Attached files
| file | filename |
|---|---|
| EX-32.1 - Alternate Energy Solutions, Inc. | v184562_ex32-1.htm |
| EX-31.1 - Alternate Energy Solutions, Inc. | v184562_ex31-1.htm |
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended: March
31, 2010
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission
File No. 000-53107
THE FORSYTHE GROUP TWO, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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26-0830388
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|
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(State
or other jurisdiction of incorporation or organization)
|
|
(I.R.S.
Employer Identification
No.)
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245 East Front Street, Suite
A, Statesville, NC 28677
(Address
of principal executive offices)
(704)
495-3101
(Registrant's
telephone number)
8301-16 Magnolia Estates
Drive, Cornelius, NC 28031
(Former
name, former address and former
fiscal
year, if changed since last report)
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. x Yes
o No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every
Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
o Yes x No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer o
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Accelerated
filer o
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Non-accelerated filer o (Do not
check if a smaller reporting company)
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Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). x Yes
o No
APPLICABLE
ONLY TO ISSUERS 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 Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. o
Yes o No
APPLICABLE
ONLY TO CORPORATE ISSUERS
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: At May 10, 2010, there were 1,000,000
shares of common stock outstanding.
PART
I — FINANCIAL INFORMATION
Item
1. Financial Statements.
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Page
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||
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Balance
Sheets as of March 31, 2010 (unaudited) and June 30, 2009
(audited)
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F-1
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|
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Statements
of Operations for the three months ended March 31, 2010 and 2009
(unaudited) and cumulative since inception (October 12,
2007)
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F-2
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|
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Statement
of Stockholders Deficit as of March 31, 2010
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F-3
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|
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Statements
of Cash Flows – For the three months ended March 31, 2010 and 2009
(unaudited) and cumulative since inception (October 12, 2007)
(unaudited)
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F-4
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Notes
to Financial Statements (Unaudited)
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F-5
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2
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The
Forsythe Group Two, Inc.
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(A
Development Stage Company)
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Balance
Sheet
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As of March 31,
|
As of June 30,
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|||||||
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2010 (Unaudited)
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2009 (Audited)
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|||||||
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ASSETS
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||||||||
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CURRENT ASSETS:
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||||||||
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Cash
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$ | 100 | $ | 100 | ||||
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TOTAL
CURRENT ASSETS
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100 | 100 | ||||||
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TOTAL
ASSETS
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$ | 100 | $ | 100 | ||||
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LIABILITIES AND STOCKHOLDERS'
DEFICIT
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||||||||
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CURRENT LIABILITIES:
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||||||||
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Note
Payable to a Related Party
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$ | 48,738 | $ | 46,710 | ||||
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Accrued
Expenses
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11,679 | 11,718 | ||||||
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TOTAL
CURRENT LIABILITIES
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60,417 | 58,428 | ||||||
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TOTAL
LIABILITIES
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60,417 | 58,428 | ||||||
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STOCKHOLDERS' DEFICIT
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||||||||
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Preferred
stock ($0.0001 par value; 10,000,000 shares authorized;
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||||||||
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no
shares issued and outstanding)
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- | - | ||||||
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Common
stock ($0.0001 par value; 110,000,000 shares authorized:
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||||||||
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1,000,000
issued and outstanding)
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100 | 100 | ||||||
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Paid
in Capital
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(100 | ) | (100 | ) | ||||
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Accumulated
Deficit
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(60,317 | ) | (58,328 | ) | ||||
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TOTAL
STOCKHOLDERS' DEFICIT
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(60,317 | ) | (58,328 | ) | ||||
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TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 100 | $ | 100 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-1
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The
Forsythe Group Two, Inc.
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(A
Development Stage Company)
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Statement
of Operations (Unaudited)
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Cumulative
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||||||||||||
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For the three months ended
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Total Since
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|||||||||||
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March 31,
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March 31,
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Inception
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||||||||||
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2010
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2009
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October 12, 2007
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||||||||||
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REVENUES:
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||||||||||||
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Income
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$ | - | $ | - | $ | - | ||||||
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Total
Revenue
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- | - | - | |||||||||
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EXPENSES:
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||||||||||||
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Selling,
General and Administrative
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328 | 5 | 4,323 | |||||||||
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Consulting
Fees
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- | - | 25,000 | |||||||||
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Professional
Fees
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700 | - | 23,815 | |||||||||
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Total
Expenses
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1,028 | 5 | 53,138 | |||||||||
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Loss
from operations
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$ | (1,028 | ) | $ | (5 | ) | $ | (53,138 | ) | |||
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OTHER INCOME/(EXPENSE):
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||||||||||||
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Interest
Expense
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(961 | ) | (773 | ) | (7,179 | ) | ||||||
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NET
LOSS
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$ | (1,989 | ) | $ | (778 | ) | $ | (60,317 | ) | |||
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Basic
and fully diluted net loss per common share:
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.06 | ) | |||
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Weighted
average common shares outstanding
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1,000,000 | 1,000,000 | 1,000,000 | |||||||||
The
accompanying notes are an integral part of these financial
statements.
