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EX-31 - EXHIBIT 31.1 CERTIFICATION - FUTURELAND CORP.section302certification.htm
EX-32 - EXHIBIT 32.1 CERTIFICATION - FUTURELAND CORP.section906certification.htm




SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



For the Fiscal Year Ended: December 31, 2011

Commission File No. 000-53377


FOREVER VALUABLE COLLECTIBLES, INC.

 (Exact Name of Registrant as specified in its charter)



 

 

      Colorado

41-2230041

(State or other jurisdiction

(IRS Employer File Number)

of incorporation)

  


 

 

  

  

535 16th Street, Suite 820

  

Denver, CO

80202

(Address of principal executive offices)

(zip code)

 

(303) 573-1000

 (Registrant's telephone number, including area code)


Securities Registered Pursuant to Section 12(b) of the Act: None


Securities Registered Pursuant to Section 12(g) of the Act:



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes: [ ] No: [X ]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.   Yes: [ ] No: [X ]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: [X] No: [ ]


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


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. [ ]


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

 

 

 

 

Large accelerated filer  £

 

  Accelerated filer

£

 

 

 

 

Non-accelerated filer     £   (Do not check if a smaller reporting company)

 

Smaller reporting company

R



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

Yes [ ]   No [ X ].


Registrant had revenues of $470 for its most recent fiscal year. The aggregate market value of the voting stock held by non-affiliates is approximately $9,400 as of June 30, 2011. Our shares of common stock currently trade on the OTCBB.  The number of shares outstanding of the registrant's common stock, as of the latest practicable date, March 30, 2012, was 12,012,600.

FORM 10-K 

Forever Valuable Collectibles, Inc. 

INDEX 

 

 

PART I

 

  

  

  

    Item 1.           Business

4

  

  

    Item 1A.        Risk Factors

7

  

  

    Item 1B.        Unresolved Staff Comments

7

 

 

    Item 2.           Properties

7

  

 

    Item 3.           Legal Proceedings

 7

  

  

    Item 4.           Mine Safety Disclosures

7

  

  

PART II

  

  

  

    Item 5.           Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

                          of Equity Securities


7

  

  

    Item 6.          Selected Financial Data

9

  

  

    Item 7.          Management's Discussion and Analysis of Financial Condition and Results of Operations

10

 

 

    Item 7A.       Quantitative and Qualitative Disclosures About Market Risk

12

  

  

    Item 8.          Financial Statements and Supplementary Data

12

  

  

    Item 9.          Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

25

  

  

    Item 9A.       Controls and Procedures

25

  

  

    Item 9B.       Other Information

26

      

  

PART III

  

  

  

    Item 10.        Directors, Executive Officers and Corporate Governance

26

  

  

    Item 11.        Executive Compensation

28

  

  

    Item 12.        Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

                         Matters

 

29

  

  

    Item 13.        Certain Relationships and Related Transactions, and Director Independence

29

  

  

    Item 14.        Principal Accountant Fees and Services

30



1






PART IV

 

  

  

    Item 15.        Exhibits, Financial Statement Schedules                                                                                                                      

30

    

   Financial Statements pages                                                                                                                      

13 – 25

   Signatures

31



For purposes of this document, unless otherwise indicated or the context otherwise requires, all references herein to “Forever Valuable,” “we,” “us,” and “our,” refer to Forever Valuable Collectibles, Inc., a Colorado corporation.

 

Forward-Looking Statements


The following discussion contains forward-looking statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products and services for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using us for certain applications; delays our introduction of new products or services; and our failure to keep pace with our competitors.


When used in this discussion, words such as "believes", "anticipates", "expects", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.


PART I


ITEM 1. DESCRIPTION OF BUSINESS.


General

 

Forever Valuable is a corporation which was formed under the laws of the State of Colorado on November 29, 2007. We were a wholly-owned subsidiary of Fincor, Inc. (“Fincor”) until August 13, 2008.

 

On December 5, 2007, the directors of Fincor approved, subject to the effectiveness of a registration with the Securities and Exchange Commission, a spin-off to Fincor shareholders of record as of August 13, 2008 (the “Record Date”), on a pro rata basis, with one (1) Forever Valuable common share to be issued for each one (1) Fincor common share as of the Record Date. Since Fincor’s business is totally unrelated to the proposed activities of Forever Valuable, the Fincor directors decided it was in the best interest of Fincor and Forever Valuable and Fincor's shareholders to spin-off Forever Valuable to better define the role of Fincor. The spin-off was completed in August, 2008.




2





Business

 

We purchased our original inventory from Fincor. This was inventory which was originally acquired by Fincor from non-affiliated third parties at the same price as Fincor originally acquired the inventory. This inventory consisted exclusively of sports memorabilia. The inventory consists of commemorative professional and college sports teams and players and coaches on those teams. We acquired the inventory at the original purchase price of $3,211.  To date, we have sold $1,200 of the inventory.


   

We plan to identify undervalued items that can be purchased at below retail prices and resold for a profit.  We plan to use other sports memorabilia sellers and auction web sites and will also contact private collectors to develop our inventory. There is risk inherent in any transaction since the collectibles market can be volatile and collector tastes can change quickly.  Our collectibles merchandise will initially be focused on sports memorabilia. We define sports memorabilia as any product directly related to a member of a professional or college sport. Our goal is to become a significant retailer of sports memorabilia in the United States. Once we have established our presence as a significant retailer of sports memorabilia, we may look at expanding our product line to include other collectibles. We plan to become a significant retailer of sports memorabilia by emphasizing growth through implementing a national operating strategy emphasizing internal revenue growth and profitability.

 

Key elements of our strategy include:

 

 

 

 

  

 

Develop, strengthen, and expand vendor relationships. Vendors in the collectibles industry often recognize retailers based on certain volume levels and reputation. We will try to achieve preferred gallery status with key vendors which would entitle us to volume discounts, co-op advertising funds, shipping allowances and other benefits. We will also try to establish exclusive relationships with vendors for certain product lines and items.   We will simultaneously focus on finding inventory on auction web sites and developing relationships with established sports memorabilia vendors throughout the United States, both individually and through trade shows. We will initially focus in the Western half of the United States and online but may also look for opportunities where we can find them. We have done initial research on auction web sites but have had no discussions with vendors at  this time, nor have we attended any trade shows;


 

 

 

  

 

Develop database direct mail, telemarketing and Internet marketing programs. We plan to develop databases that detail the buying patterns and merchandise preferences of potential customers and enable us to conduct targeted database direct mail, telemarketing and Internet marketing programs.


 

 

 

  

 

Establish operating procedures.  Initially we intend to focus on developing a centralized system to monitor our operations by auditing sales receipts, accounts payables, payroll, purchases and inventory levels and by implementing centralized cash management operations.


Taxes

Various states are increasingly seeking to impose sales or use taxes on inter-state mail order sales and are aggressively auditing sales tax returns of mail order businesses.  Complex legal issues arise in these areas, relating, among other things, to the required nexus of a business with a particular state, which may permit the state to require a business to collect such taxes. At the present time, we are not aware of any states in which we may operate who would impose sales taxes on our transactions.  Although we believe that we can adequately provide for sales taxes on mail order sales, there can be no assurance as to the effect of actions taken by state tax authorities on our financial condition or results of operations. In the future, we may be required to collect sales tax on sales made to customers in all of the states in which we conducts our operations. The imposition of sales taxes on mail order sales generally has a negative effect on mail order sales levels. All of the factors cited above may negatively affect our financial condition and results of operations in the future.  Any such impact cannot currently be quantified.


