Unaudited Consolidated Statement Of Operations
(A Development Stage Company)
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April 30, 2009 |
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30, 2010 |
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Revenue:
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$ |
- |
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$ |
6,214 |
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$ |
42,039 |
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General & Administrative Expenses
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Accounting
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4,750 |
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|
5,490 |
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|
23,260 |
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Advertising & promotion
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|
- |
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|
- |
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4,560 |
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Bad debt
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- |
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- |
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3,576 |
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Compensatory stock issuances
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- |
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- |
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20,850 |
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Consulting & contract labor
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|
- |
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7,363 |
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17,617 |
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Depreciation
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- |
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629 |
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2,383 |
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Legal
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- |
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- |
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32,200 |
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Office
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1,152 |
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7,252 |
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26,108 |
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Stock transfer
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3,373 |
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2,664 |
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12,184 |
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Abandoned assets
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|
- |
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|
- |
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|
566 |
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Total G & A
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9,275 |
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23,398 |
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143,304 |
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Income (Loss) from operations
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(9,275 |
) |
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(17,184 |
) |
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(101,265 |
) |
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Other (Expenses) interest
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(11,028 |
) |
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|
(1,790 |
) |
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|
(21,787 |
) |
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Net (Loss)
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$ |
(20,303 |
) |
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$ |
(18,974 |
) |
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$ |
(123,052 |
) |
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Basic (Loss) per common share
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(0.00 |
) |
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(0.00 |
) |
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(0.00 |
) |
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Weighted Average Common Shares Outstanding
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21,049,400 |
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21,049,400 |
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21,049,400 |
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The accompanying notes are an integral part of the consolidated financial statements.
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(A Development Stage Company)
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Consolidated Statement of Shareholders' Equity
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Number Of
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Capital Paid
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Retained
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Common
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Common
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in Excess
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Earnings
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Shares Issued
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Stock
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of Par Value
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(Deficit)
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Total
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Balance at May 23, 2007 (Inception)
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- |
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$ |
- |
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$ |
- |
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$ |
- |
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$ |
- |
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May 24, 2007 issued 70,000
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shares of par value $.001 common stock
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for cash of $70 or $.001 per share.
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70,000 |
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70 |
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- |
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70 |
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May 24, 2007 issued 20,850,000
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shares of par value $.001 common stock
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for services valued at $850 or $.001 per share
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20,850,000 |
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20,850 |
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- |
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20,850 |
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September 20, 2007 issued 80,400
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shares of par value $.001 common stock
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for cash of $20,100 or $.25 per share
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80,400 |
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80 |
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20,020 |
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20,100 |
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September 28, 2007 issued 22,000
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shares of par value $.001 common stock
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for cash of $5,500 or $.25 per share
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22,000 |
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22 |
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5,478 |
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5,500 |
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October 11, 2007 issued 2,000
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shares of par value $.001 common stock
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for cash of $500 or $.25 per share
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2,000 |
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2 |
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|
498 |
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|
500 |
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October 18, 2007 issued 25,000 shares of
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par value $.001 common stock to founder
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for subsidiary 100% of outstanding shares in
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subsidiary valued at $25 or $.001 per share
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25,000 |
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25 |
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2,453 |
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2,478 |
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Net (Loss)
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- |
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|
- |
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|
- |
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|
(48,355 |
) |
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(48,355 |
) |
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Balance at October 31, 2007
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21,049,400 |
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|
$ |
21,049 |
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|
$ |
28,449 |
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|
$ |
(48,355 |
) |
|
$ |
1,143 |
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Net (Loss)
|
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|
- |
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|
- |
|
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|
- |
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(18,488 |
) |
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(18,488 |
) |
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Balance at October 31, 2008
|
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|
21,049,400 |
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|
$ |
21,049 |
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|
$ |
28,449 |
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|
$ |
(66,843 |
) |
|
$ |
(17,345 |
) |
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Net (Loss)
|
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|
- |
|
|
|
- |
|
|
|
- |
|
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|
(35,906 |
) |
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(35,906 |
) |
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Balance at October 31, 2009
|
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|
21,049,400 |
|
|
$ |
21,049 |
|
|
$ |
28,449 |
|
|
$ |
(102,749 |
) |
|
$ |
(53,251 |
) |
| |
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|
|
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|
|
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|
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|
|
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|
Net (Loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(20,303 |
) |
|
|
(20,303 |
) |
| |
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|
Balance at April 30, 2010 (unaudited)
|
|
|
21,049,400 |
|
|
$ |
21,049 |
|
|
$ |
28,449 |
|
|
$ |
(123,052 |
) |
|
$ |
(73,554 |
) |
The accompanying notes are an integral part of the consolidated financial statements.