F-2
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The
Forsythe Group Two, Inc.
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|
(A
Development Stage Company)
|
|
Statement
of Stockholders' Deficit
(Unaudited)
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|
Deficit
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||||||||||||||||||||||||
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Accumulated
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||||||||||||||||||||||||
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Additional
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From Inception
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|||||||||||||||||||||||
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Common Stock
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Preferred Stock
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Paid-in
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October 12,
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|||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Capital
|
2007
|
|||||||||||||||||||
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Balances,
December 31, 2008
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$ | 1,000,000 | $ | 100 | $ | - | $ | - | $ | (100 | ) | $ | (44,155 | ) | ||||||||||
|
Net
loss
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- | - | - | - | - | (14,173 | ) | |||||||||||||||||
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Balances,
December 31, 2009
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1,000,000 | $ | 100 | - | $ | - | $ | (100 | ) | $ | (58,328 | ) | ||||||||||||
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Net
loss
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- | - | - | - | - | (1,989 | ) | |||||||||||||||||
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Balances,
March 31, 2010
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1,000,000 | $ | 100 | - | $ | - | $ | (100 | ) | $ | (60,317 | ) | ||||||||||||
The
accompanying notes are an integral part of these financial
statements.
F-3
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The
Forsythe Group Two, Inc.
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|
(A
Development Stage Company)
|
|
Statement
of Cash Flows (Unaudited)
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Cumulative
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||||||||||||
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For the three months ended
|
Totals Since
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|||||||||||
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March 31,
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Inception
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2010
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2009
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October 12, 2007
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CASH FLOWS FROM OPERATING
ACTIVITIES:
|
||||||||||||
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Net
loss
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$ | (1,989 | ) | $ | (778 | ) | $ | (60,317 | ) | |||
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Adjustments
to reconcile net (loss) to net cash used in operations:
|
||||||||||||
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Changes
in Assets and Liabilities:
|
||||||||||||
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Increase/(decrease)
in Accrued Expenses
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(38 | ) | 773 | 11,679 | ||||||||
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NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
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(2,027 | ) | (5 | ) | (48,638 | ) | ||||||
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CASH FLOWS FROM FINANCING
ACTIVITIES:
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||||||||||||
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Note
Payable to Related Party
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2,027 | - | 48,738 | |||||||||
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NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
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2,027 | - | 48,738 | |||||||||
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NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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- | (5 | ) | 100 | ||||||||
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BEGINNING
BALANCE
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100 | 100 | - | |||||||||
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ENDING
BALANCE
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$ | 100 | $ | 95 | $ | 100 | ||||||
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SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
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||||||||||||
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CASH
PAID DURING THE PERIOD FOR:
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||||||||||||
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Interest
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$ | - | $ | - | $ | - | ||||||
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Taxes
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$ | - | $ | - | $ | - | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-4
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THE
FORSYTHE GROUP TWO, INC.
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NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
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|
AS
OF MARCH 31, 2010
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NOTE A- BUSINESS
ACTIVITY
The
Forsythe Group Two, Inc. (the "Company”) was organized under the laws of the
State of Nevada on October 12, 2007 as a corporation. The Company’s objective is
to acquire or merge with a target business or company in a business
combination.
NOTE B—GOING
CONCERN
The
accompanying financial statements have been prepared on a going concern basis,
which assumes the Company will realize its assets and discharge its liabilities
in the normal course of business. As reflected in the accompanying
financial statements, the Company has a deficit accumulated during the
development stage of $60,317, used cash from operations of $48,638 since its
inception, and has a negative working capital of $60,317 at March 31,
2010.
The
Company’s ability to continue as a going concern is dependent upon its ability
to generate future profitable operations and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. The Company’s ability to continue
as a going concern is also dependent on its ability to find a suitable target
company and enter into a possible reverse merger with such company.
