah for costs to us of approximately $330,000.
FBC Holding Transaction
On September 24, 2009 we merged with FBC Holding Inc. Through this transaction we acquired and operated three subsidiary companies, FBC Group, Beverly Hills Choppers and Johnny Fratto Social Club Inc. These subsidiaries provided us with our then-operations, which were focused on branding and marketing for products and celebrities, as well as sales and distribution for Beverly Hills Choppers' two and three wheelers in addition to a clothing and jewelry line. We also had a social network and media outlet through JFSC.TV including its other websites.
From August 1, 2009 to May 1 2010 we focused on product branding, social networking and branding of our assets, namely Beverly Hills Choppers. However, due to a variety of differences with the operators of our subsidiaries, on May 1, 2010, we returned our ownership of Beverly Hills Choppers, FBC Group and the JFSC.tv aka the Johnny Fratto Social Club back to the parties that sold them to us, in exchange for the shares of our common stock that had been issued to the owners of the three companies. These shares were cancelled on May 15, 2011.
Super Rad Transaction
On August 11, 2009, we signed an Asset Purchase Agreement with Super Rad Corporation. Under the agreement we purchased certain assets related to the collectible toy and art industry. Super Rad Toys, Inc. was founded as a California corporation in December 2006. As a result of preparing to go public, it reincorporated in Nevada under the name of Super Rad Industries, Inc. doing business as Super Rad Toys. Since the Super Rad’s inception it has emerged at the forefront of the collectible art world, by producing innovative and high-quality vinyl collectibles that have gained an excellent reputation with collectors on a global basis.
Our initial commercial endeavor was the Ningyo Project: Gosho Doll, a collaborative effort with well-known artists customizing figures based on an ancient traditional Japanese Gosho doll. The Ningyo Project was initially conceived as a research project—a study in interpretation of traditional art and its application in the contemporary art world, as well as a study of the relationship between nature, artist, form and the collector. The founders of Super Rad aspired to create original and inspired vinyl collectibles to be acquired and cherished in the same way traditional art collectors do fine art. As their research into doll-making progressed, they recognized parallels between the traditional Ningyos of Japan and today’s vinyl collectibles. It seems the techniques employed by traditional and modern artisans, mold makers and sculptors have not changed over the centuries. Only the materials with which they utilize, the technology they use, and the popular culture they sought to emulate remain constant. The same is true for the themes reflected in the designs—hope, love, acceptance, spirituality, superstitions, parody, and the political ideologies of the artist—and the inherent connection and shared belief and aesthetic between artist and collector.
Through our acquisition of the assets of Super Rad, we have secured a portfolio of intellectual property and through various acquisitions of licenses, properties, and rights to utilize highly visible product brands in the $21 billion dollar per year toy industry. We specialize in translating licensing, branding concepts and intellectual property into tangible products including toys, figures, housewares and collectibles. Super Rad has developed properties including Dr Seuss, Love Is…, Tootsie Roll Industries, and Yo! MTV Raps to name a few. Super Rad has acquired evergreen and commercially viable licenses which attract much attention through grass roots marketing and PR campaigns with some traditional advertising and major promotional events such as Artist signings.
Sports Technology Transaction (the FBC Flowboard)
In early 2012, the Company entered into an agreement with Todd Whanish to purchase his web platform in order to get involved in the online toy business, catering to artists and the toy industry in general. The Company had planned to remain involved in the production of high-quality vinyl collectibles it plans on making the new acquisition of Mr. Whanish’s web platform its primary business focus. This purchase also provides the Company with the ability to earn additional revenues in areas ancillary to the sale of actual toys, such as apparel and jewelry. Additionally the Company has decided to move toward a web based approach, using the URL:
www.urtoice.com.
In furtherance of this new business focus, the Company has been coding and signing artists as it prepares for the launch.
In April of 2012, the Company came to an agreement with Sport Technology, Inc., a California corporation, to acquire the exclusive licensing rights to develop, market and sell certain products owned by Sport Technology, including, but not limited to, Flowboard, Flow Saucer, and Snowskate. This agreement was formalized and executed on November 21_2012, at this time the Company also entered into a consulting agreement with Sport Technology Inc. and Michael Kern, under which Sport Technology and Michael Kern will provide consulting services related to the development, marketing and sale of the licensed products.
Our Primary Products
Our flagship product is the FBC Flowboard. Unlike the standard skateboard, which allows only for 45-degree turns on its four wheels, the Flowboard features the pair's patented Deep Carve System. The seven wheels curved at each end of the board allow riders to carve through 45-degree turns with fluidity.
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DIMENSIONS: 36"L x 9.25"W
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WHEELS:14 wheels (59mm x 24mm 82A Premium U.S. wheels)
28 Abec 1- bearings, with 80AB grip tape.
PRICE: $89.99
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The FBC Flowboard allows boarders and suffers to 7sSnowboard and surf the streets all year, without waves or snow. We will manufacture two versions of the board initially, a 32 inch model and a 36 inch model. Next year we plan to reintroduce a 42 inch professional model.
Positioning, Marketing, Sales and Distribution
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The original Flowboard was launched in 200[5] and was very well-received. Mr. Kern, now our Vice President of Marketing and Distribution, purchased Flowlabs, Inc. which owned the IP and rights associated with the Flowboard for $400,000. Mr. Kern and his partner spend several years making improvements to the product and launched it in 2008]. During the first 12 months over 8,000 Flowboards were sold and $500,000 of revenue generated. The next year revenues exceeded $2 million. Flowboard, Inc., which had changed its name to Sports technology experienced difficulty supporting the cash requirements of such rapid growth and wisely decided to scale down production and sales and seek additional capital. The Flowboard was sold through large and small distribution outlets such as Sports Authority, Best Buy and Amazon as well as many small extreme sports specialty shops
In addition to the general extreme sports market, the FBC Flowboard will be repositioned as a training device. Since the Flowboard provides the rider with a feel very similar to surfing or snowboarding and possesses similar handling and riding dynamics it can allow the snowboard or surf enthusiast to experience and stay geared-up for their sport even in the absence of snow or surf. Few snowboarders reside near snowy mountains year round and few surfers live in proximity to suitable coastal areas that can be used during all seasons, but nearly all live within a short distance of a hill.
Since FBC is a holding company the Flowboard will be branded under The Bomb Factory division. The Company intends to immediately make the Flowboard available to its former customers. In addition to previous customers, the Company intends to solicit new customers as the rollout commences this will be greatly augmented by our director and Chief Operating Officer Mr. Kevin Wright., Mr. Wright has been affiliated with the extreme sports industry almost since its inception and sells a line of his own skateboards and apparel through his company AiroUSA, Inc. a Colorado Corporation. Mr. Wright’s affiliation with the action sports industry was initially spurred by his son, Kory’s interest in skateboarding. Kory’s interest waxed and he is presently a ranked professional skateboarder and winner of numerous events. Mr. Wright is the developer and manufacturer of the DuoRail. The DuoRail is a unique rail system for skateboarders that has the ability to instantly switch from a round to a flat top rail. The DuoRail will be another of FBC Holding. The Company also intends to offer its products through the bomb factory e commerce site which it intends to begin developing shortly.
The company, through The Bomb factory division intends to license additional products. These will be third party products sold through licensing agreements with manufacturers and distributors. All of these products will be targeted to the extreme sports enthusiast customer and may consists of products such as skateboards and rails or ancillary items such as apparel, novelties or personalized items.
Additional Products which may be launched
We have licensed the
Snowskate
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skateboard that can convert from a regular skateboard to a Snowskate by simply changing the wheels out for its patent pending skis that fit on the existing truck sets.
| Snowskate | Snowchuck | Bomb Factory |
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The Snowchuck
is a patented snowball maker and launcher. It allows you to make a snowball and throw it all with one hand and without your hand getting cold. Sell through has been outstanding in specialty stores.
Competition
The Company is a distributor and marketer of exclusively licensed and patented sporting goods in specialty and mass channels, supported by lifestyle marketing, sustained by innovation and launched by the Flowboard.
The Flowboard’s primary advantage over its competition is that it will be introduced as the hottest new product of this season and moving forward to cable channels among American teenage and adult men. Additionally, ‘Flowboarding’ has become a verb among Flowboard enthusiasts and may catch on with the general public.
In the extreme sports field, the Flowboard faces four competitive products: (1) Freebord™ (‘snowboard the streets’), (2) CarveBoard™ (‘surfin’ the streets’), T-Board™ (‘mimic snowboard- like carving effect’), and (4) Ripsick/Waveboard™ (‘Surfing on asphalt’).
Flowboard has advantages over these products due to (1) safety, (2) price, and (3) simplicity.
The FreeBord™, CarveBoard™ and T-Board™ are dangerously fast for those who are not expert snowboarders or skateboarders, especially when going downhill. In contrast, the Flowboard provides a safe, enjoyable and stable ride for all skill levels due to the unique geometry of the Deep Carve™ System that enables control over speed and turning radius. This difference is critically important for consumers and, therefore, mass retail buyers. The Ripstick/waveboard has been very successful and has opened up new doors for the Flowboard as the competition product was a large trend that is dieing off now and retailers as well as the Public are looking for the next big thing. The Company’s products will fill this void with multiple opportunities due to a mix of products.
The retail pricing of the competitive products ranges between $89 and $200, while the company’s product will be sold at suggested retail pricing between $59 and $99.
The other important advantage is the simplicity of Flowboard’s Deep Carve™ System. The arced, multi-wheel trucks have no moving parts and, therefore, require no maintenance.
There are a few Chinese manufacturers of 14-wheeled skateboards similar to the Flowboard. These include Pyongyang Hendy Sports Equipment manufacturing, Ltd., and Tongan Audi industry and Trading Company, Ltd. However, these manufacturers do not have extensive distribution channels.
Additionally, the FBC Flowboard has the advantage of being first to market and in industry parlance all similar products are referred to as Flowboards although they are not FBC Flowboards. Thus, giving the Company the advantage of being the “original” or “real” Flowboard.
Sources and Availability of Raw Materials
All of our products are manufactured by third parties as discussed above and numerous manufacturers are available. In addition, the raw materials are not unique and none of the primary raw materials are scarce. Thus, we do not anticipate the third party manufacturers will have any problems obtaining these raw materials.
Patents, Trademarks and Licenses
We do not have any patents or trademarks on our products. However, we do have exclusive, worldwide marketing.rights and licenses, presently for a term of [xx] years with an extension of [xx] years.
Need for Government Approval
As noted above, we do not manufacture our own products; we sell products manufactured by third party companies. As sellers of manufactured toys we do not need government approval to operate its business.
Effect of Government Regulation on Business
As noted above, we do not manufacture our own products, we sell products manufactured by third party companies. However, we are subject to toy safety regulations as well as import and export restrictions. The Company plans to secure product liability insurance prior to any sales.
Research and Development
In the past we have not engaged in research and development and have not expended any funds in this area. However, moving forward we plan on spending additional money on new licenses, tooling and sculpting in order to develop a diverse line of toys.
Effects of Compliance with Environmental Laws
The industry is subject to environmental laws and regulations concerning the products and materials in production as a result our manufacturers must ensure the materials they are using are environmentally-friendly and in compliance with all federal and state environmental laws.
We strive to comply with all applicable environmental, health and safety laws and regulations. We believe that our products are in compliance with all applicable laws and regulations on environmental matters. These laws and regulations, on federal, state and local levels, are evolving and frequently modified and we cannot predict accurately the effect, if any, they will have on its business in the future. In many instances, the regulations have not been finalized, or are frequently being modified. Even where regulations have been adopted, they are subject to varying and contradicting interpretations and implementation. In some cases, compliance can only be achieved by capital expenditure and we cannot accurately predict what capital expenditures, if any, may be required.
Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with any violations. We are subject to financial exposure with regard to intentional or unintentional violations.