Operations, Management and Employees


Our plan is to concentrate our operations in the Western half of the United States and online through our website.


We have no full-time employees. We plan to use part-time independent contractors for sales. As we expand, we intend to hire employees. However, we have no present plans to do so.


Marketing and Promotion


We expect to generate revenues in the next twelve months from memorabilia and collectibles operations using referrals from Fincor and unrelated individuals and entities that operate in the memorabilia and collectibles business. We also plan to market through direct contact with prospective customers. We have no sales representatives who solicit potential clients.


Patents and Trademarks


We do not currently have any patent or trademark protection. If we determine it is feasible to file for such trademark protection, we still have no assurance that doing so will prevent competitors from using the same or similar names, marks, concepts or appearance.


Competition

 

We have no operating history and, therefore, will have inherent difficulty competing in the crowded collectibles market. Large, well known auction houses and collectibles companies that have been in existence for many years have an extensive, well established client base with whom they have earned credibility and cemented strong long term relationships.  We face the challenge of competing against well entrenched competition with limited capital.  This becomes even more critical in the collectibles market, where the percentage of profits tends to increase exponentially with the size of the purchase.  With the amount of collectibles of dubious origin being sold to unsuspecting buyers, we believe that it will take many years to establish the impeccable reputation necessary to garner the large list of satisfied clients that is essential for any successful collectibles business.  We cannot expect to be a significant factor in the collectibles field in the foreseeable future.


 We do not expect to pay dividends on common stock.

We have not paid any cash dividends with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock in the foreseeable future. Earnings, if any, that we may realize will be retained in the business for further development and expansion.


Effect of Governmental Regulations: Compliance with Environmental Laws

 

We do not believe that we are subject to any material government or industry regulation.

 

Backlog


At December 31, 2011, we had no backlogs.


Research and Development

We have never spent any amount in research and development activities.


How to Obtain Our SEC Filings


We file annual, quarterly, and special reports, proxy statements, and other information with the Securities Exchange Commission (SEC). Reports, proxy statements and other information filed with the SEC can be inspected and copied at the public reference facilities of the SEC at 100 F Street N.E., Washington, DC 20549. Such material may also be accessed electronically by means of the SEC's website at www.sec.gov.


Our investor relations department can be contacted at our principal executive office located at 535 16th Street, Suite 820, Denver, Colorado 80202. Our telephone number is (303)573-1000.

 

 

ITEM 1A.  RISK FACTORS


The Company is not required to provide the information required by this Item because the Company is a smaller reporting company. 


ITEM 1B.  UNRESOLVED STAFF COMMENTS

 

The Company is not required to provide the information required by this Item because the Company is a smaller reporting company.


ITEM 2.  PROPERTIES.


We currently use the mailing address of 535 16th Street, Suite 820, Denver, Colorado 80202. We own no real estate nor have plans to acquire any real estate. All of our management activities are performed in Colorado. 


ITEM 3.  LEGAL PROCEEDINGS.


We are not a party to any material legal proceedings and our property is not the subject of any material legal proceeding.


ITEM 4. MINE SAFETY DISCLOSURES


Not Applicable.


PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.


Holders


As of March 30, 2012, there were 48 record holders of our common stock and there were 12,012,600 shares of our common stock outstanding.

  

Market Information

 

We have recently been cleared for trading on the OTCBB but we have three market makers and no public market has yet been developed. There can be no assurance that a public trading market will develop or be sustained in the future. Without an active public trading market, you may not be able to liquidate your shares without considerable delay, if at all. If a market does develop, the price for our securities may be highly volatile and may bear no relationship to our actual financial condition or results of operations. Factors we discuss in this prospectus, including the many risks associated with an investment in our Company, may have a significant impact on the market price of our common stock. Also, because of the relatively low price of our common stock, many brokerage firms may not effect transactions in the common stock. 


We plan to apply for quotation of the Common Stock on the OTC Bulletin Board operated by the National Association of Securities Dealers, Inc.


On October 11, 2011, we engaged the services of Alpine Securities to assist in applying to and interacting with the Depository Trust Company (DTC) as our agent in our request to the DTC to make an issue of our securities eligible for DTC book-entry delivery and depository services.


Dividend Policy


We have not previously declared or paid any dividends on our common stock and do not anticipate declaring any dividends in the foreseeable future. The payment of dividends on our common stock is within the discretion of our board of directors. We intend to retain any earnings for use in our operations and the expansion of our business. Payment of dividends in the future will depend on our future earnings, future capital needs and our operating and financial condition, among other factors that our board of directors may deem relevant. We are not under any contractual restriction as to our present or future ability to pay dividends.


Equity Compensation Plan Information


We have no outstanding stock options or other equity compensation plans.


The Securities Enforcement and Penny Stock Reform Act of 1990


The Securities Enforcement and Penny Stock Reform Act of 1990 require additional disclosure and documentation related to the market for penny stock and for trades in any stock defined as a penny stock. Unless we can acquire substantial assets and trade at over $5.00 per share on the bid, it is more likely than not that our securities, for some period of time, would be defined under that Act as a "penny stock." As a result, those who trade in our securities may be required to provide additional information related to their fitness to trade our shares. These requirements present a substantial burden on any person or brokerage firm who plans to trade our securities and would thereby make it unlikely that any liquid trading market would ever result in our securities while the provisions of this Act might be applicable to those securities.


Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.


The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which


-

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

-

contains a description of the broker's or dealer's duties to the customer  and of the rights and remedies available to the customer with respect to a  violation to such duties or other requirements of the Securities Act of  1934, as amended;

-

contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;

-

contains a toll-free telephone number for inquiries on disciplinary actions;

-

defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

-

contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation;


The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

-

the bid and offer quotations for the penny stock;

-

the compensation of the broker-dealer and its salesperson in the transaction;

-

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

-

monthly account statements showing the market value of each penny stock held in the customer’s account.


In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.

 

Stock Transfer Agent


The stock transfer agent for our securities for the fiscal year ended December 31, 2011 is Island Stock Transfer, Inc. whose address is 100 Second Avenue South Street, Suite 705S, Petersburg, FL 33701.  



ITEM 6. SELECTED FINANCIAL DATA


The Company is not required to provide the information required by this Item because the Company is a smaller reporting company.


 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Certain statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations that are not historical facts are forward-looking statements such as statements relating to future operating results, existing and expected competition, financing and refinancing sources and availability and plans for future development or expansion activities and capital expenditures. Such forward-looking statements involve a number of risks and uncertainties that may significantly affect our liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service financing and refinancing efforts, general economic conditions, and changes in applicable laws or regulations. The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.

 

Our activities have been primarily focused on organization as a development stage enterprise since planned principal operations have not yet commenced. Accordingly, management does not consider the historical results of operations to be representative of our future results of operation. Our development stage began with our incorporation. Our plan is to own and operate a sports and non-sports memorabilia and collectibles business. See “Business” below.

 

Critical Accounting Policies

 

We have identified the following policies below as critical to our business and results of operations. For further discussion on the application of these and other accounting policies, see Note 1 to the accompanying audited financial statements for the period ended December 31, 2011.  Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.


Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

The Company had revenues of $470 during the period ended December 31, 2011. Anticipated future operating revenue will represent product sales in connection owning and operating a memorabilia and collectibles business. Such revenues will be recorded as the memorabilia and collectibles are sold.



Plan of Operation for December 31, 2011 to December 31, 2012.

Forever Valuable intends to own and operate a memorabilia and collectibles business. Our operating costs are expected to range between $70,000 and $90,000 for the fiscal year ending December 31, 2012. These operating costs include insurance, taxes, utilities, maintenance, contract services and all other costs of operations. However, the operating costs and expected revenue generation are difficult to predict. We expect to generate revenues in the next twelve months from memorabilia and collectibles operations using referrals from Fincor and unrelated individuals and entities that operate in the memorabilia and collectibles business. Since there can be no assurances that revenues will be sufficient to cover operating costs for the foreseeable future, it may be necessary to raise additional funds. Due to our lack of operating history, raising additional funds may be difficult. In November, 2007, an affiliated organization named A-Squared Holdings, Inc. (“A-Squared”) agreed to provide operating capital in the form of a loan of $200,000 to cover operating expenses. This loan is evidenced by an unsecured promissory note which was originally due November 29, 2008, extended by one year on November 29, 2009 and was again extended until November 29, 2015, and renews automatically each year on November 29 with a renewal fee calculated as 1.5% of the unpaid balance due on that date.  A second affiliate, X-Clearing Corporation (“X-Clearing”) has also advanced working capital to us on an as-needed basis in exchange for promissory notes.  There is no assurance that these loans will continue in the future.  If we are unable to raise funds to cover any operating deficit after fiscal year ending December 31, 2015, our business may fail.   We have generated minimal revenues during the period ended December 31, 2011, and management does not anticipate any significant revenues until the last quarter of 2012 as contemplated by our business plan.

  

We have minimal inventory valued at $7,384. We anticipate implementing the following business plan for our next twelve months:


As we have attempted to implement our business plan over the last 38 months, we will continue to concentrate on the purchase of inventory.  The new inventory will consist primarily of sports collectibles and will be obtained in the following ways:

 

 

 

1.  

Continued development of business contacts.


 

 

2.  

Setting up a table at major sports collectibles trade show in the Midwest and West.  We plan to purchase inventory brought into the show by collectors who want to sell.


 

 

3.  

Making buying trips.  Prior to any trips, a small ad will be placed in the local newspaper to notify collectors of the location and times when they can bring their collectibles to be purchased.

 

 

In the months ahead, we will continue to purchase sports memorabilia to build an appropriate inventory level.  Initially, we will sell our inventory on a cash-only basis. At some point within the next twelve months of our operations, we will begin selling inventory on EBAY and begin accepting credit cards in order to reach a potential broader market.


The new inventory will be acquired by attending at least one large trade show, by contacting private collectors, and through other sports collectibles business contacts. Throughout this process, we will continue to sell by advertising in hobby publications and by selling at all trade shows attended. We will begin plans to hold a live public auction which will be held in Denver and be run by a licensed, third party auctioneer, who we will hire.  

 

We anticipate taking additional buying trips and attending at least one major trade show. Once we hold the public auction, we will keep the list of all attendees and add them to our mailing list.  We will begin to plan a direct mail sale targeted to our mailing list.  We will continue to attend at least one trade show per month and buying and selling inventory.


As business progresses, we plan to attend another trade show and to make another buying trip. Furthermore, we plan to begin to put together a direct sales email campaign to send out to our mailing list.  New customers will always be solicited at each trade show attended.


We plan to send out the email sales offering.  If sales and profits justify, we will begin interviewing possible additions to staff.  We will continue to attend at least one trade show per month and buying and selling inventory.

We will develop a Company website.  The site would be a virtual store, where prospective buyers can see a list of available merchandise and view pictures of the more expensive items.  We will continue to buy and sell inventory.


Following activation of the Company website, we will promote the website in all hobby publication ads and when selling auction lots on EBAY.  We will send emails to our mailing list promoting the website.  Continue attending trade shows and plan an additional buying trip.


We anticipate developing our plan for the next twelve months using a combination of our loan guarantee from A-Squared, cash advances from X-Clearing and the cash flow generated from sales.


Seasonality

 

We expect that our business will be seasonal with most revenue generated in the latter half of the calendar year. However, with our startup phase, we do not anticipate any material revenue until the last quarter of 2012.

 

Results of Operations

 

 We had $470 in revenue for the fiscal year ended December 31, 2011.  Operating expenses during the period ended December 31, 2011 totaled $89,358 consisting of filing fees, professional fees and rent.


Liquidity and Capital Resources

 

At December 31, 2011, we had a nominal cash balance of $191. Our total assets were $7,575. At December 31, 2011 our current liabilities were $113,586, which consists of accounts payable, interest accrued payable, and loans payable. While contributed services and fees throughout the development stage total $233,765 in additional paid-in capital, total operating losses for the same period equal $353,105, resulting in a net shareholders’ deficit of $106,011 at the fiscal year ended December 31, 2011.

  

Financial Position

At December 31, 2011, we had no commitments for capital expenditures. In November, 2007, A-Squared agreed to provide operating capital in the form of a loan of $200,000 to cover operating expenses. This loan is evidenced by an unsecured promissory note which was originally due November 29, 2008, with a possible extension ending November 29, 2009. On November 26, 2008, a motion was presented and passed to extend the Maturity Date of the above notes to November 29, 2009. On November 29, 2009 a motion was passed to extend the Maturity date of the above notes to November 29, 2015. A second affiliate, X-Clearing has also advanced working capital to us on an as-needed basis in exchange for promissory notes. There is no assurance that these loans will continue in the future.

Management estimates it will take approximately an additional $70,000 - $90,000 per year to fund proposed operations.  Since we have limited operating history, it is uncertain whether revenue from operations will be sufficient to cover our operating expenses. In addition, the current economic crisis has led to an overall consumer confidence decline. The demand for sports memorabilia has declined due to the overall conservative nature displayed in consumer behaviors over the last seven quarters. Holiday spending was largely over projected in all sectors of consumer spending.  Furthermore, we have no commitment for funding after fiscal year 2015. 


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

 

A smaller reporting company is not required to provide the information in this Item.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLIMENTARY DATA


FOREVER VALUABLE COLLECTIBLES, INC.

(A Development Stage Company)

Index to Financial Statements


 

 

 

 

 

Page

 

 


Report of Independent Registered Public Accounting Firm

14

 

 

 

 

 

 

 

Balance Sheets at December 31, 2011 and 2010

15

 

 

 

 

 

 

 

Statements of Operations for the years ended December 31, 2011 and 2010,

 

 

 

 

and from November 29, 2007 (Inception) through December 31, 2011

16

 

 

 

 

 

 

 

Statement of Changes in Shareholders' Deficit from

 

 

 

 

November 29, 2007 (Inception) through December 31, 2011

17

 

 

 

 

 

 

 

Statements of Cash Flows for the years ended December 31, 2011 and 2010,

 

 

 

 

and from November 29, 2007 (Inception) through December 31, 2011

18

 

 

 

 

 

 

 

Notes to Financial Statements

19 - 25

 

 

 

 

 

 

 

 

 

 




















3





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Stockholders of Forever Valuable Collectibles, Inc.:

 

We have audited the accompanying balance sheets of Forever Valuable Collectibles, Inc. (“the Company”) as of December 31, 2011 and 2010 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit. 