Management’s plan includes obtaining additional funds by equity financing
through a reverse merger transaction and/or related party advances; however
there is no assurance of additional funding being available. These
circumstances raise substantial doubt about the Company’s ability to continue as
a going concern. The accompanying financial statements do not include any
adjustments that might arise as a result of this uncertainty.
NOTE C—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation- The financial statements included herein were prepared
under the accrual basis of accounting.
Cash and Cash
Equivalents- For purposes of the Statement of Cash Flows, the Company
considers liquid investments with an original maturity of three months or less
to be cash equivalents.
Management’s 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 reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates. The financial statements above reflect all of the costs of
doing business.
Revenue Recognition-
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when
it is realized or realizable and earned less estimated future doubtful
accounts. The Company considers revenue realized or realizable and earned
when all of the following criteria are met:
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(i)
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persuasive
evidence of an arrangement exists,
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(ii)
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the
services have been rendered and all required milestones
achieved,
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(iii)
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the
sales price is fixed or determinable,
and
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(iv)
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collectability
is reasonably assured.
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F-5
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THE
FORSYTHE GROUP TWO, INC.
|
|
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
|
|
AS
OF MARCH 31, 2010
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NOTE C—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES—CONT’D
Comprehensive Income (Loss)
- The Company reports Comprehensive income and its components following
guidance set forth by section 220-10 of the FASB Accounting Standards
Codification which establishes standards for the reporting and display of
comprehensive income and its components in the financial statements. There were
no items of comprehensive income (loss) applicable to the Company during the
period covered in the financial statements.
Net Income per Common
Share- Net loss per common share is computed pursuant to section
260-10-45 of the FASB Accounting Standards Codification. Basic net loss
per share is computed by dividing net loss by the weighted average number of
shares of common stock outstanding during the period. Diluted net loss per
share is computed by dividing net loss by the weighted average number of shares
of common stock and potentially outstanding shares of common stock during each
period. There were no potentially dilutive shares outstanding as of March
31, 2010.
Deferred Taxes- The
Company accounts for income taxes under Section 740-10-30 of the FASB Accounting
Standards Codification. Deferred income tax assets and liabilities are
determined based upon differences between the financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
the statements of operations in the period that includes the enactment
date.
Fair Value of Financial
Instruments- The carrying amounts reported in the balance sheet for cash,
accounts receivable and payable approximate fair value based on the short-term
maturity of these instruments.
Accounts Receivable-
Accounts deemed uncollectible are written off in the year they become
uncollectible. As of March 31, 2010, the balance in Accounts Receivable was
$0.
Impairment of Long-Lived
Assets- The Company evaluates the recoverability of its fixed assets and
other assets in accordance with section 360-10-15 of the FASB Accounting
Standards Codification for disclosures about Impairment or Disposal of
Long-Lived Assets. Disclosure requires recognition of impairment of
long-lived assets in the event the net book value of such assets exceeds its
expected cash flows. If so, it is considered to be impaired and is written down
to fair value, which is determined based on either discounted future cash flows
or appraised values. The Company adopted the statement on inception. No
impairments of these types of assets were recognized during the period ended
March 31, 2010.
Stock-Based
Compensation- The Company accounts for stock-based compensation using the
fair value method following the guidance set forth in section 718-10 of the FASB
Accounting Standards Codification for disclosure about Stock-Based Compensation.
This section requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions). That cost will be recognized
over the period during which an employee is required to provide service in
exchange for the award- the requisite service period (usually the vesting
period). No compensation cost is recognized for equity instruments for which
employees do not render the requisite service.
F-6
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THE
FORSYTHE GROUP TWO, INC.
|
|
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
|
|
AS
OF MARCH 31, 2010
|
NOTE C—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES—CONT’D
Fair Value for Financial
Assets and Financial Liabilities- The Company follows paragraph
825-10-50-10 of the FASB Accounting Standards Codification for disclosures about
fair value of its financial instruments and paragraph 820-10-35-37 of the FASB
Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair
value of its financial instruments. Paragraph 820-10-35-37 establishes a
framework for measuring fair value in accounting principles generally accepted
in the United States of America (U.S. GAAP), and expands disclosures about fair
value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to unobservable
inputs. The three levels of fair value hierarchy defined by Paragraph
820-10-35-37 are described below:
|
Level
1
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting date.
|
|
Level
2
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
|
Level
3
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
The
carrying amounts of the Company’s financial assets and liabilities, such as cash
and accrued expenses, approximate their fair values because of the short
maturity of these instruments. The Company’s note payable approximates the fair
value of such instrument based upon management’s best estimate of interest rates
that would be available to the Company for similar financial arrangement at
March 31, 2010.