|
Famous Products, Inc.
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|
(A Development Stage Company)
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|
Unaudited Consolidated Statement of Cash Flows
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30, 2010 |
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| |
|
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|
Net (Loss)
|
|
$ |
(20,303 |
) |
|
$ |
(18,974 |
) |
|
$ |
(123,052 |
) |
|
Adjustments to reconcile decrease in net assets to net cash
|
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|
|
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|
provided by operating activities:
|
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|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
- |
|
|
|
629 |
|
|
|
2,383 |
|
| |
|
|
|
|
|
|
|
|
|
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|
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|
( Increase) decrease in accounts receivable
|
|
|
- |
|
|
|
4,064 |
|
|
|
- |
|
|
Stock issued for services
|
|
|
- |
|
|
|
- |
|
|
|
20,850 |
|
|
Increase in accounts payable
|
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|
4,525 |
|
|
|
4,801 |
|
|
|
13,493 |
|
|
Increase in bank overdraft
|
|
|
- |
|
|
|
339 |
|
|
|
- |
|
|
Interest acretion
|
|
|
|
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|
|
1,000 |
|
|
|
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|
|
Increase in interest payable
|
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|
1,528 |
|
|
|
790 |
|
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|
5,287 |
|
| |
|
|
|
|
|
|
|
|
|
|
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|
Net cash (used) in operation activities
|
|
|
(14,250 |
) |
|
|
(7,351 |
) |
|
|
(81,039 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
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|
|
|
|
|
|
|
|
|
|
|
|
Abandoned assets
|
|
|
- |
|
|
|
- |
|
|
|
566 |
|
|
Purchase of equipment
|
|
|
- |
|
|
|
- |
|
|
|
(471 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used) in investing activities
|
|
|
- |
|
|
|
- |
|
|
|
95 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
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|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
|
- |
|
|
|
- |
|
|
|
26,170 |
|
|
Advances from related party
|
|
|
- |
|
|
|
1,406 |
|
|
|
4,881 |
|
|
Notes payable
|
|
|
14,250 |
|
|
|
1,000 |
|
|
|
50,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided from financing activities
|
|
|
14,250 |
|
|
|
2,406 |
|
|
|
81,301 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
- |
|
|
|
(4,945 |
) |
|
|
357 |
|
|
Cash at beginning of period
|
|
|
357 |
|
|
|
5,302 |
|
|
|
- |
|
|
Cash at end of period
|
|
$ |
357 |
|
|
$ |
357 |
|
|
$ |
357 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
20,850 |
|
|
Expenses paid by shareholder on behalf of Company
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
The accompanying notes are an integral part of the consolidated financial statements.
Famous Products, Inc.
Notes To Unaudited Financial Statements
For The Three and Six Month Period Ended April 30 2010
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three and six month interim period ended April 30, 2010 were taken from the books and records without audit. However, such information reflects all adjustments (consisting only of normal recurring adjustments, which are of the opinion of management, necessary to reflect properly the results of interim period presented). The results of operations for the three month period ended April 30, 2010 are not necessarily indicative of the results expected for the fiscal year ended October 31, 2010.