 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion. 

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Forever Valuable Collectibles, Inc., as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles in the United States of America.

 

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting.  Accordingly, we express no such opinion.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Borgers & Cutler CPA’s PLLC

Borgers & Cutler CPA’s PLLC
Denver, CO
March 30, 2012



FOREVER VALUABLE COLLECTIBLES, INC.

(A Development Stage Company)

Balance Sheets


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  December 31 

 

December 31,

 

 

 

 

 

 

 

 

 

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash

$

191  

$

519  

 

Merchandise inventory, at cost

 

7,384  

 

3,959  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                  Total Assets

 

$

7,575  

$

4,478  

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Deficit

Liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts payable:

 

 

 

 

 

 

 

Related parties (Note 2)

 

$

4,938  

$

3,608  

 

 

Trade accounts payable

 

23,349  

 

10,666  

 

Notes payable, related parties (Note 2)

 

60,948  

 

38,920  

 

Accrued interest payable, related parties (Note 2)

 

24,351  

 

13,960  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

113,586  

 

67,154  

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ deficit (Note 3):

 

 

 

 

 

 

Preferred stock, no par value; 1,000,000 shares authorized,

 

 

 

 

 

 

 

-0- and -0- shares issued and outstanding, respectively

 

—    

 

—    

 

Common stock, no par value; 50,000,000 shares authorized,

 

 

 

 

 

 

 

12,012,600 and 11,972,600 shares issued and outstanding, respectively

 

13,329  

 

9,329  

 

Additional paid-in capital

 

233,765  

 

176,519  

 

Deficit accumulated during the development stage

 

         (353,105)

 

(248,524)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders’ deficit

 

         (106,011)

 

(62,676)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                Total Liabilities and Shareholders’ Deficit

 

$

              7,575  

$

4,478  




















See accompanying notes to condensed financial statements

FOREVER VALUABLE COLLECTIBLES, INC.

(A Development Stage Company)

Statements of Operations



 

 

 

 

 

 

 

 

 

 

 

 

 

November 29,

 

 

 

 

 

 

 

 

 

 

 

 

 

2007 (Inception)

 

 

 

 

 

 

 

 

 

For The Years Ended

 

through

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

 

 

 

 

 

2011

 

2010

 

2011

Net sales and gross revenue

$

470  

$

500  

$

1,555  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

400  

 

350  

 

1,200  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

70  

 

150  

 

355  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributed rent and services (Note 2)

 

57,246  

 

57,246  

 

233,755  

Selling, general and administrative

 

 

 

 

 

 

 

expenses, related party (Note 2)

 

—    

 

2,954  

 

3,954  

Selling, general and administrative

 

 

 

 

 

 

 

expenses, other

 

32,111  

 

12,797  

 

85,359  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(89,287)

 

(72,847)

 

(322,713)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 Interest expense

 

(15,294)

 

(7,046)

 

(30,392)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(104,581)

 

(79,893)

 

(353,105)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes (Note 4):

 

 

 

 

 

 

 

Income tax provision

 

—    

 

—    

 

—    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(104,581)

$

(79,893)

$

(353,105)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

$

(0.01)

$

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

12,005,367 

 

11,970,754  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 








See accompanying notes to condensed financial statements


FOREVER VALUABLE COLLECTIBLES, INC.

(A Development Stage Company)

Statement of Changes in Shareholders' Deficit


 

 

 

 

Additional

Paid-in

Capital

 

Deficit

Accumulated

During the

Development

Stage

 

Total

Preferred Stock

 

Common Stock

Shares

 

Amount

 

Shares

 

Amount

 

Balance at November 29, 2007

—    

$

—    

 

—    

$

—    

$

—    

$

—    

$

—    

November 2007, issuance of common stock for cash and property (Note 1)

—    

 

—    

 

11,920,600 

 

4,211  

 

—    

 

—    

 

4,211  

November 2007, issuance of warrant to A-Squared Holdings, Inc. (Note 3)

—    

 

—    

 

—    

 

—    

 

10  

 

—    

 

10  

Contributed rent and services (Note 2)

—    

 

—    

 

—    

 

—    

 

4,771  

 

—    

 

4,771  

Net loss

—    

 

—    

 

—    

 

—    

 

—    

 

(12,282)

 

(12,282)

Balance at December 31, 2007

—    

$

—    

 

11,920,600

 

4,211  

 

4,781  

 

(12,282)

 

(3,290)

October 2008, common stock issued in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

exchange for professional services (Note 3)

—    

 

—    

 

5,000  

 

500  

 

—    

 

—    

 

500  

Contributed rent and services (Note 2)

—    

 

—    

 

—    

 

—    

 

57,246  

 

—    

 

57,246  

Net loss

—    

 

—    

 

—    

 

—    

 

—    

 

(78,483)

 

(78,483)

Balance at December 31, 2008

—    

$

—    

 

11,925,600 

 

4,711  

 

62,027  

 

(90,764)

 

(24,027)

March 2009, common stock in exchange

for professional services (Note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

—    

 

—    

 

25,000  

 

2,500  

 

—    

 

—    

 

2,500  

September 2009, common stock in exchange for professional services (Note 2)

—    

 

—    

 

10,000  

 

1,000  

 

—    

 

—    

 

1,000  

Contributed rent and services (Note 2)

—    

 

—    

 

—    

 

—    

 

57,246  

 

—    

 

57,246  

Net loss

—    

 

—    

 

—    

 

—    

 

—    

 

(77,866)

 

(77,866)

Balance at December 31, 2009

—    

$

—    

 

11,960,600 

 

8,211  

 

119,273  

 

(168,630)

 

(41,147)

February 2010, common stock issued as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

payment for an account payable owed to a  related party (Note 2)

 

 

—    

 

12,000  

 

1,118  

 

—    

 

—    

 

1,118  

Contributed rent and services (Note 2)

—    

 

—    

 

—    

 

—    

 

57,246  

 

—    

 

57,246  

Net loss

—    

 

—    

 

—    

 

—    

 

—    

 

(79,893)

 

(79,893)

Balance at December 31, 2010

—    

$

—    

 

11,972,600

$

9,329  

$

176,519  

$

(248,524)

$

(62,676)

March 2011, common stock issued in exchange for professional services (Note 2)

—    

 

—    

 

40,000  

 

4,000  

 

—    

 

—    

 

4,000  

Contributed rent and services (Note 2)

—    

 

—    

 

—    

 

—    

 

57,246  

 

—    

 

57,246  

Net loss

—    

 

—    

 

—    

 

—    

 

—    

 

(104,581)

 

(104,581)

Balance at December 31, 2011

—    

$

—    

 

12,012,600

$

13,329  

$

233,765  

$

(353,105)

$

(106,011)

 










See accompanying notes to condensed financial statements

FOREVER VALUABLE COLLECTIBLES, INC.