Employees
As of November 21 2012 the Company had two employees and two consultants
We are not aware of any problems in its relationships with its employees. The Company’s employees are not represented by a collective bargaining organization and the Company has never experienced any work stoppage.
Industry Overview
The Market
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Extreme sports have experienced substantial growth in the last decade. According to a survey of 14,772 Americans conducted by American Sports Data, snowboarding, skateboarding and wakeboarding
– three well-known extreme sports – have been the fastest growing sports in the US since 2001. There are now 7.8 million snowboarders, 28 million skateboarders, 19 million in-line skaters, 3.4 million wake boarders, and 14 million surfers and body boarders in the US.
These participants, encouraged by television broadcasts of extreme sports, video games, and contests continue to drive the extreme sports equipment sales upwards. The market, targeted at 12-30 year olds, is estimated to be over $2 billion according to TransWorld Skateboarding Magazine on hard goods only. With market acceptance expanding beyond extreme sports aficionados to the general public, the market is looking for products that provide a safe adrenaline rush and can be performed by individuals of all skill levels.
Product Line
In the extreme sports category, The Company will markets visually dynamic products whose sales are initially driven by the acceptance of Generation Y males who enjoy the adrenaline rush produced by the thrill and excitement of being "on the edge."
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The Flowboard has an eye-catching design and can be used to perform the same tricks as a standard skateboard with the exhilarating carving action of surfing, snowboarding and wakeboarding…on city streets.
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Sporting Goods Mfg. Assoc., Nat’l Sporting Goods Assoc., and TransWorld Skateboarding
Flowboarding
is an exciting sport itself, yet is an ideal complement as a cross-trainer to the four major board sports: snowboarding, wakeboarding, surfing and skateboarding. The cutting-edge design of the patented Deep Carve™ System enables the Flowboard to realistically replicate the feel and experience of these popular extreme sports.
Media representatives have written the following objective opinions about the Flowboard:
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Maxim:
“…the closest thing you can get to surfing or snowboarding on pavement…”
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Wired:
“…sidewalks will feel like they’ve got a foot of fresh powder with the Deep carve System skateboard…”
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Popular Mechanics:
“…the 42-inch maple deck can carve to nearly 45° and holds a sharp turning radius…the number one invention in skateboarding in the last 25 years…”
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Innovation Magazine:
“…this snowboard or skateboard for the streets replicates the way a snowboard carves or a surfboard flows…”
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International Longboarder:
“…combining the best of what snowboarding and longboarding have to offer, Flowlab’s revolutionary new board will most definitely turn heads, the 42-inch plank feels remarkably like snowboarding…turning offers less resistance and tight, smooth lines.”
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Inc.: Elevator Pitch. Three venture Capital Companies wrote their opinion on the chance of the Companies success. Dan Googel, President Easton Capital Investment Group;” This Company has definite traction in the market and has lined itself up with some strong retailers. It could benefit in this economy, because its products are relatively inexpensive in comparison with other products in the skateboard and snow sports category”. The other two have strong positive comments as well.
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Popular Mechanics:
The Snowskate takes the skateboard to the mountains. Designed to keep street and vert skaters happy on the slopes. The rockered design ski’s and rails provide the pops for ollies, kick flips and all your favorite tricks.
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Specialty Retail Magazine:
During the Flowboard’s previous introduction Sport Technology introduced a Kiosk program and inline program for independent entrepreneurs who want to tap into the fastest growing segment of the sporting goods market (Action sports). They have new products to add to their existing sku’s including the Snowskate, making for an actions sports store in a kiosk. Sport Technology currently has 15 kiosks prepared for deployment.
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Carlton Calvin, president of Razor USA, who commented, “Because the Flowboard is visually dynamic, if it is priced right, it will fly off the shelves.”
Marketing
The company has developed the following positioning for its products:
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Positioning
– We intend to position the FBC Flowboard as a training adjunct which snowboarders and surfers may use to practice their sport at times and locations in which they may be otherwise unable. Train anywhere, anytime. Surf Without Waves, Carve Without Snow.
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Consumer Target
–Surfers, wake boarders, snowboarders or skateboarders, or anyone who is looking at a new recreational toy. Extreme is now becoming mainstream
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Pricing
- The Flowboard suggested retail prices will be reduced from $89 to $59 for the beginner model and $79 for the mid-tier model. The pro models will be retail priced between $99 and $159. Specialty, limited edition models will be priced according to demand.
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Free Television and Movie Exposure
– via X Games to be broadcast on ESPN and ESPN2 and feature film product placement.
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Professional Athlete Endorsement
– The Company will seek to obtain endorsements from celebrities and professional athletes. Several very high-profile skateboarders and snowboarders already own and use the FBC Flowboard
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Tour Sponsorship
– Sport Technology from whom we obtained the exclusive marketing rights to most of our products and which previously introduced the Flowboard sponsored the Women’s Skateboarding Tour. The Company may consider similar sponsorships.
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Partner Marketing
– Apple and KTF Wireless have already produced television commercials that prominently feature the Flowboard. The Flowboard can be a marketing tool for other companies, and the company envisions sales to corporate customers. These cases will also serve to promote the Flowboard itself.
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Print Advertising
– advertisements in leading skateboarding, surfing, snowboarding and wakeboarding magazines are essential, especially with well-known athletes.
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Retail Displays
– support co-op advertising with attractive packaging and trendy in-store displays with a television stand, playing a 30-second looped Flowboard video.
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Event Marketing
– continue to sponsor and expand the FlowFest, a Flowboard competition event including live band and corporate sponsors. The company plans demonstrations and displays at surf, skate, and snowboard contests as well to develop product recognition.
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Online Marketing
–
www.fbcflowboard.com
website pushed on all media and packaging. The website will promote the Flowboard Association for Flowboarders to keep up on the latest developments in their sport. Management is also evaluating the possibility of free music downloads from emerging artists on the site.
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Trade Exhibitions
– generate awareness of the FBC Flowboard products at trade shows.
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Exhibitions/Tours with Flowboard Bus
– showcases the Flowboard and takes the pro Flowboard riders to demonstrations and exhibitions at retail store locations and on tours with a mobile billboard.
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Sales & Distribution
Flowboards have been sold to Sports Chalet (NASD:SPCHA), Sport Authority, Chicks, and Modells. It will use internal sales management to manage a network of regional sales representatives, and in certain cases, distributors. The primary focus will be to expand product placement at major US sporting goods retailers and mass merchandisers. Target and Costco have already expressed concrete interest in placing the Flowboard. In parallel, the Company will sell into the high margin specialty channel, including surf and skate stores. Further opportunities will exist to sell corporate-branded and promotional products direct or via specialty marketing companies. Sport Technology has already provided customized boards for Xbox, Sobe, and Apple.
Sourcing
Sport Technology previously purchased from established contract manufacturers in Shenzhen, China with an office in Shanghai due to Mr. Kerns relationship of over 15 years with his Chinese partner. This manufacturer has been recently contacted and is still prepared to manufacture and deliver the product within 45 days from the time of the order.
Management
Frank Russo, Director, Chief Executive Officer
Russo is the former Vice President of Development for RYCA and is an expert in implementing sales distribution and product strategy, sales team leadership, marketing, and market analysis and business development. Prior to joining RYCA and FBC Mr. Russo was the President of Gladiator Sales, Inc., which was the exclusive sales agency for Puma North America. He led Gladiator to reestablish the Puma brand to prominence and increased minimum sales revenue to over $75 million with 13 sales associates. Under his leadership Gladiator was named Brand Agency of the Year – 2000 and 2002.
Kevin Wright, Director, Chief Operating Officer
Mr. Wright has been involved in the extreme sports industry especially skateboarding since the early 90’s and is the founder of the RMSBA Amateur Skateboarding Association and is the founder and President of AiroUSA, LLC a manufacturer and distributor of skateboard decks, extreme sports apparel, and the DUORail. The DUORail is a unique innovative skate rail that combines a square and round skate surface in one rail. The best of both worlds in one with a simple turn and lock system, the rider can switch to either skate surface. For further information please check
http://airousa.com/
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Mike Kern, V.P. of Marketing
Mr. Kern
is an entrepreneur who began his career at a LA-based family glass business, where he was named Chief Financial Officer at the age of 23. Mr. Kern later established a successful wholesale apparel company, the Bomb Factory Clothing in 1994, and Mehndi Body Art, an accessory import and export company in 1997, which both successfully targeted the youth market. Mr. Kern also manufactured many trend products for OEM business directly for major retailers such as Hot Topics, Wet Seal, and Claires due to his knowledge and connections on doing business in China. He also made and distributed many licensed products for the mass and specialty markets such as Planet of the Apes, Simpson’s, Buffy the Vampire Slayer, Rocky Horror Picture show, and many others for iron, on transfers, t-shirts, and temporary tattoos in 2002-2007.
As a smaller reporting company we are not required to provide a statement of risk factors. However, we believe this information may be valuable to our shareholders for this filing. We reserve the right to not provide risk factors in our future filings. Our primary risk factors and other considerations include:
Cost and availability of product liability insurance
Our products are designed for and used by extreme sports enthusiasts of varying degrees of competence. Extreme sports, by their nature run the inherent risk of serious physical injury to those who utilize our products even when operated properly. Our products may also be used in an unsafe manner, by inexperienced users or material defects resulting in personal injury which may be actionable. We intend to secure the protection of product liability insurance but cannot be assured that such insurance will be available or available at a cost which is not unreasonable. In the absence of such insurance we may decide that certain lines of business may not be economically feasible.
Settlement of outstanding litigation
The Company has an outstanding judgment against it in the amount of $238,152. As of March 6, 2012 the amount of this judgment with additional interest and legal fees grew to $309,070.53. The Creditor filed a Motion to Appoint a Receiver and on August1, 2012, the Court granted the motion. The judgment was purchased from the Creditor by our Principal Creditor pursuant to a Release and Settlement agreement dated August 8, 2012. It is possible that the Principal Creditor will default on its obligations under Release and Settlement Agreement and the Creditor may choose to enforce the Motion to Appoint a Receiver or the Principal Creditor may opt to enforce the Motion. (See Recent Events)
Departure of previous management has created circumstances in which we do not have possession of documents such as agreements and contracts which may result in latent litigation or the existence of corporate obligations of which we are not aware
.
Previous management consisted of a single officer and director who maintained all books and records of the company and was authorized to incur obligations on behalf of the company. The current board of directors and officers have requested that all corporate books, records, material contracts and agreements be supplied to the directors. However, this has not occurred and previous management has been uncooperative and tacitly refused to produce same. If we are not able to secure the cooperation of previous management,
|
o
|
We may be unaware of our obligations under these contracts or agreements, and;
|
|
o
|
We may be unable to provide regulators with documentation which has not been returned to the company, and;
|
|
o
|
We may be subject to litigation in regard to nonfulfillment of our obligations under these agreements, and;
|
|
o
|
We may not have complete documentation with regard to corporate governance issues such as board books, minutes, resolutions, etc.
|
As a result, latent liabilities may exists that may negatively impact us economically or operationally.
We have accumulated considerable debt which has a conversion feature
The company currently has approximately $610,000 in convertible debt of which, we anticipate, all or a portion will be converted into common shares at a discount to market. This may result in material dilution of the present shareholders and may negatively impact our stock price.
The Company has and is expected to continue to use the services of third party unaffiliated market awareness service providers
.
The Company is advising investors that non-affiliate shareholders of the company, and the Company may, from time to time, engage the services of unaffiliated firms to provide investor relations and advertising services. These third party shareholders may own the Company’s shares and plan to liquidate, which may negatively affect the stock price. All content in our releases is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities. Neither the information presented nor any statement or expression of opinion, or any other matter herein, directly or indirectly constitutes a solicitation of the purchase or sale of any securities. The Company does not purport to provide an analysis of any company's financial position, operations or prospects and this is not to be construed as a recommendation by the Company or an offer or solicitation to buy or sell any security. Neither the Company nor any of its members, officers, directors, debt-holders, contractors or employees are licensed broker-dealers, account representatives, market makers, investment bankers, registered investment advisors, analyst or underwriters. Readers should always consult with a licensed securities professional before purchasing or selling any securities of any company including our own. It is possible that a reader's entire investment may be lost or impaired due to the speculative nature of the investment.