Note 2 - Financial Statements
For a complete set of footnotes, reference is made to the Company’s Report on Form 10-K for the year ended October 31, 2009 as filed with the Securities and Exchange Commission and the audited financial statements included therein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.
Overview and History
We are a full service, brand marketing organization whose activities are centered around our client's products, principally in the liquor industry. Brand marketing builds the value of the brand by connecting it with target audiences to achieve strategic marketing objectives. We are comprised of one corporation with a wholly-owned subsidiary, Fancy Face Promotions, Inc., a Colorado corporation. All of our operations are conducted through this subsidiary.
Our efforts are organized into four operating segments, composed of promotional products and marketing services. The marketing services segment includes promotion marketing, brand strategy and identity, presence marketing and consumer event marketing. Each one of the segments has similar products and services, production processes, types of clients, distribution methods and regulatory environments. We attempt to physically connect the brand with identified target markets and individuals through repeated exposure to merchandise that builds brand awareness, enhances brand recognition and creates brand loyalty.
We were incorporated under the laws of the State of Colorado on May 23, 2007. Our fiscal year end is October31.
Our principal business address is 10680 Hoyt Street Westminster, Colorado 80021. Our phone number is (303) 988-8602.
Results of Operations
The following discussion involves our results of operations for the fiscal quarters ending April 302010 and 2009 and for the six months ended April 30, 2010 and 2009. For the fiscal quarter ended April 30, 2010 we had sales of $-0- compared to $-0- in sales for the fiscal quarter ended April 30, 2009. For the six months ended April 30, 2010 we had sales of $-0-, compared to $6,214 in sales for the six months ended April 30, 2009.
The major components of operating expenses include professional fees, salaries and associated payroll costs, rent and telephone expenses.
Operating expenses, which are comprised of general and administrative expenses for the fiscal quarter ended April 30, 2010 were $3,289, compared to operating expenses of $8,661 for the fiscal quarter ended April 30, 2009. Our operating expenses for the six months ended April 30, 2010 were $9,275, compared to operating expenses of $23,398 for the six months ended April 30, 2009.
The major component of these general and administrative expenses were payments to independent contractors, professional fees, and pre-paid expenses, and accrued receivables. While our general and administrative expenses will continue to be our largest expense item, we believe that this expense will stabilize in the coming fiscal year as we reduce prepaid expenses.
We had a net loss of $4,053 for the fiscal quarter ended April 30, 2010, compared to a net loss of $10,076 for the fiscal quarter ended April 30, 2009. We had a net loss for the six months ended April 30, 2010 was $20,303, compared to a net loss of $18,974 for the six months ended April 30, 2009. We expect we will operate at a profit, but cannot guarantee we will be able to do so.
We believe that overhead cost in current operations should remain fairly constant. Each additional sale and correspondingly the gross profit of such sale have minimal offsetting overhead cost. If our sales continue to grow at the same pace as last fiscal quarter, we could be profitable for fiscal year 2010, although it is too early to predict profitability.
Liquidity and Capital Resources
As of April 30, 2010 and 2009, we each had cash or cash equivalents of $357.
Net cash used in operating activities was $14,250 for the six months ended April 30, 2010 compared to net cash used in operating activities of $7,351 for the six months ended April 30, 2009. We anticipate that overhead costs in current operations will remain fairly constant as sales improve.
Cash flows used in investing activities were $-0- for the six months ended April 30, 2010, compared to $-0- for the six months ended April 30, 2009.
Cash flows provided by financing activities were $14,250 for the six months ended April 30, 2010, compared to $2,406 for the six months ended April 30, 2009. These cash flows were principally related to loans to us for our operational activities.
Over the next twelve months we do not expect any material our capital costs to develop operations. We plan to buy office equipment to be used in our operations.