The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
March 31, 2010, nor gains or losses are reported in the statement of operations
that are attributable to the change in unrealized gains or losses relating to
those assets and liabilities still held at the reporting date for the interim
period ended March 31, 2010.
Recent Accounting
Pronouncements - The Company has reviewed all recently issued, but not
yet effective, accounting pronouncements and do not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its
financial condition or the results of its operations.
FASB Accounting
Standards Codification
(Accounting Standards Update (“ASU”)
2009-01)
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s consolidated financial statements as all future references to
authoritative accounting literature will be referenced in accordance with the
Codification. There have been no changes to the content of the Company’s
financial statements or disclosures as a result of implementing the Codification
during the quarter ended March 31, 2010.
F-7
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THE
FORSYTHE GROUP TWO, INC.
|
|
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
|
|
AS
OF MARCH 31, 2010
|
NOTE C—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES—CONT’D
Recent Accounting
Pronouncements (continued)
As a
result of the Company’s implementation of the Codification during the fiscal
year ended December 31, 2009, previous references to new accounting standards
and literature are no longer applicable. In the current annual consolidated
financial statements, the Company will provide reference to both new and old
guidance to assist in understanding the impacts of recently adopted accounting
literature, particularly for guidance adopted since the beginning of the current
fiscal year but prior to the Codification.
Subsequent
Events
(Included in Accounting Standards
Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165
“Subsequent Events”)
SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the consolidated
financial statements are issued or available to be issued (“subsequent events”).
An entity is required to disclose the date through which subsequent events have
been evaluated and the basis for that date. For public entities, this is the
date the consolidated financial statements
are issued. SFAS No. 165 does not apply to subsequent events or
transactions that are within the scope of other GAAP and did not result in
significant changes in the subsequent events reported by the Company. SFAS
No. 165 became effective for interim or annual periods ending after
June 15, 2009 and did not impact the Company’s consolidated financial
statements. The Company evaluated for subsequent events through the issuance
date of the Company’s consolidated financial statements. No recognized or
non-recognized subsequent events were noted.
Determination of
the Useful Life of Intangible Assets
(Included in ASC 350 “Intangibles —
Goodwill and Other”, previously FSP SFAS No. 142-3 “Determination of the
Useful Lives of Intangible Assets”)
FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for consolidated financial statements
issued for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. The adoption of FSP SFAS No. 142-3 did not
impact the Company’s consolidated financial statements.
Noncontrolling
Interests
(Included in ASC 810
“Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB
No. 51”)
SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a noncontrolling interest
exceeds the book value at the time of buyout. The adoption of SFAS No. 160
did not have any other material impact on the Company’s financial
statements.
F-8
|
THE
FORSYTHE GROUP TWO, INC.
|
|
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
|
|
AS
OF MARCH 31, 2010
|
NOTE C—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES—CONT’D
Recent Accounting
Pronouncements (continued)
Consolidation of
Variable Interest Entities — Amended
(To be included in ASC 810
“Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No.
46(R)”)
SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to been
evaluated and the basis for that date. For public entities, this is the date the
consolidated financial reassess that should consolidate a variable-interest
entity. SFAS No. 167 is effective for the first annual reporting period
beginning after November 15, 2009, with earlier adoption prohibited. The
Company will adopt SFAS No. 167 in fiscal 2010 and does not anticipate any
material impact on the Company’s financial statements.
NOTE D-SUPPLEMENTAL CASH
FLOW INFORMATION
Supplemental
disclosures of cash flow information for the quarters ended March 31, 2010 and
2009 is summarized as follows:
Cash paid
during the quarters ended March 31, 2010 and 2009 for interest and income
taxes:
|
2010
|
2009
|
|||||||
|
Interest
|
$ | - | $ | - | ||||
|
Taxes
|
$ | - | $ | - | ||||
NOTE E-SEGMENT
REPORTING
The
Company follows the guidance set forth by section 280-10 of the FASB Accounting
Standards Codification for reporting and disclosure on operating segments of the
Company. It also requires segment disclosures about products and services,
geographic areas, and major customers. The Company determined that it did not
have any separately reportable operating segments as of March 31,
2010.
NOTE F-INCOME
TAXES
Due to
the operating loss and the inability to recognize an income tax benefit there is
no provision for current or deferred federal or state income taxes for year
ended December 31, 2009.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amount used for federal and state income tax purposes.