We have a history of losses which could continue in the future
.
We have reported losses for every year since our inception and have an accumulated deficit of $20.3 million as of April 31, 2012. There can be no assurance that we will report positive net income in any future period
The commercial acceptance and economic viability of our products are uncertain
Our primary product, the FBC Flowboard was well-received during its initial launch in 2008 achieving revenue which has been represented to us as $400,000 in its first year and $2,000,000 in its second year. It has also been represented to us that Sports Technology, Inc., the company which did the introduction had to discontinue operations due to its inability to secure adequate funding to meet the rising demand for the product. The reintroduction of the product may not be met with the same level of acceptance and the product may not be successful.
If we lose key management or are unable to attract and retain talent, our operating results could suffer
.
We depend on the continued service of our senior management. The loss of the services of any key employee could hurt our business. Also, our future success depends on our ability to identify, attract, hire, train and motivate other highly skilled personnel. Failure to do so may adversely affect future results.
We have a definitive Judgment against Us and a Court approved Motion to Appoint a Receiver
The Company has a judgment against it in the amount of $238,152 the Holder of the judgment has requested and obtained a Motion to Appoint a Receiver. The Motion has not been enforced as a result of a tripartite Release and Settlement Agreement among the holder of the judgment, the Company and the Company’s Senior Secured Lender. In the event all or some parties fail to fulfill their obligations under the Release and Settlement Agreement the holder of the judgment may appoint a Receiver. This event would have a negative impact on the Company’s abilities to complete its business plans and management would expect that to have a negative effect on the price of the stock.
We have very little operating capital, and we likely must raise additional capital to remain in business.
We presently have very operating capital and are dependent upon future fundraising efforts to provide the minimum capital necessary to continue our business. Such fundraising efforts may include the sale of additional shares of the Company or could involve commercial or institutional borrowing. Although we believe that our status as a publicly-traded company will enhance our ability to raise additional capital, our financial condition is dire and we are currently operating with no or very little working capital and several loan obligations. We cannot assure you that capital will be available to meet the costs of our operations, or that it will be available on acceptable terms. Even if we raise the maximum amount of fundraising, we will still need to raise additional capital to operate our Company. Presently, we have no commitments or arrangements from commercial lenders or other sources.
Our operating costs will most likely increase
.
Our income could be seriously affected by rising operating expenses. If we cannot control operating costs or adequately cover them, our cash flow will deteriorate and we will have to raise capital or discontinue our business.
If we are unable to maintain relationships with our suppliers, our business could be materially adversely affected.
Substantially all of our products are manufactured by third parties. To the extent that a manufacturer is unwilling to do business with us, or to continue to do business with us once we enter into formal agreements with it, our business could be materially adversely affected. In addition, to the extent that the manufacturer modifies the terms of any contract it may enter into with us (including, without limitation, the terms regarding price, rights of return, or other terms that are favorable to us), or extend lead times, limit supplies due to capacity constraints, or other factors, there could be a material adverse effect on our business.
We operate in a competitive industry and continue to be under the pressure of eroding gross profit margins, which could have a material adverse effect on our business.
The market for the products we sell is very competitive and subject to rapid changes in terms of market popularity. The prices for our intended products tend to decrease over their life cycle, which can result in decreased gross profit margins for us. There is also substantial and continuing pressure from customers to reduce their total cost for products. We expend substantial amounts on the value creation services required to remain competitive, retain existing business, and gain new customers, and we must evaluate the expense of those efforts against the impact of price and margin reductions. Further, our margins will be lower in certain geographic markets and certain parts of our business than in others. If we are unable to effectively compete in our industry or are unable to maintain acceptable gross profit margins, our business could be materially adversely affected.
Products sold by us may be found to be defective and, as a result, product liability claims may be asserted against us, which may have a material adverse effect on the company.
We may face claims for damages as a result of defects or failures in the products we intend to sell to our customers. Because we Although many of our products are sold under a third-party warranty or are sold “as is” our ability to avoid liabilities, including consequential damages, may be limited as a result of differing factors, such as the inability to exclude such damages due to the laws of some of the locations where we do business. Our business could be materially adversely affected as a result of a significant quality or performance issue in the products developed by us, if we are required to pay for the damages that result.
If we add additional products, we may not be able to successfully integrate them or attain the anticipated benefits
.
We may acquire licenses for additional products that are synergistic with ours. If we are unsuccessful in integrating these products, or if integration is more costly than anticipated, we may experience disruptions that could have a material adverse effect on our business. In addition, we may not realize all of the anticipated benefits from our licenses, which could result in an impairment of goodwill or other intangible assets.
If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or timely or detect fraud, which could have a material adverse effect on our business.
An effective internal control environment is necessary for us to produce reliable financial reports and is an important part of our effort to prevent financial fraud. We will be required to periodically evaluate the effectiveness of the design and operation of our internal controls over financial reporting. Based on these evaluations, we may conclude that enhancements, modifications or changes to internal controls are necessary or desirable. While management will evaluate the effectiveness of our internal controls on a regular basis, and although we have recently undergone substantial changes to address any weaknesses, these controls may not always be effective. There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure of human judgment. In addition, control procedures are designed to reduce rather than eliminate business risks. If we fail to maintain an effective system of internal controls, or if management or our independent registered public accounting firm discovers material weaknesses in our internal controls, we may be unable to produce reliable financial reports or prevent fraud, which could have a material adverse effect on our business. In addition, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline or limit our access to capital.
We rely on manufacturers to make our products, and we have limited control over these suppliers and manufacturers and may not be able to obtain quality products on a timely basis or in sufficient quantity.
All of our products are manufactured by third-party manufacturers. We do not have any long-term contracts with these suppliers or manufacturing sources. We expect we will have to compete with our competitors for production capacity and availability at these third-party manufacturers.
There can be no assurance that there will not be a significant disruption with our manufacturers or, in the event of a disruption, that we would be able to locate alternative manufacturers with comparable quality at an acceptable price, or at all. In addition, we cannot be certain that our unaffiliated manufacturers will be able to fill our product order in a timely manner. If we experience significant increased demand, or need to replace an existing manufacturer, there can be no assurance that additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new manufacturing sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Any delays, interruption or increased costs in the manufacture of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues and net income both in the short and long-term.
In addition, there can be no assurance that our suppliers and manufacturers will continue to manufacture products that are consistent with our standards. We may receive shipments of product that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of revenues resulting from the inability to sell those products and related increased administrative and shipping costs. In addition, because we do not control our manufacturers, products that fail to meet our standards or other unauthorized products could end up in the marketplace without our knowledge, which could harm our reputation in the marketplace.
This Item is not applicable to us as we are not an accelerated filer, a large accelerated filer, or a well-seasoned issuer; however, we have received written comments from the Commission staff regarding our periodic or current reports under the Securities Exchange Act of 1934 within the last 180 days before the end of our last fiscal year and are in the process of responding to those comments.
We do not own any real property. Our principal offices are located at 16213 S. Western Ave., Gardena, CA 90247. , this is the office of Sport Technology, Inc. owned by Michael Kern, Vice President of Marketing. We have not yet adopted any policies regarding investment in real property, as we do not expect to make any real estate purchases in the foreseeable future.
On July 10, 2007 the Company’s predecessor Wave Uranium Holding, Inc. sold a Secured Promissory Note to Panthera Advisers, LLC (“Lender”) in the amount of $51,000 (the “Note”) which was provided to the Company by the Lender on July 26, 2007.. The note carried 12% interest and matured on September 30, 2007. On October 10, 2007 the Company borrowed another $100,000 under the Note and in addition to the terms of the note agreed to provide the Lender 51,000 shares of the Company’s common stock. On April 20, 2009 the Note was assigned to California Asset Recovery Solutions, LLC (“Assigned Lender”) .The Company failed to repay the Note or provide the stock and the Assigned Lender filed a complaint with the Superior Court of California, Orange County (the “Court”) on or about November 13, 2008. The company failed to address the complaint and on May 27, 2009 the Court determined in favor of the Plaintiffs and issued a judgment in the amount of $238,152 (the “Judgment”). The Company failed to comply with the Judgment and on April 22, 2012 the Assigned Lender filed a Motion to Appoint a Receiver which was approved by the Court on August 1, 2012. The Court held the appointment until August 8, 2012 to allow the parties to resolve the matter. On August 8, 2012 the Company, the Assigned Lender and the Company’s Senior Secured Creditor entered into Release and Settlement Agreement (“Release”) in which the Senior Secured Creditor agreed to a
de facto
purchase the Judgment from the Assigned Lender According to the Release the Assigned Lender will file a Release of Judgment upon the occurrence of certain performance by the Secured Lender and the Company. In the event that the conditions are not fulfilled the Company may be put into immediate receivership. The Company has fulfilled its obligations under the Release and is unaware of the status of the other parties.
In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
Market Information
Our common stock is currently listed on the OTC Markets “Pink Sheets” on the OTCQB-tier under the symbol “FBCD.” On September 27, 2006, we filed a registration statement on Form SB-2, which went effective on December 13, 2006, and subsequently filed a Form 8-A12G to register our common stock under Section 12 of the Exchange Act. As a result, on October 11, 2007, we became subject to the reporting requirements under the Exchange Act. We began listing on the OTC Bulletin Board on April 10, 2007 and were subsequently removed from the OTC Bulletin Board on February 23, 2011, due to inactivity under SEC Rule 15c2-11. We have been listed on the OTC Markets “Pink Sheets” since that time.
The following table sets forth the high and low bid information for each quarter within the two most recent fiscal years. The information reflects prices between dealers, and does not include retail markup, markdown, or commission, and may not represent actual transactions.
|
Fiscal Year
|
||||||||||
|
Ended
|
Bid Prices
|
|||||||||
|
July 31,
|
Period
|
High
|
Low
|
|||||||
|
2010
|
First Quarter
|
$
|
0.30
|
$
|
0.10
|
|||||
|
Second Quarter
|
$
|
0.40
|
$
|
0.30
|
||||||
|
Third Quarter
|
$
|
1.40
|
$
|
0.05
|
||||||
|
Fourth Quarter
|
$
|
0.09
|
$
|
0.09
|
||||||
|
2011
|
First Quarter
|
$
|
0.10
|
$
|
0.05
|
|||||
|
Second Quarter
|
$
|
0.10
|
$
|
0.02
|
||||||
|
Third Quarter
|
$
|
0.02
|
$
|
0.01
|
||||||
|
Fourth Quarter
|
$
|
0.07
|
$
|
0.01
|
||||||
|
2012
|
First Quarter
|
$
|
0.01
|
$
|
0.01
|
|||||
|
Second Quarter
|
$ |
0.014
|
$ |
0.0025
|
||||||
|
Third Quarter
|
$ |
0.007
|
$ |
0.0020
|
||||||
|
Fourth Quarter
|
$ |
0.0033
|
$ |
0.0003
|
||||||
The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.
Holders
As of July 31, 2012, there were 2,216,225,459shares of our common stock outstanding held by 75 holders of record of our common stock and numerous shareholders holding shares in brokerage accounts. Approximately 1.7 billion of these shares were issued as collateral shares for a $75,000 note. Of these shares, all were held by shareholders we believe are non-affiliates. On the cover page of this filing we value these shares at 886,490. These shares were valued at $0.0004 per share, which was closing price of our common stock on the OTC Bulletin Board on November 13, 2012.
Dividends
For the two most recent fiscal years we have not paid any cash dividends on our common shares and do not expect to declare or pay any cash dividends on our common shares in the foreseeable future. Payment of any dividends will depend upon future earnings, if any, our financial condition, and other factors as deemed relevant by our Board of Directors.