We believe that we have sufficient capital in the short term for our current level of operations. This is because we believe that we can attract sufficient product sales and services within our present organizational structure and resources to become profitable in our operations. Additional resources would be needed to expand into additional locations, which we have no plans to do at this time. We do not anticipate needing to raise additional capital resources in the next twelve months In the event that we need additional capital, Mr. Quam has agreed to loan such funds as may be necessary through December 31, 2010 for working capital purposes.
Our principal source of liquidity will be our operations. We expect variation in revenues to account for the difference between a profit and a loss. Also business activity is closely tied to the U.S. economy, particularly the economy in Denver, Colorado. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully develop a full service, brand marketing organization and our ability to generate revenues.
In any case, we try to operate with minimal overhead. Our primary activity will be to seek to develop clients for our services and, consequently, our sales. If we succeed in developing clients for our services and generating sufficient sales, we will become profitable. We cannot guarantee that this will ever occur. Our plan is to build our company in any manner which will be successful.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements with any party.
Our plan for the twelve months beginning January 1, 2009 is to operate at a profit or at break even. Our plan is to attract sufficient additional product sales and services within our present organizational structure and resources to become profitable in our operations.
Currently, we are conducting business in only one location in the Denver Metropolitan area. We have no plans to expand into other locations or areas. The timing of the completion of the milestones needed to become profitable are not directly dependent on anything except our ability to develop sufficient revenues. We believe that we can achieve profitability as we are presently organized with sufficient business. Our principal cost will be marketing our product. At this point, we do not know the scope of our potential marketing costs but will use our existing resources to market our product. Our resources consist of our available cash and advances from Mr. Quam, who has agreed to loan such funds as may be necessary through December 31, 2010 for working capital purposes.
If we are not successful in our operations we will be faced with several options:
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Cease operations and go out of business;
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Continue to seek alternative and acceptable sources of capital;
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Bring in additional capital that may result in a change of control; or
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Identify a candidate for acquisition that seeks access to the public marketplace and its financing sources
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Currently, we believe that we have sufficient capital to implement our proposed business operations or to sustain them through December 31, 2010. If we can become profitable, we could operate at our present level indefinitely. To date, we have never had any discussions with any possible acquisition candidate nor have we any intention of doing so.
Proposed Milestones to Implement Business Operations
At the present time, we plan to operate from one location in the Denver Metropolitan area. Our plan is to make our operation profitable by the end of our next fiscal year. We estimate that we must generate approximately $50,000 in sales per year to be profitable.
We believe that we can be profitable or at break even by the end of the current fiscal year, assuming sufficient sales. Based upon our current plans, we have adjusted our operating expenses so that cash generated from operations and from working capital financing is expected to be sufficient for the foreseeable future to fund our operations at our currently forecasted levels. To try to operate at a break-even level based upon our current level of anticipated business activity, we believe that we must generate approximately $50,000 in revenue per year. However, if our forecasts are inaccurate, we may need to raise additional funds. Our resources consist of our available cash and advances from Mr. Quam, who has agreed to loan such funds as may be necessary through December 31, 2010 for working capital purposes. On the other hand, we may choose to scale back our operations to operate at break-even with a smaller level of business activity, while adjusting our overhead to meet the revenue from current operations. In addition, we expect that we will need to raise additional funds if we decide to pursue more rapid expansion, the development of new or enhanced services and products, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.
We expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We expect approximately $50,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business.
Other than advances from Mr. Quam, who has agreed to loan such funds as may be necessary through December 31, 2010 for working capital purposes, there is no assurance that additional funds will be made available to us on terms that will be acceptable, or at all, if and when needed. We expect to generate and increase sales, but there can be no assurance we will generate sales sufficient to continue operations or to expand.
We also are planning to rely on the possibility of referrals from clients and will strive to satisfy our clients. We believe that referrals will be an effective form of advertising because of the quality of service that we bring to clients. We believe that satisfied clients will bring more and repeat clients.