The
Company’s total deferred tax asset, calculated using federal and state effective
tax rates, as of December 31, 2009 is as follows:
|
Total
Deferred Tax Asset
|
$ | 19,800 | ||
|
Valuation
Allowance
|
(19,800 | ) | ||
|
Net
Deferred Tax Asset
|
- |
F-9
|
THE
FORSYTHE GROUP TWO, INC.
|
|
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
|
|
AS
OF MARCH 31, 2010
|
NOTE F-INCOME TAXES
(CONT’D)
The
reconciliation of income taxes computed at the federal statutory income tax rate
to total income taxes for the period from inception through December 31, 2009
and 2008 is as follows:
|
2009
|
2008
|
|||||||
|
Income
tax computed at the federal statutory rate
|
34 | % | 34 | % | ||||
|
State
income tax, net of federal tax benefit
|
0 | % | 0 | % | ||||
|
Total
|
34 | % | 34 | % | ||||
|
Valuation
allowance
|
-34 | % | -34 | % | ||||
|
Total
deferred tax asset
|
0 | % | 0 | % | ||||
Because
of the Company’s lack of earnings history, the deferred tax asset has been fully
offset by a valuation allowance. The valuation allowance increased (decreased)
by approximately $3,800 and $4,500 for the years ending December 31, 2009 and
2008, respectively.
As of
December 31, 2009, the Company had a federal and state net operating loss carry
forward in the amount of approximately $58,328, which expires in the year ending
2029.
NOTE G-CAPITAL
STOCK
The
Company is authorized to issue 100,000,000 common shares at $0.0001 par value
per share.
During
the period ended March 31, 2010, the Company issued no stock.
As of
March 31, 2010, the Company had 1,000,000 shares of common stock
outstanding.
The
Company is authorized to issue 10,000,000 preferred shares at $0.0001 per
share.
As of
March 31, 2010, the Company issued no shares of preferred stock.
NOTE H-DEVELOPMENT STAGE
COMPANY
The
Company is in the development stage as of March 31, 2010 and to date has had no
significant operations. Recovery of the Company assets is dependent on future
events, the outcome of which is indeterminable. In addition, successful
completion of the Company’s development program and its transition, ultimately,
to attaining profitable operations is dependent upon obtaining adequate
financing to fulfill its development activities and achieving a level of sales
adequate to support the Company’s cost structure.
NOTE I—RELATED PARTY NOTE
PAYABLE
The
Company has the following promissory notes outstanding:
|
Note
Payable, due upon demand, 8% per year
|
$ | 43,738 |
The
interest accrued, but not paid as of March 31, 2010 is $7,179.
F-10
Item
2. Management’s Discussion and Analysis or Plan of Operation.
Overview.
The
Forsythe Group Two, Inc. (“we”, “us”, the “Company” or like terms) was
incorporated in the State of Nevada on October 12, 2007. We are a
developmental stage company and have not generated any revenues to date.
We were organized to serve as a vehicle for a business combination through a
capital stock exchange, merger, reverse acquisition, asset acquisition or other
similar business combination (a “Business Combination”) with an operating or
development stage business (the “Target Business”) which desires to utilize our
status as a reporting company under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). We are in the process of identifying and
evaluating targets for a Business Combination. We are not presently
engaged in, and will not engage in, any substantive commercial business
operations unless and until we consummate a Business Combination.
Our
management has broad discretion with respect to identifying and selecting a
prospective Target Business. We have not established any specific
attributes or criteria (financial or otherwise) for prospective Target
Businesses. Our sole officer and director has never served as an officer
or director of a development stage public company that has affected a Business
Combination. Accordingly, he may not successfully identify a Target
Business or conclude a Business Combination.
Any
entity with which consummate a Business Combination will be subject to numerous
risks inc connection with its operations. To the extent we affect a
Business Combination with a financially unstable company or an entity in its
early stage of development or growth, including entities without established
records of sales or earnings, we may be affected by numerous risks inherent in
the business and operations of financially unstable and early stage or potential
emerging growth companies. If we consummate a Business Combination with a
foreign entity, we will be subject to all of the risks attendant to foreign
operations. Although our management will endeavor to evaluate the risks
inherent in a particular Target Business, we cannot assure you that we will
properly ascertain or assess all significant risk factors.
We expect
that in connection with any Business Combination, we will issue a significant
number of shares of our common stock (equal to at least 80% of the total number
of shares outstanding after giving effect to the transaction and likely, a
significantly higher percentage) in order to ensure that the Business
Combination qualifies as a tax-free transaction under federal tax laws.