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any equity compensation plans in place so there are no outstanding options or warrants to purchase shares of our common stock under any equity compensation plans.
As a result, we did not have any options, warrants or rights outstanding as of July 31, 2012.
|
Plan Category
|
Number of Securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
|
|||||||||
|
(a)
|
(b)
|
(c)
|
||||||||||
|
Equity compensation plans approved by security holders
|
- 0 -
|
- 0 -
|
- 0 -
|
|||||||||
|
Equity compensation plans not approved by security holders
|
- 0 -
|
- 0 -
|
- 0 -
|
|||||||||
|
Total
|
- 0 -
|
- 0 -
|
- 0 -
|
|||||||||
Recent Issuance of Unregistered Securities
In April, 2011, we issued 150,000 shares to Seafin Capital, LLC, in exchange for an equity investment of $12,000. The shares were restricted in accordance with Rule 144. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and Seafin Capital, LLC, is a sophisticated investor and familiar with our operations.
On May 11, 2011, we issued 166,666 shares to Seafin Capital, LLC, in exchange for an equity investment of $25,000. The shares were restricted in accordance with Rule 144. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and Seafin Capital, LLC, is a sophisticated investor and familiar with our operations.
On May 20, 2011, we issued 2,000,000 shares to Panther Consulting Corp., in exchange for debt conversion of $2,000, valued at $0.001 per share. The shares were restricted in accordance with Rule 144. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and Island is a sophisticated investor and familiar with our operations.
On May 21, 2011, we issued 4,000,000 shares to MGMT4 Personal Services, in exchange for consulting services and were valued at approximately $0.015 per share. The shares were restricted in accordance with Rule 144. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and Island is a sophisticated investor and familiar with our operations.
On June 29, 2012 the Company issued 33,000,000 shares of common stock to two consultants in exchange for services. The shares were valued at their fair market value, $17,600, at the date of the grant.
If our stock is listed on an exchange we will be subject to the Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.
As a smaller reporting company we are not required to provide the information required by this Item.
Forward-Looking Statements
This annual report on Form 10-K of FBC Holding, Inc. for the year ended July 31, 2012 contains forward-looking statements, principally in this Section and “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements which apply only as of the date of this annual report. These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation of belief will be accomplished.
We believe it is important to communicate our expectations to our investors. There may be events in the future; however, that we are unable to predict accurately or over which we have no control. The risk factors listed in this filing, as well as any cautionary language in this annual report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated, include, but are not limited to: our ability to successfully maintain a credit facility to purchase new and used machines, manufacture new products; the ability to obtain financing for product acquisition; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which requires us to make estimates and assumptions in certain circumstances that affect amounts reported. In preparing these financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. We believe that of our significant accounting policies (more fully described in Notes to the Consolidated Financial Statements), the following are particularly important to the portrayal of our results of operations and financial position and may require the application of a higher level of judgment by our management, and as a result are subject to an inherent degree of uncertainty.
DEVELOPMENT STAGE COMPANY
We are in the development stage and have not yet realized any revenues from our planned operations, but we anticipate we will have revenues in our fiscal year ended July 31, 2013, beginning with our quarter ended April 30, 2012. Our business plan is to continue to develop our existing toys, as well as attempt to develop and/or license new toy ideas, and sell toys via retailers, wholesale accounts and online.
Based upon our business plan, we are a development stage enterprise. Accordingly, we present our financial statements in conformity with the accounting principles generally accepted in the United States of America that apply in establishing operating enterprises. As a development stage enterprise, we disclose the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.
STOCK BASED COMPENSATION
We account for stock based compensation in accordance with ASC 718, "Accounting for Stock-Based Compensation." The provisions of ASC 718 allow companies to either expense the estimated fair value of stock options or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma effects on net income (loss) had the fair value of the options been expensed.
EARNINGS (LOSS) PER SHARE
We calculate net income (loss) per share as required by ASC 260, "Earnings per Share." Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods when they would be anti-dilutive common stock equivalents, if any, are not considered in the computation.
Recent Accounting Pronouncements
The FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company’s present or future financial statements.
Results of Operations for the Year Ended July 31, 2012 and 2011
Introduction
For the year ended July 31, 2012 we generated $33,500 of revenue, however operations resulted in a net loss of $1,565,834. For the year ended July 31, 2011, we generated no revenue, and therefore had no corresponding cost of sales. With these revenues and cost of sales for the year ended July 31, 2011, we had a net loss of $6,753,453. An explanation of these numbers and how they relate to our business is contained below.
Revenues, Expenses and Loss from operations:
|
|
Year ended
|
Year ended
|
||||||
|
July 31,
|
July 31,
|
|||||||
|
2012
|
2011
|
|||||||
|
Revenues
|
$
|
33,500
|
$
|
-
|
||||
|
Cost of Sales
|
18,186
|
-
|
||||||
|
Selling, General and Administrative Expenses
|
587,665
|
112,091
|
||||||
|
Conversion Fee
|
0
|
1,631,500
|
||||||
|
Non-Cash Compensation
|
1,067,600
|
3,737,414
|
||||||
|
Impairment of Goodwill
|
0
|
1,250,000
|
||||||
|
Operating Income (loss)
|
(2,031,760
|
) |
(6,741,005
|
) | ||||
|
Interest Expense
|
9,912
|
|||||||
|
Amortization of Debt Discount
|
-
|
-
|
||||||
|
Net Income (Loss)
|
$
|
(3,303,927
|
) |
$
|
6,750,917
|
|||
Revenues
Our revenues for the year ended July 31, 2012 were $33,500 compared to revenues of $0 for the year ended July 31, 2011. We have had no revenues since inception. We anticipate we will have revenue in our fiscal year ended July 31, 2012, beginning with our quarter ended October 31, 2011.
Cost of Sales
Because we had no revenue in 2011 our cost of sales was also $0. For 2012 we had revenue $33,600 and the cost of sales was $18,186.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses are those expenses we have related to the actual sales of our products and the costs we incur in transporting those product and the costs that we incur in the support activities related to the actual sales and transportation of our products. For the year ended July 31, 2012 our selling and distribution expenses were $57,957, compared to $0 for the year ended July 31, 2011. Our selling, general and administrative expenses for the year ended July 31, 2012, primarily consisted of professional fees of $82,226, consulting expenses of $115,907, and stock-based compensation of $1,067,600. Except for the stock-based compensation, these amounts were comparable to the prior year. Currently our general and administrative expenses have been primarily related to the public reporting and attainment of working capital to commence our business operations.
Interest Expense
For the year ended July 31, 2012, our interest expense was $263,041 which represented an increase of $253,129 over the comparable period ending April 30, 2011 which was $9,912.
Liquidity and Capital Resources
Our principal sources of liquidity consist of cash and cash equivalents, cash generated from operations and borrowing from various sources. At July 31, 2012, our cash and cash equivalents totaled $2,877 and we had negative working capital of -$3,968,868.
At July 31, 2012, we had $604,083 in debt outstanding, net of deferred financing costs and debt discounts, primarily owed to Capitoline Ventures II, LLC.
Our existing sources of liquidity, along with cash expected to be generated from sales, will not be sufficient to fund our operations, anticipated capital expenditures, working capital and other financing requirements for the foreseeable future. If that is the case we may need to seek to obtain additional debt or equity financing, especially if the introduction of the FBC Flowboard takes longer than anticipated, or if we fail to achieve anticipated revenue targets, or if we experience significant increases in the cost of raw material and manufacturing, or increases in our expense levels resulting from being a publicly-traded company. If we attempt to obtain additional debt or equity financing, we cannot assure you that such financing will be available to us on favorable terms, or at all.
As a result our audited financial statements for the year ended July 31, 2012 contain an explanatory note (footnote 4) to the effect that our ability to continue as a going concern is dependent on our ability to retain our current short term financing and ultimately to generate sufficient cash flow to meet our obligations on a timely basis in order to attain profitability, as well successfully obtain financing on favorable terms to fund the company’s long term plans. We can give no assurance that our plans and efforts to achieve the above steps will be successful.
Cash Flows
The following table sets forth our cash flows for the years ended July 31:
|
2012
|
2011
|
|||||||
|
Provided by (used in):
|
||||||||
|
Operating activities
|
$
|
(367,584
|
)
|
$
|
(235,158
|
)
|
||
|
Investing activities
|
-
|
-
|
||||||
|
Financing activities
|
361,023
|
244,596
|
||||||
|
Net Cash Used in Continuing Operations
|
$
|
(6,561
|
) |
$
|
9,438
|
|||
Cash Flows for the Years Ended July 31, 2012 and 2011
Operating Activities
Net cash provided by (used in) operating activities was ($367,584) for the year ended July 31, 2012, compared to $(235,158) for the year ended July 31, 2011. Our cash from operating activities for the year ended July 31, 2012 was primarily $339.903 in amortization of debt discount, $$391,807 in deferred financing and $629,823 from change in derivative and accrued expenses.
Investing Activities
Net cash provided by (used in) investing activities was $0 for the year ended July 31, 2012, compared to $0 for the year ended July 31, 2011.
Financing Activities
Net cash provided by financing activities was $361,023for the year ended July 31, 2012, compared to $244,596 for the year ended July 31, 2011. The cash provided by financing activities for the year ended July 31, 2012 was all from net borrowings.
Contractual Obligations
The following table summarizes our contractual obligations and commercial commitments as of July 31, 2012:
|
2012
|
2013
|
2014
|
2015
|
2016
|
Total
|
|||||||||||||||||||
|
Debt obligations
|
$
|
3,146,076
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
1,714,400
|
||||||||||||
|
Capital leases
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||
|
Operating leases
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||
|
$
|
1,714,400
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
1,714,400
|
|||||||||||||
Quantitative and Qualitative Disclosures about Market Risk
The only financial instruments we hold are cash and cash equivalents.
We are currently billed our vendors in U.S. dollars and we currently bill our customers in U.S. dollars. However, , since we will be using mainly Asian manufacturers our financial results could be affected by factors such as changes in foreign credit and currency rates or changes in economic conditions.
Off Balance Sheet Arrangements
We have no off balance sheet arrangements.
As a smaller reporting company we are not required to provide the information required by this Item.