In the next 12 months, we do not intend to spend any material funds on research and development and do not intend to purchase any large equipment.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
None.
ITEM 4. CONTROLS AND PROCEDURES
Not applicable
ITEM 4T. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief Financial Officer has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the applicable time periods specified by the SEC’s rules and forms.
There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
This report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Identified in connection with the evaluation required by paragraph (d) of Rule 240.13a-15 or Rule 240.15d-15 of this chapter that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS
You should carefully consider the risks and uncertainties described below; and all of the other information included in this document. Any of the following risks could materially adversely affect our business, financial condition or operating results and could negatively impact the value of your investment.
You should carefully consider the risks and uncertainties described below and the other information in this document before deciding to invest in shares of our common stock.
The occurrence of any of the following risks could materially and adversely affect our business, financial condition and operating result. In this case, the trading price of our common stock could decline and you might lose all or part of your investment.
Risks Related to Our Business and Industry
RISKS ASSOCIATED WITH OUR COMPANY:
We have a limited operating history, and have never been profitable. As a result, we may never become profitable, and, as a result, we could go out of business.
We were formed as a Colorado business entity in May, 2007. At the present time, we have never been profitable. There can be no guarantee that we will ever be profitable. From our inception on May 23, 2007 through April 30, 2010, we generated $42,039 in revenue. We had a net loss of $123,052 for this period. For the three month period ended April 30, 2010, we had $-0- in revenue and generated a loss of $4,053. Our revenues depend upon the number of clients we can develop and service. We cannot guarantee we will ever develop a substantial number of clients. Even if we develop a substantial number of clients, there is no assurance that we will become a profitable company. We may never become profitable, and, as a result, we could go out of business.
Because we had incurred operating losses from our inception, our accountants have expressed doubts about our ability to continue as a going concern.
For the period ended October 31, 2009, our accountants have expressed doubt about our ability to continue as a going concern as a result of our continued net losses. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:
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our ability to begin active operations;
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our ability to locate clients who will purchase our services; and
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our ability to generate revenues.
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Based upon current plans, we may incur operating losses in future periods because we may, from time to time, be incurring expenses but not generating sufficient revenues. We expect approximately $50,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues will cause us to go out of business.
Our lack of operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance. If we make poor budgetary decisions as a result of unreliable historical data, we could continue to incur losses, which may result in a decline in our stock price.
We have no operating history. This fact makes it difficult to evaluate our business on the basis of historical operations. As a consequence, our past results may not be indicative of future results. Although this is true for any business, it is particularly true for us because of our limited operating history. Reliance on historical results may hinder our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses. For example, if we overestimate our future sales for a particular period or periods based on our historical growth rate, we may increase our overhead and other operating expenses to a greater degree than we would have if we correctly anticipated the lower sales level for that period and reduced our controllable expenses accordingly. If we make poor budgetary decisions as a result of unreliable historical data, we could continue to incur losses, which may result in a decline in our stock price.
As a company with no operating history, we are inherently a risky investment. An investor could lose his entire investment.
We have no operating history. Because we are a company with no history, the operation in which we engage in, brand marketing, is an extremely risky business. An investor could lose his entire investment.
We are implementing a strategy to grow our business, which is expensive and may not generate increases in our revenues.
We intend to grow our business, and we plan to incur expenses associated with our growth and expansion. Although we recently raised funds through offerings to implement our growth strategy, these funds may not be adequate to offset all of the expenses we incur in expanding our business. We will need to generate revenues to offset expenses associated with our growth, and we may be unsuccessful in achieving revenues, despite our attempts to grow our business. If our growth strategies do not result in significant revenues, we may have to abandon our plans for further growth or may even cease our proposed operations.
Because we are small and do not have much capital, we must limit our operations. A company in our industry with limited operations has a smaller opportunity to be successful. If we do not make a profit, we may have to suspend or cease operations.