(A Development Stage Company)

Statements of Cash Flows


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For The Years Ended

December 31,

 

November 29, 2007 (Inception) through

December 31,

 

2011

 

2010

 

2011

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(104,581)

$

(79,893)

$

(353,105)

 

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

 

used by operating activities:

 

 

 

 

 

 

 

 

Share-based payment

 

4,000 

 

—    

 

12,329

 

 

Contributed services (Note 2)

 

48,000 

 

48,000 

 

196,000 

 

 

Contributed rent (Note 2)

 

9,246 

 

9,246 

 

37,765 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Inventory

 

 (3,425)

 

           (971) 

 

(7,384) 

 

 

 

 

 

Accounts payable

  

                  14,012

  

9,400 

  

28,287 

 

 

 

 

 

Accrued interest related party

  

10,392 

 

                   7,047 

 

24,351 

 

 

 

 

 

 

 

Net cash used in

  

 

  

 

  

 

 

 

 

 

 

 

 

 

operating activities

  

(22,356)

  

                (7,171)

  

                 (61,757)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of related party notes

 

22,028 

 

5,000  

 

60,948 

 

Proceeds from issuance of common

   

 

  

 

  

 

 

 

stock, net of issuance costs

  

—    

  

—    

  

1,000 

 

 

 

 

 

 

 

Net cash provided by

  

 

  

 

  

 

 

 

 

 

 

 

 

 

financing activities

  

22,028 

  

5,000  

  

61,948 

 

 

 

 

 

 

 

 

 

  

 

  

 

  

 

 

 

 

 

 

 

 

Net change in cash and

  

 

  

 

  

 

 

 

 

 

 

 

 

 

cash equivalents

  

(328) 

  

                (2,171)

  

191 

 

 

 

 

 

 

 

 

 

  

 

  

 

  

 

Cash and cash equivalents:

  

 

  

 

  

 

 

Beginning of period

  

519  

  

2,690  

  

—    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period

$

191  

$

519  

$

191 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Income taxes

$

—    

$

—    

$

—    

 

 

Interest

$

—    

$

—    

$

—    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash financing activities:

 

 

 

 

 

 

 

Shares issued for property

$

—    

$

—   

$

                    3,211

 

Shares issued for liabilities (Note 3)

$

                 4,000

$

               1,118

$

                    5,118




See accompanying notes to condensed financial statements



4






(1)  Nature of Organization and Summary of Significant Accounting Policies


Organization and Basis of Presentation


Upon effectiveness of a Registration Statement filed with the Securities and Exchange Commission (“SEC”) by Forever Valuable Collectibles, Inc. (the “Company” or “we”), Fincor, Inc (“Fincor”) completed the spin-off of the Company to its shareholders of record as of August 13, 2008.  The transaction was effected by the issuance of 11,920,600 shares of the Company’s common stock to Fincor in exchange for cash and property.  


Fincor shareholders retained their Fincor common shares and, after the spin-off, received (1) share of the common stock of the Company for each share of Fincor common stock held.  Immediately following the spin-off, Fincor’s shareholders owned approximately 100 percent of the Company’s common stock.   


The Company accounted for the spin-off based on recorded amounts.


The Company is incorporated in the State of Colorado and plans to enter the memorabilia and collectible industry.  The Company is a development stage enterprise in accordance with accounting principles generally accepted in the United States of America.


Basis of Presentation and Going Concern

We have a limited history of operations, limited assets, and an operating loss since Inception.  Our current burn rate is between $70,000 and $90,000 annually and we may incur additional operating losses in future periods.  In addition, there is no assurance that we will be able to access capital markets to raise funds sufficient to cover any future operating losses.    


Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to locate customers who will use our memorabilia and collectibles services and our ability to generate sales revenues.  However, we have generated nominal revenues from our Inception, and at December 31, 2011 and 2010, we had cash positions of $191 and $519, respectively.  

In November, 2007, A-Squared Holdings, Inc., an affiliated company, agreed to provide us with a credit facility of $200,000 for working capital (see Note 2).  There is no assurance that this credit facility will be sufficient to meet our future cash needs.  A second affiliate, X-Clearing has also advanced working capital to us on an as-needed basis in exchange for promissory notes (see Note 2).  There is no assurance that these loans will continue in the future.


As a result, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Risks and Uncertainties


The collectibles industry can be subject to seasonal variations in demand.  We expect that most of our collectibles operations will see the greatest demand during the winter holiday shopping period.  Consequently, we expect to be most profitable during the fourth quarter of our fiscal year.  Quarterly results may also be materially affected by the timing of new product introductions, the gain or loss of significant customers or product lines and variations in merchandise mix.  We will  make  decisions about purchases of inventory well in  advance  of the  time at  which  such  products  are  intended  to be sold. Accordingly, our performance in any particular quarter may not be indicative of the results that can be expected for any other quarter or for the entire year.  Significant  deviations  from  projected  demand for  collectibles merchandise  could have a material  adverse  effect on our  financial condition  and  quarterly or annual  results of  operations.  


Demand for collectibles merchandise is affected by the general economic conditions in the United States.  When economic conditions are favorable and discretionary income increases, purchases of non-essential items like collectibles merchandise and animation art generally increase.  When economic conditions are less favorable, sales of collectibles merchandise and animation art are generally lower. In addition, we may experience more competitive pricing pressure during economic downturns.  Therefore,   any significant economic downturn or any future changes in consumer spending habits could have a material adverse effect on our financial condition and results of operations.  


The markets for our products are subject to changing customer tastes and the need to create and market new products.  Demand for  collectibles  is  influenced by the  popularity of certain  themes, cultural and  demographic  trends,  marketing and advertising  expenditures  and general economic conditions.  Because these factors can change rapidly, customer demand also can shift quickly.  


Use of Estimates


The preparation of financial statements in accordance 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 the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.


Inventory

Inventory, consisting of collectibles held for sale, are stated at the lower of cost (specific identification method) or market.


Revenue Recognition


The Company earned revenues of $470 and $500 for the years ended December 31, 2011 and 2010, respectively.  There was no revenue earned prior to 2009.  Anticipated future operating revenue will represent product sales in connection with owning and operating a memorabilia and collectibles business.  We recognize revenue on the sale of our inventory when persuasive evidence of an arrangement exists, delivery has occurred, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.


Shipping and Handlings cost


Shipping and handling fees billed to customers are recorded as revenues while the related shipping and handling costs are included in other cost of revenues. The Company has not incurred any shipping costs in its development stage.


Advertising Costs


The Company plans to expense all advertising costs as incurred.  The Company had no advertising costs during the years ended December 31, 2011 and 2010.




5





Income Taxes

We maintained a full valuation allowance on our net deferred tax assets as of December 31 2011 and 2010. The valuation allowance was determined in accordance with the provisions of Accounting Standards Codification (ASC) No. 740, Accounting for Income Taxes (ASC 740), which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable; such assessment is required on a jurisdiction by jurisdiction basis.  Expected future losses represented sufficient negative evidence under ASC 740 and accordingly, a full valuation allowance was recorded against deferred tax assets.  We intend to maintain a full valuation allowance on the deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

Our tax provision was $-0- on a pre-tax losses of $104,581 and $79,893 for the years ended December 31, 2011 and 2010, respectively.


The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal tax return and its state tax return in Colorado as “major” tax jurisdictions, as defined.  The Company believes that its income tax filings positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial conditions, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded.


Fair Value of Financial Instruments


The Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents.  


The carrying amounts of cash and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.