|
F-1
|
|
|
F-2
|
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
Peter Messineo
Certified Public Accountant
1982 Otter Way Palm Harbor FL 34685
peter@pm-cpa.com
T 727.421.6268 F 727.674.0511
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of FBC Holding Inc.:
I have audited the consolidated balance sheet of FBC Holding Inc. as of July 31, 2012 and 2011 and the related consolidated statement of operations, consolidated changes in stockholder’s deficit, and consolidated cash flows for the years then ended and for the period May 30, 2006 (date of inception) through July 31, 2012. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements were free of material misstatement. The Company was not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the financial position of FBC Holding Inc. as of July 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for the years then ended and for the period May 30, 2006 (date of inception) through July 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had recurring losses resulting in accumulated deficit, negative cash flows from operations and is requiring traditional financing or equity funding to commence its operating plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty were also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Peter Messineo, CPA
Palm Harbor, Florida
November 11, 2012
|
July 31, 2012
|
July 31, 2011
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
$ | 2,877 | $ | 9,438 | ||||
|
Deferred Financing Expense
|
- | 108,500 | ||||||
|
Total Current Assets
|
2,877 | 117,938 | ||||||
|
Total Assets
|
$ | 2,877 | $ | 117,938 | ||||
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts Payable
|
282,352 | 5,085 | ||||||
|
Accrued Interest
|
460,657 | 338,614 | ||||||
|
Equity Obligations
|
1,641,307 | 1,249,500 | ||||||
|
Convertible Notes Payable
|
604,083 | 464,900 | ||||||
|
Derivative Liability
|
983,346 | - | ||||||
|
Total Current Liabilities
|
3,971,745 | 2,058,099 | ||||||
|
Total Liabilities
|
3,971,745 | 2,058,099 | ||||||
|
Stockholders Deficit
|
||||||||
|
Preferred Stock .001 Par Value, 5,000,000 shares authorized,
2,500,000 issued and outstanding, Series A preferred
|
2,500 | 2,500 | ||||||
|
Common Stock .001 Par Value; 5,000,000,000 shares authorized;
2,216,225,459 and 128,178,304 shares issued and outstanding, respectively
|
2,216,225 | 128,178 | ||||||
|
Additional paid in capital
|
17,800,171 | 18,612,998 | ||||||
|
Defitcit accumlated during the development stage
|
(23,987,764 | ) | (20,683,837 | ) | ||||
|
Total Stockholders' Deficit
|
(3,968,868 | ) | (1,940,161 | ) | ||||
|
Total Liabilities and Stockholders' Equity
|
$ | 2,877 | $ | 117,938 | ||||
See accompanying notes to the consolidated financial statements
FBC
HOLDING
Inc
(A Development Stage Company)
|
Year
|
Year
|
May 30, 2006
|
||||||||||
|
Ended
|
Ended
|
(inception) through
|
||||||||||
|
July 31, 2012
|
July 31, 2011
|
July 31, 2012
|
||||||||||
|
Revenue
|
$ | 33,500 | $ | - | $ | 33,500 | ||||||
|
Cost of sales
|
18,186 | 18,186 | ||||||||||
| 15,314 | - | 15,314 | ||||||||||
|
Expenses
|
||||||||||||
|
General Selling and Adminstrative
|
587,667 | 122,091 | 2,278,676 | |||||||||
|
Depreciation
|
- | 1,889 | ||||||||||
|
Warrant Expense
|
- | 861,694 | ||||||||||
|
Conversion Fee
|
1,631,500 | 1,631,500 | ||||||||||
|
Land Claim Fees
|
- | 597,957 | ||||||||||
|
Non Cash Compensation
|
1,067,600 | 3,737,414 | 12,614,337 | |||||||||
|
Amortization of Deferred Finance Charges
|
391,807 | - | 533,668 | |||||||||
|
Impairment of Goodwill
|
1,250,000 | 2,236,667 | ||||||||||
| 2,047,074 | 6,741,005 | 20,756,388 | ||||||||||
|
Gain(Loss) on Operations
|
(2,031,760 | ) | (6,741,005 | ) | (20,741,074 | ) | ||||||
|
Other Income (expense)
|
||||||||||||
|
Change in Derivative Liability
|
(629,823 | ) | (629,823 | ) | ||||||||
|
Legal Settlement
|
(40,000 | ) | (40,000 | ) | ||||||||
|
Amortization of Debt Discount
|
(339,303 | ) | - | (1,987,501 | ) | |||||||
|
Interest Expense
|
(263,041 | ) | (9,912 | ) | (604,959 | ) | ||||||
| (1,272,167 | ) | (9,912 | ) | (3,262,283 | ) | |||||||
|
Net Income (Loss) before provision for income tax
|
(3,303,927 | ) | (6,750,917 | ) | (24,003,357 | ) | ||||||
|
Provision for income tax
|
- | - | - | |||||||||
|
Net Income(Loss) from Continuing Operations
|
(3,303,927 | ) | (6,750,917 | ) | (24,003,357 | ) | ||||||
|
Discontinued Operations: Gain (Loss) from
discontinued operations (including gain on disposal
|
- | - | 15,593 | |||||||||
|
Net Income (Loss)
|
$ | (3,303,927 | ) | $ | (6,750,917 | ) | $ | (23,987,764 | ) | |||
|
Net Income(Loss) per share
Basic and Fully Diluted, From:
|
||||||||||||
|
Continuing operations
|
$ | (0.01 | ) | $ | (0.07 | ) | ||||||
|
Discontinuted operations
|
- | - | ||||||||||
|
Combined
|
$ | (0.01 | ) | $ | (0.07 | ) | ||||||
|
Weighted Average Number of Common Shares
|
307,703,272 | 100,910,281 | ||||||||||
|
Deficit
|
||||||||||||||||||||||||||||||||
|
Accum.
|
Accum.
|
|||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
During the
|
Other
|
Stock-
|
||||||||||||||||||||||||||||
|
Amount
|
Amount
|
Paid In
|
Development
|
Compre.
|
holders'
|
|||||||||||||||||||||||||||
|
Shares
|
($.001Par)
|
Shares (1)
|
($.001Par)
|
Capital
|
Stage
|
Income/(Loss)
|
Equity
|
|||||||||||||||||||||||||
|
Balance at May 30, 2006
|
- | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
|
Issuance of stock for cash
|
250,000 | 250 | 4,750 | 5,000 | ||||||||||||||||||||||||||||
|
Foreign currency Gain(Loss)
|
(64 | ) | (64 | ) | ||||||||||||||||||||||||||||
|
Net Gain (Loss) for period ending
July 31st, 2006
|
(9,881 | ) | (9,881 | ) | ||||||||||||||||||||||||||||
|
Balance at July 31, 2006
|
- | - | 250,000 | 250 | 4,750 | (9,881 | ) | (64 | ) | (4,945 | ) | |||||||||||||||||||||
|
Issuance of stock for cash
|
100,400 | 100 | 50,100 | 50,200 | ||||||||||||||||||||||||||||
|
Issuance of shares for acquisition
|
133,333 | 133 | 266,534 | 266,667 | ||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Discontinued Operations
|
64 | 64 | ||||||||||||||||||||||||||||||
|
Net loss for the year
|
(310,032 | ) | (310,032 | ) | ||||||||||||||||||||||||||||
|
Balance at July 31, 2007
|
- | - | 483,733 | 483 | 321,384 | (319,913 | ) | - | 1,954 | |||||||||||||||||||||||
|
Share Cancellation
|
(250,000 | ) | (250 | ) | 250 | - | ||||||||||||||||||||||||||
|
Shares Issued for cash, net of offering
costs of $64,315
|
3,047 | 3 | 255,582 | 255,585 | ||||||||||||||||||||||||||||
|
Shares Issued for Services
|
9,500 | 10 | 854,990 | 855,000 | ||||||||||||||||||||||||||||
|
Conversion of Debt
|
3,563 | 4 | 386,649 | 386,653 | ||||||||||||||||||||||||||||
|
Shares Issued for Land Claims
|
284 | 42,500 | 42,500 | |||||||||||||||||||||||||||||
|
Issuance of Warrants
|
861,694 | 861,694 | ||||||||||||||||||||||||||||||
|
Net loss for the year
|
(3,980,287 | ) | (3,980,287 | ) | ||||||||||||||||||||||||||||
|
Balance at July 31, 2008
|
- | - | 250,127 | 250 | 2,723,049 | (4,300,200 | ) | - | (1,576,901 | ) | ||||||||||||||||||||||
|
Shares Issued for services
|
10,000 | 10 | 14,990 | 15,000 | ||||||||||||||||||||||||||||
|
Fractional Shares - Reverse Stock Split
|
135 | |||||||||||||||||||||||||||||||
|
Net loss for the year
|
(2,348,748 | ) | (2,348,748 | ) | ||||||||||||||||||||||||||||
|
Balance at July 31, 2009
|
- | - | 260,262 | 260 | 2,738,039 | (6,648,948 | ) | - | (3,910,649 | ) | ||||||||||||||||||||||
|
Shares Issued for services
|
14,550,000 | 14,550 | 6,974,717 | 6,989,267 | ||||||||||||||||||||||||||||
|
Shares issued for stock subscription payable
|
8,000,000 | 8,000 | 712,000 | 720,000 | ||||||||||||||||||||||||||||
|
Net loss for the year
|
(7,283,972 | ) | (7,283,972 | ) | ||||||||||||||||||||||||||||
|
Balance at July 31, 2010
|
- | - | 22,810,262 | 22,810 | 10,424,756 | (13,932,920 | ) | - | (3,485,354 | ) | ||||||||||||||||||||||
|
Shares issued for services
|
104,051,375 | 104,051 | 5,264,863 | 5,368,914 | ||||||||||||||||||||||||||||
|
Shares issued for assets
|
25,000,000 | 25,000 | 1,253,131 | 1,278,131 | ||||||||||||||||||||||||||||
|
Shares issued for Subscriptions
|
316,667 | 317 | 36,683 | 37,000 | ||||||||||||||||||||||||||||
|
Preferred Stock
|
2,500,000 | 2,500 | - | - | 1,609,565 | 1,612,065 | ||||||||||||||||||||||||||
|
Shares Cancelled
|
(24,000,000 | ) | (24,000 | ) | 24,000 | - | ||||||||||||||||||||||||||
|
Net loss for the year
|
(6,750,917 | ) | (6,750,917 | ) | ||||||||||||||||||||||||||||
| Balance at July 31, 2011 | 2,500,000 | 2,500 | 128,178,304 | 128,178 | 18,612,998 | (20,683,837 | ) | - | (1,940,161 | ) | ||||||||||||||||||||||
|
Shares issued for services
|
1,783,000,000 | 1,783,000 | (715,400 | ) | 1,067,600 | |||||||||||||||||||||||||||
|
Shares exchanged for debt
|
305,047,155 | 305,047 | (97,427 | ) | 207,620 | |||||||||||||||||||||||||||
|
Net loss for the year
|
(3,303,927 | ) | (3,303,927 | ) | ||||||||||||||||||||||||||||
|
Balance at July 31, 2012
|
2,500,000 | $ | 2,500 | 2,216,225,459 | $ | 2,216,225 | $ | 17,800,171 | $ | (23,987,764 | ) | $ | - | $ | (3,968,868 | ) | ||||||||||||||||
(1) As restated for a 15 for 1 forward stock split on July 30, 2007 and a 1 for 300 reverse stock split on November 11, 2008.
See accompanying notes to the consolidated financial statements
FBC
Holding Inc.
(A Development Stage Company)
|
Year
|
Year
|
May 30, 2006
|
||||||||||
|
Ended
|
Ended
|
inception through
|
||||||||||
|
July 31, 2012
|
July 31, 2011
|
July 31, 2012
|
||||||||||
|
Cash flow from operating Activity:
|
||||||||||||
|
Operating activity from continuing operations
|
||||||||||||
|
Net Loss
|
$ | (3,303,927 | ) | $ | (6,750,917 | ) | $ | (23,987,764 | ) | |||
|
Less: Loss from discontinued operations
|
- | - | (15,657 | ) | ||||||||
|
Net loss from continuing operations
|
(3,303,927 | ) | (6,750,917 | ) | (24,003,421 | ) | ||||||
|
Adustments:
|
||||||||||||
|
Stock issued for services
|
1,067,600 | 3,737,414 | 14,640,859 | |||||||||
|
Impairment of goodwill
|
- | 1,250,000 | 1,998,131 | |||||||||
|
Conversion Fee
|
- | 1,631,500 | 1,703,665 | |||||||||
|
Amortization of debt discount
|
339,303 | - | 507,706 | |||||||||
|
Depreciation
|
- | - | 1,062 | |||||||||
|
Change in derivative
|
629,823 | 629,823 | ||||||||||
|
Deferred financing fees
|
391,807 | - | 391,807 | |||||||||
|
Changes in assets & liabilities from
continuing operations
|
||||||||||||
|
Prepaids
|
108,500 | (108,500 | ) | 108,500 | ||||||||
|
Accounts Payable
|
277,267 | (1,263 | ) | 273,283 | ||||||||
|
Accrued Expenses
|
122,043 | 6,608 | 457,353 | |||||||||
|
Cash flow from operating activities
by continuing operations
|
(367,584 | ) | (235,158 | ) | (3,291,232 | ) | ||||||
|
Cash Flow from investing activities
|
||||||||||||
|
Purchase of fixed assets
|
- | - | (2,259 | ) | ||||||||
|
Net cash provided by (used for) from investing activities
|
- | - | (2,259 | ) | ||||||||
|
Cash Flow from Financing activities
|
||||||||||||
|
Notes payable - borrowings
|
361,023 | 207,596 | 2,386,523 | |||||||||
|
Notes payable - payments
|
- | - | (8,847 | ) | ||||||||
|
Issuance of stock
|
- | 37,000 | 918,692 | |||||||||
|
Net cash provided by (used for) from financing activities
|
361,023 | 244,596 | 3,296,368 | |||||||||
|
Net cash used in continuing operations
|
(6,561 | ) | 9,438 | 2,877 | ||||||||
|
Cash Flow from discontinued operations
|
- | - | - | |||||||||
|
Net change in cash
|
(6,561 | ) | 9,438 | 2,877 | ||||||||
|
Beginning cash
|
9,438 | - | ||||||||||
|
Ending cash
|
$ | 2,877 | $ | 9,438 | $ | 2,877 | ||||||
|
Supplemental Disclosures
|
||||||||||||
|
Cash Paid For:
|
||||||||||||
|
Interest
|
$ | - | $ | 3,304 | $ | 3,304 | ||||||
|
Income Taxes
|
$ | - | $ | - | $ | - | ||||||
|
During the year ended July 31, 2011, the Company issued 2,500,000 preferred shares in exchange for a debt note
|
$ | - | $ | 1,612,062 | $ | 1,612,062 | ||||||
| During the year ended July 31, 2011, the Company issued 25,000,000 shares of common stock for acquired assets as follows: | ||||||||||||
|
Assets acquired
|
$ | - | $ | 1,278,131 | 1,278,131 | |||||||
|
Impairment of goodwill
|
- | (1,250,000 | ) | (1,250,000 | ) | |||||||
|
Expenses of acquisition
|
- | (28,131 | ) | (28,131 | ) | |||||||
|
Assets reported July 31, 2011
|
$ | - | $ | - | $ | - | ||||||
|
Equity issued in exchange for debt
|
$ | 207,620 | $ | - | $ | 207,620 | ||||||
See accompanying notes to the consolidated financial statements
FBC
Holding Inc.