Because we are small and do not have much capital, we must limit our operations. We must limit our operations to the Denver, Colorado metropolitan area as the only geographical area in which we operate. Because we may have to limit our operations, we may not generate sufficient sales to make a profit. If we do not make a profit, we may have to suspend or cease operations.
We must effectively manage the growth of our operations, or we may outgrow our current infrastructure.
We have one employee, our President, Mr. Quam. If we experience rapid growth of our operations, we could see a backlog of client orders. We can resolve these capacity issues by hiring additional personnel and upgrading our infrastructure. However, we cannot guarantee that sufficient additional personnel will be available or that we will find suitable personnel to aid our growth. In any case, we will continue pursuing additional sales growth for our company. Expanding our infrastructure will be expensive, and will require us to train our workforce, and improve our financial and managerial controls to keep pace with the growth of our operations.
We have a lack of liquidity and will need additional financing in the future. Additional financing may not be available when needed, which could delay our development or indefinitely postponed. Our investors could lose some or all of their investment.
We are only minimally capitalized. Because we are only minimally capitalized, we expect to experience a lack of liquidity for the foreseeable future in our proposed operations. We will adjust our expenses as necessary to prevent cash flow or liquidity problems. However, we expect we will need additional financing of some type, which we do not now possess, to fully develop our operations. We expect to rely principally upon our ability to raise additional financing, the success of which cannot be guaranteed. We will look at both equity and debt financing, including loans from our principal shareholder. However, at the present time, we have no definitive plans for financing in place, other than the funds which may be loaned to us by Mr. Quam, our President. In the event that we need additional capital, Mr. Quam has agreed to loan such funds as may be necessary through December 31, 2010 for working capital purposes. To the extent that we experience a substantial lack of liquidity, our development in accordance with our proposed plan may be delayed or indefinitely postponed, our operations could be impaired, we may never become profitable, fail as an organization, and our investors could lose some or all of their investment.
We have limited experience as a public company.Our inability to operate as a public company could be the basis of your losing your entire investment in us.
We have limited experience as a public company. We have limited experience in complying with the various rules and regulations which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.
There are factors beyond our control which may adversely affect us. An investor could lose his entire investment.
Our operations may also be affected by factors which are beyond our control, principally general market conditions and changing client preferences. Any of these problems, or a combination thereof, could have affect on our viability as an entity. We may never become profitable, fail as an organization, and our investors could lose some or all of their investment.
Our ability to grow our business depends on relationships with others. We have no established relationships at this time. We may never develop such relationships. Further, if we were to lose those relationships, we could lose our ability to sell certain of our promotional products and marketing services. If we lose enough clients, we could go out of business.
All of our revenue and gross profit are expected to come from the sale of promotional products and marketing services. While our relationships will change from time to time, we must rely upon our clients for our success. At the present time, we do not have a limited number of clients and cannot guarantee we will ever develop sufficient numbers of clients to be profitable. If we do develop such clients, we risk that a given client will change its marketing strategy and de-emphasize its use of our products and services. Our ability to generate revenue from the sale of promotional products and marketing services would diminish. If we lose enough clients, we could go out of business.
We are a relatively small company with limited resources compared to some of our current and potential competitors, which may hinder our ability to compete effectively.
Some of our current and potential competitors have longer operating histories, significantly greater resources, broader name recognition, and a larger installed base of clients than we have. As a result, these competitors may have greater credibility with our existing and potential clients. They also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion and sale of their products than we can to ours, which would allow them to respond more quickly than us to new or emerging changes in client requirements. In addition, some of our current and potential competitors have already established supplier or joint development relationships with decision makers at our potential clients.
We may need to substantially invest in marketing efforts in order to grow our business, which will be expensive.