The issuance of additional shares of our capital stock will:
|
|
·
|
significantly
reduce the equity interest of our stockholders prior to the transaction;
and
|
|
|
·
|
cause
a change in control of our Company and likely result in the resignation or
removal of our officer and
director.
|
Our
management anticipates that our Company likely will affect only one Business
Combination, due primarily to our financial resources and the dilution of
interest for present and prospective stockholders, which is likely to occur as a
result of our management's plan to offer a controlling interest to a Target
Business in order to achieve a tax-free reorganization. This lack of
diversification should be considered a substantial risk in investing in us
because it will not permit us to offset potential losses from one venture
against potential gains from another.
Liquidity and Capital
Resources.
At March 31, 2010, we had a de minimus
amount of cash on hand. Our cash reserves will not be sufficient to cover
our operating costs and expenses during the next twelve months which we
anticipate will comprise costs and expenses in connection with the preparation
and filing of reports under the Exchange Act, the identification and evaluation
of Target Companies and, possibly, in connection with a Business
Combination.
To date,
we have funded our operations through loans from our stockholder and, as of
March 31, 2010, we had borrowed an aggregate of $48,738 from it. Our
stockholder has advised us that it expects to fund additional costs and through
loans or further investment in the Company, as and when
necessary.
3
We cannot
provide investors with any assurance that we will have sufficient capital
resources to identify a suitable Target Business, to conduct effective due
diligence as to any Target Business or to consummate a Business
Combination. As a result of our negative working capital, our losses since
inception, and failure to generate revenues from operations, our financial
statements include a note in which our auditor has expressed doubt about our
ability to continue as a "going concern."
Results of
Operations.
Since our
inception, we have not engaged in any substantive activities nor generated any
revenues. We reported a net loss for the three months ended March 31, 2010
of $1,989 and a net loss since inception of $60,317. The Company has a
deficit accumulated during the development stage of $60,317, used cash from
operations of $48,638 since its inception, and has a negative working capital of
$60,317 at March 31, 2010
We do not
expect to engage in any activities, other than seeking to identify a Target
Business, unless and until such time as we enter into a Business Combination
with a Target Business, if ever. We cannot provide investors with any
assessment as to the nature of a Target Business’s operations or speculate as to
the status of its products or operations, whether at the time of the Business
Combination it will be generating revenues or its future prospects.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item
4(T). Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
As of
March 31, 2010, the Company’s management carried out an evaluation, under the
supervision and with the participation of the Company’s Chief Executive Officer,
who is the Company’s principal executive officer and principal financial
officer, of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under
the Exchange Act), pursuant to Exchange Act Rule 13a-15. Based on such
evaluation, the Company’s Chief Executive Officer has concluded that the
Company's disclosure controls and procedures were effective.
Changes
in Internal Controls
There
have been no changes in the Company’s internal control over financial reporting
(as defined in Rules 13a-15 and 15d-15 under the Exchange Act) during the three
months ended March 31, 2010 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
PART
II — OTHER INFORMATION
Item
1. Legal Proceedings.
The
Company is not a party to any legal proceeding or litigation.
Item
1A. Risk Factors.
Smaller
reporting companies are not required to provide the information required by this
item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) During
the three months ended March 31, 2010, the Company did not issue any
securities.
(b) Not
applicable.
4
(c)
During the three months ended March 31, 2010, neither the issuer nor any
"affiliated purchaser," as defined in Rule 10b-18(a)(13), purchased any shares
or other units of any class of the issuer's equity securities.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. (Removed and Reserved).
Item
5. Other Information.
(a) None.
(b) The Company has not adopted any
procedures by which security holders may recommend nominees to the registrant's
board of directors.
Item
6. Exhibits.
|
Exhibit
|
Description
|
|
|
31.1
|
Certification
of the Company’s Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with
respect to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2010.
|
|
|
32.1*
|
|
Certification
of the Company’s Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes Oxley Act of
2002.
|
*
Pursuant to Commission Release No. 33-8238, this certification will be
treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as
part of such report for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liability of
Section 18 of the Securities Exchange Act of 1934, as amended, and this
certification will not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, except to the extent that the registrant specifically
incorporates it by reference.
5
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
THE
FORSYTHE GROUP TWO, INC.
|
||
|
Dated:
May 12, 2010
|
By:
|
/s/
Hunt Keith
|
|
Name:
|
Hunt
Keith
|
|
|
Title:
|
President,
Principal Executive Officer
|
|
|
and
Principal Financial
Officer
|
6