Notes to Consolidated Financial Statements
For the Years Ended July 31, 2012 and 2011
NATURE OF OPERATIONS
Wave Uranium Holding's ("Wave", the "Company") business had been to acquire mineral land positions. In October 2009 the Company was redomiciled as a Nevada corporation under the name FBC Holding Corp. On July 21, 2009, the Company entered into an acquisition agreement to purchase FBC Holdings, Inc., a California corporation ("FBC Holdings, Inc. - California"), with the plan that the Company would abandon its former business plan in the industry of mining and land acquisition and pursue the business plan of FBC Holdings, Inc. FBC Holdings, Inc. - - California had no material activity up to the agreement date and no material assets or liabilities. The acquisition agreement called for the Company to purchase FBC Holdings, Inc. - California, by acquiring all the outstanding shares of FBC Holdings, Inc. -– California, in exchange for 8 million shares of the Company’s common stock. As of July 31, 2009 the Company had not completed the transaction by issuing the 8 million shares, so the Company recorded a stock subscription payable of $720,000 based on the market price of $.09 per share on the date the acquisition agreement was entered into, with a corresponding recording and immediate write-off of goodwill in the same amount. The stock was subsequently issued in November 2009. The new entity was to focus in three areas: (i) branding (product placement) in television production, movies, etc.; (ii) the sale of mini-choppers and the associated merchandise of the brand Beverly Hills Choppers, including clothing, accessories, parts, etc.; and (iii) internet platforms focused on social networking and the database built around the Johnny Fratto Social Club. The acquisition did not work out according to the Company’s plan and the Company returned all interest in FBC Holdings, Inc. – California, in exchange for the return for return of all the 8 million shares of the Company’s common stock. On August 11, 2010, the Company signed an Asset Purchase Agreement with Super Rad Corporation. Under the agreement the Company purchased certain assets related to the collectible toy and art industry. Super Rad Toys, Inc. was founded as a California corporation in December 2006. As a result of preparing to go public, it reincorporated in Nevada under the name of Super Rad Industries, Inc. doing business as Super Rad Toys. Since the Super Rad’s inception it has emerged at the forefront of the collectible art world, by producing innovative and high-quality vinyl collectibles. Since the acquisition of these assets from Super Rad, this has been the primary business of the Company.
DEVELOPMENT STAGE COMPANY
The Company is in the development stage and has not yet realized any revenues from its planned operations, but we anticipate we will have revenues in our fiscal year ended July 31, 2012, beginning with our quarter ended October 31, 2011. Our business plan is to continue to develop our existing toys, attempt to develop and/or license new toy ideas, and sell toys via retailers, wholesale accounts and online.
Based upon the Company's business plan, it is a development stage enterprise. Accordingly, the Company presents its financial statements in conformity with the accounting principles generally accepted in the United States of America that apply in establishing operating enterprises. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its’ wholly owned subsidiaries. All intercompany accounts and balances have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets of three to seven years. Currently we do not have any capitalized property and equipment.
EARNINGS (LOSS) PER SHARE
The Company calculates net income (loss) per share as required by ASC 260, "Earnings per Share." Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods when they would be anti-dilutive common stock equivalents, if any, are not considered in the computation.
STOCK-BASED COMPENSATION
The Company accounts for stock based compensation in accordance with ASC 718, "Accounting for Stock-Based Compensation." The provisions of ASC 718 allow companies to either expense the estimated fair value of stock options or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma effects on net income (loss) had the fair value of the options been expensed.
FAIR VALUE OF FINANCIAL INSTRUMENTS
AFC Topic 820, "Disclosures about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of July 31, 2012 and 2011.
The respective carrying value of certain on-balance-sheet financial instruments approximates their fair values. These financial instruments include cash, restricted cash, trade accounts receivables, accounts payable, accrued expenses, notes payable and due to investors. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value or they are receivable or payable on demand. The carrying value of the Company's long-term debt, notes payable and due to investors approximates fair values of similar debt instruments.
INCOME TAX
The Company accounts for income taxes under ASC 720, Under ASC 720 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.
At July 31, 2012 and 2011 the Company had net operating loss carryforwards of approximately $20,000,000 and $14,000,000 which begin to expire in 2026. The Deferred tax asset of approximately $3,100,000 and $2,090,000 in 2011 and 2010 has been offset by a 100% valuation allowance. The change in the valuation allowance in 2011and 2010 was $1,010,000 and $1,090,000.
NEW PRONOUNCEMENTS
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company’s present or future financial statements.
The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has experienced a significant loss from operations as a result of its investment necessary to achieve its operating plan, which is long-range in nature. For the year ended July 31, 2011, the Company incurred a net loss of $6,750,917.
The Company's ability to continue as a going concern is contingent upon its ability to attain profitable operations and secure financing. In addition, the Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which the Company operates.
The Company is pursuing equity financing for its operations. Failure to secure such financing or to raise additional capital or borrow additional funds may result in the Company depleting its available funds and not being able pay its obligations.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Wave Uranium Holding Notes
On March 20, 2008, Wave Uranium Holding (the "Company") entered into a securities purchase agreement (the "Agreement") with accredited investors (the "Investors") pursuant to which the Investors purchased an aggregate principal amount of $1,562,500 of 8% Original Issue Discount Senior Secured Convertible Debentures for an aggregate purchase price of $1,250,000 (the "Debentures"). The Debentures bore interest at 8% and mature twenty-four months from the date of issuance. The Debentures were convertible at the option of the holder at any time into shares of common stock, at an initial conversion price equal to $0.25 ("Initial Conversion Price"). These notes were converted to preferred shares with an exercise price of $0.625.
In connection with the Agreement, each Investor received a warrant to purchase such number of shares of common stock equal to their subscription amount divided by the Initial Conversion Price ("Warrants"). Each Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $90. The investors may exercise the Warrants on a cashless basis if the shares of common stock underlying the Warrants are not then registered pursuant to an effective registration statement. In the event the Investors exercise the Warrants on a cashless basis, then we will not receive any proceeds. The conversion price of the Debentures and the exercise price of the Warrants are subject to full ratchet and anti-dilution adjustment for subsequent lower price issuances by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.
The full principal amount of the Debentures is due upon default under the terms of Debentures. Beginning on the seven (7) month anniversary of the closing of the Debentures and continuing on the same day of each successive month thereafter, the Company must prepay 1/18th of the aggregate face amount of the Debentures, plus all accrued interest thereon, either in cash or in common stock, at the option of the Company. If the Debenture is prepaid in shares of common stock, the conversion price of such shares shall be equal to the lesser of (i) the conversion price then in effect and (ii) 80% of the average of the three (3) closing bid prices for the 20 consecutive trading days ending on the trading day that is immediately prior to the applicable redemption date. Notwithstanding the foregoing, the Company's right to prepay the Debentures in shares of common stock on each prepayment date is subject to, among other things, the following conditions: (i) that a registration statement must be effective on such prepayment date and available for use by the Investors (ii) the shares to be issued are registered with the Securities and Exchange Commission and (iii) the aggregate number of shares to be issued under any monthly redemption amount is less than 20% of the total dollar trading volume of the Company's common stock for the 20 trading days prior to the applicable monthly redemption date. Beneficial conversion was calculated based on the converted value and amortized over the life of the loan.
At any time after the effectiveness of the registration statement described below, the Company may, upon written notice, redeem the Debentures in cash at 115% of the then outstanding principal amount of the Debentures provided, among other things, that (i) the volume weighted average price ("VWAP") for any 20 consecutive trading days exceeds $0.50, (ii) a registration statement must be effective on such redemption date and available for use by the Investors and (iii) the Company has satisfied all conditions under the transaction documents.
Each of the Investors have contractually agreed to restrict their ability to exercise the Warrants and convert the Debentures such that the number of shares of the Company common stock held by each of them and their affiliates after such conversion or exercise does not exceed 4.99% of the Company's then issued and outstanding shares of common stock.
The Company is obligated to file a registration statement registering the resale of shares of (i) the Common Stock issuable upon conversion of the Debentures, (ii) the Common Stock issuable upon exercise of the Warrants, and (iii) the shares of common stock issuable as payment of interest on the Debenture. If the registration statement is not filed within 45 days from the final closing, or declared effective within 105 days thereafter (120 days if the registration statement receives a review by the SEC), the Company is obligated to pay the investors certain fees in the amount of 2% of the total purchase price of the Debentures, per month, and the obligations may be deemed to be in default.
Additionally the Company has shown the current portion of the debt in current liabilities; also the Company has discounted the note under the interest method and is amortizing the debt discount over the life of the loan. On July 6, 2009 the debenture terms were amended with the interest rate being changed to nil (0.00%) and the conversion price changed to $.62 per share.
The Company has discounted the Debentures under the interest method, and the original issue discount on the Debentures of $312,500 plus the additional calculated debt discount of $1,250,000 derived from the calculated cost of the conversion feature and attached warrants as limited by the face amount of the Debentures ($1,562,500 total) is being amortized over the life of the loan, which has been fully amortized in prior years. The Company's potential equity cost from the conversion feature and attached warrants of $1,249,500 was recorded as an equity obligation liability in 2008. The equity obligation expires five years from amended date, July 6, 2009). As of July 31, 2012 and 2011, there have been no conversions and the equity obligation is presented as a current liability in the amount of $1,249,500.
FBC Holding Notes
The Company entered into a financing agreement with a lender, which provides for incremental installments resulting in a series of convertible notes. The terms of these notes include interest payable at the rate of 8%, maturing in three (3) months from the origination date. The notes are convertible at 50% of the five (5) day closing trading price at the date of the conversion request.
The Company evaluated the terms of the notes in accordance with ASC Topic No. 815 - 40,
Derivatives and Hedging - Contracts in Entity’s Own Stock
and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized a beneficial conversion feature, to the extent of the note, and applied as a debt discount to the Convertible Notes Payable and amortized to interest expense over the terms of the note.
The features of the notes resulted in the recognition of a derivative liability. The Company valued the features using the Black-Scholes Model, which resulted in a potential liability of $520,255.