The FASB ASC clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:


Level 1:

Quoted prices in active markets for identical assets or liabilities.

  

Level 2:

Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.

  

Level 3:

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Stock-based Compensation

Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the value of the awards and is recognized as expense over the vesting period.




6





Loss per Common Share


Accounting Standards Codification No. 260, Earnings per Share, requires presentation of “basic” and “diluted” earnings per share on the face of the statements of operations for all entities with complex capital structures.  Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period.  Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. At December 31, 20110 and 2010, a warrant to purchase 200,000 shares of our common stock was excluded from diluted earnings per share because it was anti-dilutive.


Recently Issued Accounting Pronouncements


We have 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 our financial condition or the results of our operations.


(2)  Related Party Transactions


Rent expense of $9,246 was recognized during the years ended December 31, 2011 and 2010 for contribution of office space by an affiliate.  The Board of Directors valued the contribution based on rent for similar space in the local area.


Our President and Director contributed her time and attendance during 2011 and 2010.  We recognized $48,000 for the years ended December 31, 2011 and 2010, in contributed service expense.  The Board of Directors valued the contribution based on prevailing rates for similar services in the local area.


During the years ended December 31, 2011 and 2010, we incurred stock transfer agent fees to X-Pedited Transfer Corp., an affiliate, totaling $534 and $2,954, respectively.  At December 31, 2011, the unpaid balance to the affiliate was $3,488, and is included in the accompanying balance sheet as accounts payable, related party. During February 2010, we issued 12,000 shares of our common stock to X-Pedited Transfer Corp. as payment for the December 31, 2009 obligation.


Our affiliates, X-Clearing Corp. and A-Squared Holdings, Inc., have provided us cash since our inception to cover operating expenses pursuant to the terms of unsecured promissory notes.


As of December 31, 2011 and 2010, notes payable to related parties, consist of the following:


 

 

December 31,

 

 

2011

 

2010

Demand notes payable to affilliate A-Squared Holdings, Inc. issued

 

 

 

 

between February 2008 and November 2011, due on demand not to  

 

 

 

 

exceed a maturity date of November 29, 2015, unsecured and bearing

 

 

 

 

interest at 15%, interest payable every 90 days

$

  31,361 

$

  20,347 

 

 

 

 

 

Demand notes payable to affilliate X-Clearing issued between

 

 

 

 

January 2008 and November 2011, due on demand not to exceed a

 

 

 

 

maturity date of November 29, 2015, unsecured and bearing

 

 

 

 

interest at 15%, interest payable every 90 days

 

  29,587 

 

  18,573 

 

 

 

 

 

Total notes payable, related parties

$

  60,948 

$

  38,920 

 

 

 

 

 



Interest is payable every 90 days, but no interest has been paid to date. Accrued interest payable as of December 31, 2011 and 2010 were $24,351 and $13,960, respectively.


(3)  Shareholders’ Deficit


Preferred stock

We are authorized to issue 1,000,000 shares of no par value preferred stock; the classes and features of which will be determined by the Board of Directors.


Common stock

We are authorized to issue 50,000,000 shares of no par value common stock.  The shares do not have preemptive rights and cumulative voting is not permitted.


During October 2008, we issued 5,000 shares of common stock to a vendor in exchange for payment of professional fees.  The transaction was recorded based on the fair value of the services rendered, which totaled $500, or $0.10 per share.


During March 2009 and September 2009, we issued 25,000 and 10,000 shares of common stock, respectively, to our stock transfer agent, X-Pedited Transfer Corp., an affiliate, for payment of professional services.  25,000 shares were issued as payment for a December 31, 2008 liability related to services rendered during 2008.  10,000 shares were issued for services performed during 2009.  The transactions were recorded based on the fair value of the services rendered, which totaled $3,500, or $0.10 per share.


During March 2011 we issued 40,000 shares of common stock to our stock transfer agent, Island Capital Management, for payment of professional services.


Warrant to purchase our common stock

On November 29, 2007 the Board of Directors unanimously approved the granting of a warrant to A-Squared Holdings, Inc. in exchange for providing a one-year, $200,000 credit facility to the Company (See Note 5).

The warrant vested as of the date of the grant and expires in five years.  All 200,000 shares underlying the warrant are exercisable at $0.001 per share.  The Board of Directors valued the shares of common stock at the fair value of $0.00005 per share on the date of grant using the Black-Scholes option pricing model.  Compensation expense totaling $10 was recognized during the period ended December 31, 2007.  No warrants had been exercised through December 31, 2011.



7





The status of the Company’s outstanding warrant is as follows:

                                                                                                   

 

 

 

 

Weighted

 

Weighted Avg.

 

Aggregate

 

 

Number of

 

Avg. Exercise

 

Rermaining

 

Intrinsic

 

 

Shares

 

Price

 

Contractual Term

 

Value

Outstanding at November 29, 2007 (inception)*****************************.

$

0

$

0

 

 

 

 

Granted*************************.'

 

  200,000 

 

  0.001 

 

4.9 years

 

 

Exercised************************.

 

0

 

0

 

 

 

 

Cancelled************************.

 

0

 

0

 

 

 

 

Outstanding at December 31, 2007********************.

$

200000

$

0

 

4.9 years

$

0

Granted*************************.

 

0

 

0

 

 

 

 

Exercised************************.

 

0

 

0

 

 

 

 

Cancelled************************.

 

0

 

0

 

 

 

 

Outstanding at December 31, 2008*********************..

 

200000

 

0

 

3.9 years

$

0

Granted*************************.

 

0

 

0

 

 

 

 

Exercised************************.

 

0

 

0

 

 

 

 

Cancelled************************.

 

0

 

0

 

 

 

 

Outstanding at December 31, 2009*********************..

 

200000

 

0

 

2.9 years

$

0

Granted*************************.

 

0

 

0

 

 

 

 

Exercised************************.

 

0

 

0

 

 

 

 

Cancelled************************.

 

0

 

0

 

 

 

 

Outstanding at December 31, 2010*********************..

 

200000

 

0

 

1.9 years

$

0

Granted*************************.

 

0

 

0

 

 

 

 

Exercised************************.

 

0

 

0

 

 

 

 

Cancelled************************.

 

0

 

0

 

 

 

 

Outstanding at December 31, 2011*********************..

 

200000

 

0

 

0.9 years

$

0

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2011********************.

$

200000

$

0

 

 

$

0

Exercisable at December 31, 2008*******************.

$

200000

$

0

 

 

$

0

Exercisable at December 31, 2009*******************.

$

200000

$

0

 

 

$

0

Exercisable at December 31, 2010*******************.

$

200000

$

0

 

 

$

0

Exercisable at December 31, 2011*******************.

$

200000

$

0

 

 

$

0

 

 

 

 

 

 

 

 

 



The weighted average fair value of the warrant granted on November 29, 2007 was estimated on the date of grant using the Black-Sholes option-pricing model at $0.00035 per share or $10.  The fair value of the warrants granted is estimated on the date of grant using the following assumptions: dividend yield of zero, expected volatility of 100%, risk free interest rate of 3.42%, and an expected life of five years.