In order to grow our business, we will need to develop and maintain widespread recognition and acceptance of our company, our business model, our services and our products. We have not presented our service and product offering to the potential market. We plan to rely primarily on word of mouth from our existing contacts we develop personally through industry events to promote and market ourselves. In order to successfully grow our company, we may need to significantly increase our financial commitment to creating awareness and acceptance of our company among potential clients, which would be expensive. To date, marketing and advertising expenses have been negligible. If we fail to successfully market and promote our business, we could lose potential clients to our competitors, or our growth efforts may be ineffective. If we incur significant expenses promoting and marketing ourselves, it could delay or completely forestall our profitability.
Our business is not diversified, which could result in significant fluctuations in our operating results.A downturn in that sector may reduce our stock price, even if our business is successful.
We are a full service, brand marketing organization, and, accordingly, dependent upon trends in that business sector. Downturns in that sector could adversely effect on our business. A downturn in that sector may reduce our stock price, even if our business is successful.
Our success will be dependent upon our management’s efforts. We cannot sustain profitability without the efforts of our management. An investor could lose his entire investment.
Our success will be dependent upon the decision making of our directors and executive officers. These individuals intend to commit as much time as necessary to our business, but this commitment is no assurance of success. The loss of any or all of these individuals, particularly Mr. Quam, our President, could have a material, adverse impact on our operations. We have no written employment agreements with any officers and directors, including Mr. Quam. We have not obtained key man life insurance on the lives of any of our officers or directors.
Our stock has a limited public trading market and there is no guarantee an active trading market will ever develop for our securities. You may not able to sell your shares when you want to do so, if at all.
There has been, and continues to be, a limited public market for our common stock. Our common stock currently is listed on the Over-the-Counter Bulletin Board under the trading symbol FPRD. An active trading market for our shares has not, and may never develop or be sustained. If you purchase shares of common stock, you may not be able to resell those shares at or above the initial price you paid. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following:
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actual or anticipated fluctuations in our operating results;
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changes in financial estimates by securities analysts or our failure to perform in line with such estimates;
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changes in market valuations of other companies, particularly those that market services such as ours;
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announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;
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introduction of product enhancements that reduce the need for our products;
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departures of key personnel.
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Of our total outstanding shares as of April 30, 2010, a total of 19,849,800, or approximately 94.3%, will be restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.
As restrictions on resale end, the market price of our stock could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them.
Applicable SEC rules governing the trading of “Penny Stocks” limit the liquidity of our common stock, which may affect the trading price of our common stock. You may not able to sell your shares when you want to do so, if at all.
Our common stock is currently quoted well below $5.00 per share. As a result, our common stock is considered a “penny stock” and is subject to SEC rules and regulations that impose limitations upon the manner in which our shares can be publicly traded. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock and the associated risks. Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination for the purchaser and receive the written purchaser’s agreement to a transaction prior to purchase. These regulations have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock.
The over-the-counter market for stock such as ours is subject to extreme price and volume fluctuations. You may not able to sell your shares when you want to do so, at the price you want, or at all.
The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and quarterly variations in our operational results, may have a negative effect on the market price of our common stock.
Buying low-priced penny stocks is very risky and speculative. You may not able to sell your shares when you want to do so, if at all.
The shares being offered are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The following financial information is filed as part of this report:
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(a)
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(1) FINANCIAL STATEMENTS
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(2) SCHEDULES
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(3) EXHIBITS. The following exhibits required by Item 601 to be filed herewith are incorporated by reference to previously filed documents:
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Exhibit
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Description
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3.1*
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Articles of Incorporation
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3.2*
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Bylaws
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21.1*
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List of Subsidiaries
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31.1
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Certification of CEO/CFO pursuant to Sec. 302
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32.1
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Certification of CEO/CFO pursuant to Sec. 906
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* Previously filed with Form SB-2 Registration Statement, January 22, 2008.
(b) The Company filed no reports on Form 8-K during the three months ended April 30, 2010.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Famous Products, Inc.
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Date June 11, 2010
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By:
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/s/ John Quam
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John Quam, President,
Chief Executive Officer
and Chief Financial Officer
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