Assumptions used in the derivative valuation were as follows:
|
Weighted Average:
|
||||
|
Dividend rate
|
0.0 | % | ||
|
Risk-free interest rate
|
.06 | % | ||
|
Expected lives (years)
|
.18 | |||
|
Expected price volatility
|
134.6 | % | ||
|
Forfeiture Rate
|
0.0 | % | ||
During the year ended July 31, 2012, the series of agreements required the lender to perform certain additional services, including management and satisfaction of certain of the Company’s liabilities. Each series of notes included compensation for the management function, recorded as expense and added to the convertible notes face value. Additionally, the services called for compensation in shares to be issued. Under these individual agreements, the Company is obligated to issue the lender 117,045,353 shares of common stock for these financing services, which were valued at the fair market value of the stock at the date of origination (grant date), resulting in $391,807 of financing costs (operating expense) and a corresponding recognition of the equity obligation.
The balance due under all notes payable at July 31, 2012 and 2011 was $604,083 (net of $14,220 of unamortized debt discounts) and $464,900, respectively with all notes currently due or subject to conversion. During the year ended July 31, 2012 the Company converted $345,196 of loan debt in exchange for 2,055,047,155 common shares.
Notes payable at December 31,2011 and 2010 consist of the following:
|
July 31,
2012
|
July 31,
2011
|
|||||||
|
Demand note payable, dated June 24, 2012, 18% interest rate, maturing June 24, 2013
|
$ | 7,500 | $ | - | ||||
|
Convertible notes payable, all under identical terms of 8% interest, maturing in 30 days from issuance date, convertible into common shares at 50% discount to average five day trading price at date of request
|
610,803 | 464,900 | ||||||
|
Debt discount assigned to convertible notes payable
|
(14,220 | ) | - | |||||
| 604,083 | 464,900 | |||||||
|
Current maturities of debt
|
604,083 | 464,900 | ||||||
|
Long-term portion of debt
|
$ | - | $ | - | ||||
As of July 31, 2012 and 2011, the Company had 5,000,000 authorized shares of preferred stock, $.001 par value, with 2,500,000 shares issued and outstanding.
As of July 31, 2012 and 2011, the Company had 5,000,000,000 authorized shares of common stock, $.001 par value, with 2,216,225,459 and 128,174,304 shares issued and outstanding, respectively.
STOCK OPTIONS AND WARRANTS
At July 31, 2012 and 2011the Company had stock options and warrants outstanding as described below.
NON-EMPLOYEE STOCK OPTIONS AND WARRANTS
The Company accounts for non-employee stock options and warrants under ASC718, whereby option and warrant costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise provided for, the Company covers option and warrant exercises by issuing new shares.
During fiscal year 2008 the Company granted 20,833 common stock warrants in connection with debenture borrowings as more fully described in Note 5. In addition the Company issued 1,828 warrants to various individuals and entities for compensation, allowing the holder to purchase one share of common stock per warrant, exercisable immediately at $150 per share with the warrant terms expiring in November and December of 2009. The fair value of these warrant grants were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 3.2%, dividend yield of 0%, expected life of 2 years, volatility of 26%. The Company recorded total compensation expense under these warrant issuances of $861,694 in fiscal year 2008. As of July 31, 2012, all of the 2008 warrant grants of 22,661 expired.
The Company issued 100,000 warrants in 2009 under a $150,000 convertible debenture, allowing the holder to purchase one share of common stock per warrant, exercisable immediately at $1 per share with the warrant terms expiring in July 2014. The warrants were out of the money with no material recording value. At July 31, 2012 these warrants were not exercised and remain outstanding.
In November 2008 a note holder filed a legal action against the Company in the Superior Court of Orange County, California alleging breach of contract and other malfeasance and seeking damages of approximately $238,000, plus legal costs (California Asset Recovery Solutions, LLC vs. Wave Uranium Holdings, case no. 30-2008-0014550). The Company disputed the allegations, however on August 8, 2012, the Company has reached a settlement agreement in the amount of $40,000.
From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that there are no other current matters that would have a material effect on the Company’s financial position or results of operations.
The Company has consulting contracts with its two officers and directors. The Company does not have a funding commitment or any written agreement for our future required cash needs with these officers or any beneficial owners of the Company.
The officers and directors of the Company are involved in other business activities and may, in the future, become involved in additional business opportunities that become available. A conflict may arise in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
The Company does not own or lease property or lease office space. The Company has minimal needs for office space at this time. Office space, as needed has been provided by the officers and directors of the Company at no charge.
The above amount is not necessarily indicative of the amount that would have been incurred had a comparable transaction been entered into with independent parties.
On August 7, 2010, the Company issued 22 million shares to Christopher LeClerc, the Company’s Chief Executive Officer, Chief Financial Officer and its sole Director in exchange for Mr. Leclerc’s role in the transaction to purchase the assets of Super Rad Corporation, as well as the role he would play in the future of the Company, as a public company, post-transaction. Mr. LeClerc also agreed to forfeit any accrued salary and expenses he was owed as part of the transaction. However, once the shares were issued to Mr. LeClerc and because he had agreed to forego compensation as part of the same transaction Mr. LeClerc was concerned about the tax issues related to the issuance, as well as the dilution that would occur to the Company’s other shareholders as a result of the issuance. As a result, Mr. LeClerc agreed to return the shares to the Company for cancellation. The shares granted to Mr. LeClerc were not based on the share price of the Company at issuance and the amounts owed to Mr. LeClerc, but more so based on the value he added to the Company in connection with the Super Rad transaction, and would continue to add, compared to the shares granted to Super Rad in connection with the asset purchase transaction. A total of 24 million shares (including the 22 million shares mentioned above) owned by Mr. LeClerc were cancelled on May 17, 2011.
None.
(a) Disclosure Controls and Procedures
We conducted an evaluation, 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, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of July 31, 2011, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of July 31, 2011, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in Item 9A(b).
(b) Management Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and any disposition of our assets;
|
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. 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.
A material weakness is 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 our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2011. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, Management has identified the following two material weaknesses that have caused management to conclude that, as of July 31, 2011, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
1. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2. We have not documented our internal controls. We have limited policies and procedures that cover the recording and reporting of financial transactions and accounting provisions. As a result we were delayed in our ability to calculate certain accounting provisions. While we believe these provisions are accounted for correctly in the attached audited financial statements our lack of internal controls led to a delay in the filing of this Annual Report. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
(c) Remediation of Material Weaknesses
To remediate the material weakness in our documentation, evaluation and testing of internal controls we may engage a third-party firm to assist us in remedying this material weakness.
(d) Changes in Internal Control over Financial Reporting
There are no changes to report during our fiscal quarter ended July 31, 2011.
There are no events required to be disclosed by the Item.
Directors and Executive Officers
The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person, and the date such person became a director or executive officer. Our executive officers are elected annually by the Board of Directors. The directors serve one year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. Unless described below, there are no family relationships among any of the directors and officers.
|
Name
|
Age
|
Position(s)
|
|||
|
Frank Russo
|
54 |
Director (08/12), Chief Executive Officer (11/09
|
|||
|
Kevin Wright
|
55 |
Director (8/12), Chief Operating Officer (11/12)
|
|||
|
Brian Lehman
|
42 |
Secretary (7/10)
|
|||
Frank Russo
became a director on August 24, 2012 and Chief Executive Officer as of November [xx] 2012. Russo is the former Vice President of Development for RYCA and is an expert in implementing sales distribution and product strategy, sales team leadership, marketing, and market analysis and business development. Prior to joining RYCA and FBC Mr. Russo was the President of Gladiator Sales, Inc., which was the exclusive sales agency for Puma North America. He led Gladiator in re-launching and reestablishing the Puma brand to prominence within in the US, tackling the most difficult market - New York City. By restoring the brand presence in the likes of Henri Bendel, Bloomingdale’s, Urban Outfitters and Foot Locker Corporate, the brand was empowered to pursue collaborations with Ferrari, Ducati and the likes of Alexander McQueen. The increased visibility in the ‘right retail locations’ created a brand perception that turned into a reality, permitting increased sales revenue from a base of $5 million to over $75 million with 13 sales associates throughout the Northeast corridor. Under his leadership Gladiator was named Brand Agency of the Year – 2000 and 2002 and had numerous Salesman of the Year honors in the categories of Footwear / Apparel / Soccer / Accessories.
Kevin Wright
joined the FBC management team as a director on August 24, 2012 and became Chief Operating Officer on November [ ], 2012. Mr. Wright has been involved in the extreme sports industry especially skateboarding since the early 90’s and is the founder of the RMSBA Amateur Skateboarding Association and is the founder and President of AiroUSA, LLC a manufacturer and distributor of skateboard decks, extreme sports apparel, and the DUORail. The DUORail is a unique innovative skate rail that combines a square and round skate surface in one rail. The best of both worlds in one with a simple turn and lock system, the rider can switch to either skate surface. For further information please check
http://airousa.com/
.
Brian Lehman
Mr. Lehman has been our Secretary since July 22, 2010. Mr. Lehmann has over 22 years of business and technical experience in outsourced services, software and technology fields, with particular strengths in corporate development, marketing, product management, business development and software development. From 2005 until present, Mr. Lehmann has been Chief Executive Officer of Prestige Employee Administrators Inc., a private company that provides outsourced human resources services to over 250 Small & Medium Businesses in 32 States. It has been represented by Mr. Christopher LeClerc, our former CEo and sole director that Mr. Lehman has resigned as Secretary and that that occurred subsequent to Mr. Leclerc’s termination in September 26, 2012. The Company has been unsuccessful thus far in contacting Mr. Lehman for verification of his resignation and we have received no notification of any kind regarding Mr. Lelhman’s status as an officer of the Company as of the date of this filing.
Other Directorships
None of our officers and directors are directors of any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Audit Committee
The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director of us and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
During the most recent fiscal year, to the Company’s knowledge, the following delinquencies occurred:
|
Name
|
No. of Late
Reports
|
No. of
Transactions
Reported Late
|
No. of
Failures to
File
|
|||||||||
|
Christopher LeClerc
|
0
|
0
|
2
|
|||||||||
|
Brian Lehman
|
0
|
0
|
2
|
|||||||||
Board Meetings and Committees
During the fiscal year ended July 31, 2012, the Board of Directors consisted of Mr. Leclerc as sole director. As stated previously (see Recent Events) Mr. LeClerc was terminated as an Officer by the unanimous consent of the independent directors. Mr. Leclerc has not provided the current directors with a written statement of resignation and has been requested but has not provided the board with an update of his status as a director of the Company. Mr. Leclerc has provided a written statement to the Company’s then current SEC Counsel, and has verbally stated that he had resigned as a director to one of the Company’s creditors. As such, we cannot be certain that the director took written action on any occasion. In addition, Mr. Leclerc has been uncooperative with the current board of directors and their advisors and has up to the date of this filing refused to provide the Company with material documents including any board minutes, resolutions or other corporate actions.
Code of Ethics
We have not adopted a written code of ethics, however since the current board has come to suspect that previous management and the previous sole director may have acted outside of the guidelines of generally accepted fiduciary behavior which reasonably should be expected from a director or officer the current board and management will create and implement such a policy as soon as practicable.