(4)  Income Taxes

A reconciliation of the U.S. statutory federal income tax rate to the effective tax rates at December 31, 2011 and 2010 is as follows:


 

 

December 31,

 

 

2011

 

2010

 

U.S. federal statutory graduated rate

15.00%

 

15.00%

 

State income tax rate,

 

 

 

 

  net of federal benefit

4.00%

 

4.00%

 

Permanent differences

-14.00%

 

-14.00%

 

Net operating loss for which no tax

 

 

 

 

  benefit is currently available

-5.00%

 

-5.00%

 

 

0.00%

 

0.00%

 

 

 

 

 

 



At December 31, 2011, deferred tax assets consisted of a net tax asset of $22,849, due to an operating loss carryforward of $120,122, which was fully allowed for, in the valuation allowance of $22,849.  The valuation allowance offsets the net deferred tax asset for which there is no assurance of recovery.  The changes in the valuation allowance for the year ended December 31, 2011 and 2010 was $8,963 and $4,288, respectively. Net operating loss carryforwards will expire through 2031.  The value of these carryforwards depends on the ability of the Company to generate taxable income.


The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax asset is no longer impaired and the allowance is no longer required.


(5)  Subsequent Events


In conjunction with the preparation of these financial statements, an evaluation of subsequent events was performed though March 30, 2012, which is the date financial statements were issued.  No reportable subsequent events were noted other than those described below.


Note Payable, Related Parties

During January 2012, A-Squared Holdings, Inc. advanced the Company an additional $5,000 for working capital under the terms of the promissory notes discussed above in Note 2.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

 

We did not have any disagreements on accounting and financial disclosures with our present accounting firm during the reporting period.


ITEM 9A. CONTROLS AND PROCEDURES.



Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our principal executive officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).   Accordingly, we concluded that our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act were not effective as of December 31, 2011.

 

Management’s Annual Report on Internal Control Over Financial Reporting.


We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934,  as  amended  (the  "Exchange  Act")  that are  designed  to ensure  that information  required to be disclosed in our reports  under the Exchange Act, is recorded,  processed,  summarized and reported within the time periods  required under  the  SEC's  rules and forms  and that the  information  is  gathered  and communicated to our management, including our Chief Executive Officer (Principal Executive Officer), as appropriate, to allow for timely decisions regarding required disclosure.


Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our internal control over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U. S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 

i.

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

ii.

 provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in  accordance with U. S. generally accepted accounting principles, and  that our receipts and expenditures are being made only in accordance with  authorizations of our management and directors; and

iii.

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.


As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report.  Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011 and has concluded that our internal control over financial reporting was effective as of December 31, 2011.  


 

Changes in Internal Control Over Financial Reporting.


We have made no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Attestation Report of the Registered Public Accounting Firm.


This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report on Form 10-K.

 

 

ITEM 9B. OTHER INFORMATION.

 

Nothing to report.

 


PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS & CORPORATE GOVERNANCE


         Set forth below is the name of our director and officer, all positions and offices held with us, the period during which she has served as such, and the business experience during at least the last five years:


 

 

 

Name

Age

   Position

Jodi Stevens

Patricia Philbrook

46


56

  President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director

  Secretary and a Director


Jodi Stevens has been the President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary-Treasurer and a Director of our Company since Inception on November 29, 2007.  She has been Secretary of Fincor, Inc. since 2005 and serves as President of X-Pedited Transfer Corporation.  She has been with X-Pedited Transfer Corporation since its Inception in January 2007.  She has worked for two Fortune 500 companies, Ball Aerospace Systems Group, 1986-1992, and Coram Healthcare, 1994 to 1996.  With Ball Aerospace, she handled Public and Investor Relations as well as social events while supporting the Vice President of Human Relations and the Vice President of Public Affairs and Public Relations.  She also managed the department’s budget and non-profit projects.  With Coram Healthcare she worked with the Executive Vice President of the Corporation, the President of the Lithotripsy Division, and the Vice President of Human Resources for the Corporation. She worked from 1996-2001 with LRG Group, LLC as office manager.  From 2001–2010 she worked first as VP Operations of X-Clearing Corp., a U.S Securities and Exchange Commision-regulated stock transfer agency, and in January 2004 became the President of the Corporation until its closing in December 2010. She was educated at Metropolitan State College, Denver, Colorado. She will devote a minimum of forty hours per month to our operations.


Patricia Philbrook was appointed to the position of Corporate Secretary as of March 24, 2010. Patricia Philbrook (56 years) has been Secretary /Treasurer of PEC Services, Inc. since November 19, 1999. PEC Services, Inc. offers financial and business planning services as well as accounting consulting services to small and midsize companies.  Prior to forming PEC Services, Ms. Philbrook had worked for Pacific Mountain Network (PMN) as its controller for seven years.  PMN was an non-profit association of public television companies located in the western region of the United States and as controller, Ms. Philbrook was responsible for the proper and accurate accounting of various grant monies received including those with the Corporation for Public Broadcasting, National Science Foundation and Channel One, which was responsible for providing original educational broadcasting content in middle and secondary schools in this region.  Prior to PMN, Ms. Philbrook was the controller for Thomas Perkins, a local advertising agency located in Denver with accounts such as Qwest, Xcel Energy, First Bank. She was in charge of financial reporting for the agency as well as managing an extensive office build-out project and keeping that project on time and under budget.  Prior to moving to Denver from San Francisco, CA in 1991, she worked for four years (through 1989) with the San Francisco office of Grant Thornton, a top-ten international accounting firm in their management consulting department.  Ms. Philbrook received her B.S. in Information Systems Management from the University of San Francisco in 1986 after having worked in various senior accounting positions for the previous fifteen years.


Committees of the Board of Directors

 

Currently, we do not have any committees of the Board of Directors.

 

Director and Executive Compensation

 

Our President and Director contributed her time and attendance during the period from November 29, 2007 through December 31, 2011.  Although no compensation has been paid and no stock options have been granted to any officer or director in the last three fiscal years, we recognize that she has accrued salary compensation of $48,000 year ended December 31, 2010, and $48,000 for the year end December 31, 2011, and a total of $196,000 for her contributed services expense from Inception through December 31, 2011.  The Board of Directors valued the contribution based on prevailing rates for similar services in the local area. 

 

Employment Agreements

 

 We have no written employment agreements with our executive officer.

 

Equity Incentive Plan

 

 We have not adopted an equity incentive plan, and no stock options or similar instruments have been granted to any of our officers or directors.




8





 Indemnification and Limitation on Liability of Directors

 

 Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by Colorado law. Specifically, our directors will not be personally liable to our Company or any of its shareholders for monetary damages for breach of fiduciary duty as directors, except liability for (i) any breach of the director's duty of loyalty to the corporation or its shareholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) voting for or assenting to a distribution in violation of Colorado Revised Statutes Section 7-106-401 or the articles of incorporation if it is established that the director did not perform his duties in compliance with Colorado Revised Statutes Section 7-108-401, provided that the personal liability of a director in this circumstance shall be limited to the amount of distribution which exceeds what could have been distributed without violation of Colorado Revised Statutes Section 7-106-401 or the articles of incorporation; or (iv) any transaction from which the director directly or indirectly derives an improper personal benefit. Nothing contained in the provisions will be construed to deprive any director of his right to all defenses ordinarily available to the director nor will anything herein be construed to deprive any director of any right he may have for contribution from any other director or other person. 