Executive Officers and Directors
The following tables set forth certain information about compensation paid, earned or accrued for services by (i) our Chief Executive Officer and (ii) all other executive officers who earned in excess of $100,000 in the fiscal year ended July 31, 2011, 2010 and 2009 (“Named Executive Officers”):
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($) *
|
Option
Awards
($) *
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||||||
|
Christopher LeClerc (1)
|
2012
|
0
|
0
|
0
|
0
|
0
|
0
|
115,600 (4)
|
115,600
|
|||||||||||||||||||||||||
|
CEO, CFO
|
2011
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
| Treasurer |
2010
|
0
|
0
|
0
|
0
|
0
|
011
|
0
|
||||||||||||||||||||||||||
|
Brian Lehman (2)
|
2012
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
|
Secretary
|
2011
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
|
2010
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||||||||
|
Cady Johnson
(3)
|
2011
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||||||||||||
| Former President |
2010
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||||||||||||
|
and CFO
|
2009
|
45,000
|
0
|
300,000
|
0
|
0
|
0
|
0
|
345,000
|
|||||||||||||||||||||||||
|
*
|
Based upon the aggregate grant date fair value calculated in accordance with the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standard (“FAS”) No. 123R, Share Based Payment. Our policy and assumptions made in valuation of share based payments are contained in the Notes to our July 31, 2012 financial statements.
|
|
(1)
|
Christopher LeClerc has been a director since December 2007 and our Chief Financial Officer and Treasurer since June 2007. He was appointed President and Chief Executive Officer on March 20, 2009. He was terminated as CEO, CFO, President and Treasurer on [ ]. The current board and management is in the process of determining the nature of the compensation which the Company paid to Mr. Leclerc.
|
|
|
(2)
|
Brian Lehman was appointed our Secretary on July 22, 2010.
|
|
(3)
|
Cady Johnson was our President and Chief Financial Officer from June 2007 until March 19, 2009
|
|
|
(4)
|
Some portion of this amount appears on preliminary investigation to have been distributions to the CEO and sole director which may have been unauthorized personal expenditures. In the event that further investigation proves this to be true, the board intends to demand or take other such action to obtain recoupment
|
Consulting Agreements with Officers
Mr. Russo and Mr. Wright, or Chief Executive Officer and Chief Operations Officer respectively are compensated $5,000 per month. Currently the compensation is being paid in stock. The agreements contemplate that this monthly compensation will be paid in cash when the Company can afford to do so, and we also contemplate that the compensation amount will be increased to competitive market rates when the Company is financially able to do so. In addition, there will be additional consideration paid through the issuance of the Company’s restricted stock. However , at the time of this filing the officers hold no equity. The agreement further contemplates that the Company and these individuals will negotiate a performance-related bonus plans based on certain milestones which will be agreed upon within the first 90-days following the execution of the agreements..
Director Compensation
The following table sets forth director compensation as of July 31, 2012:
|
Name
|
Fees Earned
or Paid in
Cash
($)
|
Stock Awards
($) *
|
Option Awards
($) *
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
|
Christopher LeClerc (1)
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|||||||||||||||||||||
|
*
|
Based upon the aggregate grant date fair value calculated in accordance with the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standard (“FAS”) No. 123R, Share Based Payment. Our policy and assumptions made in valuation of share based payments are contained in the notes to our financial statements. The monies shown in the “option awards” column is the total calculated value for each individual.
|
|
(1)
|
Christopher LeClerc was appointed to our Board of Directors in December 2007.
|
We do not provide any compensation to our directors for serving as directors.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information concerning outstanding stock awards held by the Named Executive Officers as of July 31, 2011:
|
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
|
|||||||||||||||||||||||||||
|
Christopher LeClerc
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
|
Brian Lehman
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
The following table sets forth, as of November 16, 2011, certain information with respect to the Company’s equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 10% of each class of the Company’s outstanding equity securities; and (iii) all Directors and Executive Officers as a group.
Common Stock
|
Title of Class
|
Name and Address
of Beneficial Owner (3)
|
Amount and Nature of
Beneficial Ownership
|
Percent
of Class (1)
|
|||||||
|
Common Stock
|
Christopher LeClerc (2)
|
5,000
|
<1
|
%
|
||||||
|
Common Stock
|
Brian Lehman (2)
|
-0-
|
0
|
%
|
||||||
|
Common Stock
|
All Directors and Officers
As a Group (2 persons)
|
5,000
|
<1
|
%
|
||||||
|
(1)
|
Unless otherwise indicated, based on 2,216,225,490 shares of common stock issued and outstanding. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for the purposes of computing the percentage of any other person.
|
|
(2)
|
Indicates one of our officers or directors. With regard to Mr. Lehman, it has been represented by Mr. Christopher LeClerc, our former CEo and sole director that Mr. Lehman has resigned as Secretary and that that occurred subsequent to Mr. Leclerc’s termination in September 26, 2012. The Company has been unsuccessful thus far in contacting Mr. Lehman for verification of his resignation and we have received no notification of any kind regarding Mr. Lelhman’s status as an officer of the Company as of the date of this filing.
|
|
(3)
|
Unless indicated otherwise, the address of the shareholder is 16213 S. Western Ave, Gardenia, CA 90247.
|
The issuer is not aware of any person who owns of record, or is known to own beneficially, ten percent or more of the outstanding securities of any class of the issuer, other than as set forth above. There are no classes of stock other than common stock issued or outstanding.
On August 7, 2010, we issued 22 million shares to Christopher LeClerc, our Chief Executive Officer, Chief Financial Officer and our sole Director in exchange for Mr. Leclerc’s role in the transaction to purchase the assets of Super Rad Corporation, as well as the role he would play in the future of the company, as a public company, post-transaction. Mr. LeClerc also agreed to forfeit any accrued salary and expenses he was owed as part of the transaction. However, once the shares were issued to Mr. LeClerc and because he had agreed to forego compensation as part of the same transaction Mr. LeClerc was concerned about the tax issues related to the issuance, as well as the dilution that would occur to the Company’s other shareholders as a result of the issuance. As a result, Mr. LeClerc agreed to return the shares to the Company for cancellation. The shares granted to Mr. LeClerc were not based on the share price of the Company at issuance and the amounts owed to Mr. LeClerc, but more so based on the value he added to the Company in connection with the Super Rad transaction, and would continue to add, compared to the shares granted to Super Rad in connection with the asset purchase transaction. A total of 24 million shares (including the 22 million shares mentioned above) owned by Mr. LeClerc were cancelled on May 17, 2011.
We do not have an audit, compensation, or nominating committee, and none of our Directors are considered independent.
Audit and Restated Fees
During the year ended July 31, 2012 and 2011, Peter Messineo, CPA, charged us $7,000 and $2,500 in fees for professional services for the audit of our financial statements in our Form 10-K and review of financial statements included in our Form 10-Q’s, as applicable.
Tax Fees
During the year ended July 31, 2011, Peter Messineo, CPA billed us $0 for professional services for tax preparation.
All Other Fees
During the year ended July 31, 2011, Peter Messineo, CPA did not bill us any amounts for any other fees.
Of the fees described above for the year ended July 31, 2012 and 2011, 100% were approved by the entire Board of Directors.
|
(a)(1)
|
Financial Statements
|
The following financial statements are filed as part of this report:
|
F-1
|
|
|
F-2
|
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
(a)(2)
|
Financial Statement Schedules
|
We do not have any financial statement schedules required to be supplied under this Item.
|
(a)(3)
|
Exhibits
|
Refer to (b) below.
|
(b)
|
Exhibits
|
|
Exhibit
Number
|
Exhibit
Description
|
|
|
2.1
|
Agreement and Plan of Reorganization between Wave Uranium and the Registrant.(2)
|
|
|
2.2
|
Agreement of Sale between the Registrant and Alexandre Routkovski (2)
|
|
|
3.1
|
Articles of Incorporation (1)
|
|
|
3.2
|
Bylaws (1)
|
|
|
3.3
|
Certificate of Amendment to Articles of Incorporation changing name to Wave Uranium Holding (2)
|
|
|
3.4
|
Certificate of Amendment to Articles of Incorporation increasing authorized stock (4)
|
|
|
10.1
|
Software Development and Consulting Agreement (1)
|
|
|
10.2
|
Employment Agreement with Dr. Johnson (2)
|
|
|
10.3
|
Employment Agreement with Mr. LeClerc(2)
|
|
|
10.4
|
Wilson Creek Agreement (3)
|
|
|
10.5
|
Form of Debenture related to March 2008 financing (5)
|
|
|
10.6
|
Form of Warrant related to March 2008 financing (5)
|
|
|
10.7
|
Securities Purchase Agreement, dated March 20, 2008 by and between Wave Uranium Holding and the Purchasers signatory thereto (5)
|
|
|
10.8
|
Registration Right Agreement, dated March 20, 2008 by and between Wave Uranium Holding and the Purchasers signatory thereto (5)
|
|
|
10.9
|
Security Agreement, dated March 20, 2008 by and between Wave Uranium Holding and the Purchasers signatory thereto (5)
|
|
10.10
|
Pledge and Security Agreement, dated March 20, 2008 by and between Wave Uranium Holding and the Purchasers signatory thereto (5)
|
|
|
10.11
|
Subsidiary Guarantee, dated March 20, 2008 of Wave Uranium (5)
|
|
|
10.12
|
Form of Lock-Up Agreement (5)
|
|
|
10.13
|
Asset Purchase Agreement with Super Rad Corporation dated August 11, 2010 (6)
|
|
|
10.14
|
Securities Exchange Agreement dated March 31, 2011 (7)
|
|
|
10.15
|
Second Addendum to Amended Stock Transfer Agreement by and among FBC Holdings, Inc. and Super Rad Corporation dated July 6, 2011 (8)
|
|
|
31.1
|
||
| 31.2 | ||
|
32.1
|
||
| 32.2 |
|
(1)
|
Filed with the Registration Statement on Form SB-2 on September 27, 2006, file number 333-137,613 and incorporated by reference to this Annual Report.
|
|
(2)
|
Filed with the Current Report on Form 8-K dated June 18, 2007 and incorporated by reference to this Annual Report.
|
|
(3)
|
Filed with the Current Report on Form 8-K dated October 9, 2007 and incorporated by reference to this Annual Report.
|
|
(4)
|
Filed with our Annual Report on Form 10-K for the fiscal year ended July 31, 2007, filed November 13, 2007, and incorporated by reference to this Annual Report.
|
|
(5)
|
Filed with Current Report on Form 8-K dated March 20, 2008 and incorporated by reference to this Annual Report.
|
|
(6)
|
Filed with Current Report on Form 8-K/A dated August 11, 2010 and incorporated by reference to this Annual Report.
|
|
(7)
|
Filed with Current Report on Form 8-K dated March 31, 2011 and incorporated by reference to the Annual Report.
|
|
(8)
|
Filed with Current Report on Form 8-K dated July 12, 2011 and incorporated by reference to this Annual Report.
|
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
FBC Holding, Inc.
|
||
|
Dated: November 21, 2012
|
By: |
/s/ Frank Russo
|
|
Frank Russo
|
||
|
Chief Executive
Officer,
|
||
|
and Director
|
||
|
Dated: November 21, 2012
|
By: |
/s/ Kevin Wright
|
|
Keving Wright
|
||
|
Chief Operating Officer and Director
|
||
In accordance with 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.
|
Dated: November 21, 2012
|
By: |
/s/ Frank Russo
|
|
Frank Russo
|
||
|
Chief Executive
Officer
|
||
|
and Director
|
||
TABLE OF CONTENTS
Part IItem 1 BusinessItem 1A Risk FactorsItem 1B Unresolved Staff CommentsItem 2 PropertiesItem 3 Legal ProceedingsItem 4 (removed and Reserved)Part IIItem 5 Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6 Selected Financial DataItem 7 Management S Discussion and Analysis Of Financial Condition and Results Of OperationItem 7A Quantitative and Qualitative Disclosures About Market RiskItem 8 Financial Statements and Supplementary DataNote 1: Summary Of Significant Accounting PoliciesNote 2: Basis Of ReportingNote 3: Notes PayableNote 4: Stockholders' EquityNote 5: ContingenciesNote 6: Related Party TransactionsItem 9 Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A Controls and ProceduresItem 9B Other InformationPart IIIItem 10 Directors, Executive Officers and Corporate GovernanceItem 11 Executive CompensationItem 12 Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13 Certain Relationships and Related Transactions, and Director IndependenceItem 14 Principal Accounting Fees and ServicesPart IVItem 15 Exhibits, Financial Statement Schedules