 

 At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 (the “34 Act”) requires our officers and directors and persons owning more than ten percent of the Common Stock, to file initial reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”). Additionally, Item 405 of Regulation S-K under the 34 Act requires us to identify in its Form 10-K and proxy statement those individuals for whom one of the above referenced reports was not filed on a timely basis during the most recent year or prior years. We have nothing to report in this regard.

 

Code of Ethics

 

         Our Board of Directors has not adopted a code of ethics but plans to do so in the future.

 

 

ITEM 11.  EXECUTIVE COMPENSATION


Our President and Director contributed her time and attendance during the period from November 29, 2007 through December 31, 2011.  Although no compensation has been paid and no stock options have been granted to any officer or director in the last three fiscal years, we recognize that she has accrued salary compensation of $48,000 year ended December 31, 2011, and $48,000 for the year end December 31, 2010, and a total of $196,000 for her contributed services expense from Inception through December 31, 2011.  The Board of Directors valued the contribution based on prevailing rates for similar services in the local area. 


  Our officer and director did not receive nor was she entitled to receive any finder’s fee, either directly or indirectly, as a result of her efforts to implement our business plan outlined herein.  No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by us for the benefit of our employees. 


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        

        The following sets forth the number of shares of our no par value common stock beneficially owned by (i) each person who, as of March 30, 2012, was known by us to own beneficially more than five percent (5%) of its common stock; (ii) our individual Directors and (iii) our Officers and Directors as a group. A total of 12,012,600 shares of common stock were issued and outstanding as of March 30, 2012.

 


 

 

 

 

               Name 

Number of Shares

Percentage Ownership

  

  

  

  

  

Jodi Stevens (1)

11,495,000

96%

  

535 16th Street, Suite 820

  

  

  

Denver, Colorado  80202


PEC Services, Inc (2)

535 16th Street, Suite 820

Denver, CO 80202

  


        11,000

  



          0.1%

 

 

  

  

  

All Officers and Directors as a Group

11,515,000

96%

  

 

 

  

  



(1)

A total of 11,475,000 shares are owned of record jointly by Robert and Jodi Stevens through SHC, LLC. In addition, X-Clearing Corporation, owns 20,000 shares. Mrs. Stevens has beneficial ownership and control of all of the shares. In addition, Jodi Stevens and Robert Stevens own A-Squared Holdings, Inc., which has a total of 200,000 warrants issued to it, exercisable at a price of $0.001 per share subject to adjustment, for a period of five years from the date of issuance.

(2)

PEC Services is controlled by Patricia Philbrook, who was appointed to the position of Secretary and a Director as of March 24, 2010.


 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


On November 29, 2007, an affiliate named A-Squared Holdings, Inc., agreed to provide operating capital in the form of a loan of $200,000 to cover operating expenses. This loan is evidenced by an unsecured promissory note which was originally due November 29, 2008.  The maturity date of this note may be extended at the option of A-Squared  for a period of one year following the maturity date provided A-Squared  receives a renewal fee equal to 1.5% of the then outstanding principal balance due.  However, the loan is due on demand and the maturity date of this note will not be extended past November 29, 2015. The note is at an interest rate of 15% per annum, with interest payments to be made every ninety days, beginning ninety days from the date of the promissory note.  Interest payments have not been paid every 90 days as due, but continues to accrue and is compounded and is reflected in the total interest outstanding.  A-Squared is a Company owned by Robert and Jodi Stevens.


 We have issued a total of 200,000 warrants to A-Squared, exercisable at a price of $0.001 per share subject to adjustment, for a period of five years from the date of issuance. These warrants were issued as an additional inducement for A-Squared to loan us $200,000. The warrants are subject to registration rights. 



After the spin-off distribution, Robert and Jodi Stevens hold 11,495,000 shares of our issued and outstanding stock, representing approximately 96.4% of our issued and outstanding common stock. There were 11,925,600 shares of our common stock outstanding at August 13, 2008.

An affiliate contributed office space to us during the period from November 29, 2007 through December 31, 2011.  We recognized $771 for the period from November 29, 2007 to December 31, 2007, in rent expense.  For each of the years ended December 31, 2011 and December 31, 2010 we recognized $9,246 as rent. The Board of Directors valued the contribution based on rent for similar space in the local area.


Our President and Director contributed her time and attendance during the period from November 29, 2007 through December 31, 2011.  Although no compensation has been paid and no stock options have been granted to any officer or director in the last three fiscal years, we recognize that she has accrued salary compensation of $48,000 year ended December 31, 2011, and $48,000 for the year end December 31, 2010, and a total of $196,000 for her contributed services expense from Inception through December 31, 2011.  The Board of Directors valued the contribution based on prevailing rates for similar services in the local area. 

 


ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES


Our financial statements for the fiscal years ended December 31, 2011 and December 31, 2010, along with the related statements of operations, stockholders’ equity and cash flows have been audited by Borgers and Cutler CPAs or Denver, Colorado, independent registered public accounting firm, to the extent and for the period set forth in their report, and are set forth in reliance upon such report given upon the authority of them as experts in auditing and accounting.


Audit Fees

Our independent auditor, Borgers and Cutler CPAs, billed an aggregate of $4,000.00 for the years ended December 31, 2011 and December 31, 2010, and for professional services rendered for the audit of the Company's annual financial statements and review of the financial statements included in its quarterly reports. The firm billed an aggregate of $1,080 in connection with the review of the Company's unaudited quarterly financial statements for the period ended September 30, 2011.  Our previous auditors, Cordovano and Honeck LLPs of Englewood, Colorado, billed an aggregate of $5,500 during the fiscal year ended December 31, 2011 for professional services rendered for the audit of the Company’s financial statements for the period ended December 31, 2010 (which was subsequently re-audited by Borgers and Cutler CPAs) and the review of the Company's unaudited quarterly financial statements for the periods ended March 31, 2011 and June 30, 2011.

 

We do not have an audit committee and as a result our board of directors performs the duties of an audit committee. Our board of directors evaluates the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.



PART IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.


The following financial information is filed as part of this report:

(a)

(1) FINANCIAL STATEMENTS


(2) SCHEDULES


(3) EXHIBITS. The following exhibits required by Item 601 to be filed herewith are incorporated  by reference to previously filed documents:




 

 

 

Exhibit

Number

                              Description 

 

  

  

 

3.1*

Articles of Incorporation

 

3.2*

Bylaws

 

4.1*

Warrant dated November 29, 2007 for A-Squared Holdings, Inc.

 

10.1*

Promissory note dated November 29, 2007 with A-Squared Holdings, Inc.

 

31.1

Certification of CEO/CFO pursuant to Sec. 302

 

32.1

Certification of CEO/CFO pursuant to Sec. 906

 

  

  

 


 * Previously filed

 

(b)

 Reports on Form 8-K. Item 4.01 on Form 8-K was filed by the Company on November 14, 2011 and Item 4.01 Form 8-K/A on November 17, 2011.

 

  

SIGNATURES

 

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 30, 2012.

 

 

 

 

 

 

 

  

FOREVER VALUABLE COLLECTIBLES, INC.

  

  

  

  

By:     

/s/ Jodi K. Stevens

  

Jodi K. Stevens

 

  

Chief Executive Officer and President

(principal executive officer and principal financial and accounting officer)

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated.

 

 

 

 

 

Date:   March 30, 2012

By:  

/s/  Jodi K. Stevens

  

  

Jodi K. Stevens

  

  

Director

 



9