Attached files
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EX-32.1 - Farrallon, Inc | v193801_ex32-1.htm |
EX-31.1 - Farrallon, Inc | v193801_ex31-1.htm |
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended: June
30, 2010
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ________ to _________
Commission
file number: 000-53102
FARRALLON,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
26-1469891
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification
No.)
|
14908 Oxford Hollow,
Huntersville, NC 28078
(Address
of principal executive offices)
(704)
948-1183
Issuer’s
telephone number
(Former name, former address and former
fiscal
year, if changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. x
Yes ¨ No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
¨ Yes x No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨ (Do not check if a smaller reporting
company)
|
Smaller reporting
company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). x Yes ¨ No
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
¨ Yes ¨ No
APPLICABLE
ONLY TO CORPORATE ISSUERS
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: At August 20, 2010 there were
1,000,000 shares of common stock outstanding.
PART
I — FINANCIAL INFORMATION
Item
1. Financial Statements.
Page
|
||
Balance
Sheets as of June 30, 2010 (unaudited) and December 31, 2009
(audited)
|
F-1
|
|
Statements
of Operations for the three months ended June 30, 2010 and 2009 and the
period from November 13, 2007 (date of inception) to June 30,
2010 (unaudited)
|
F-2
|
|
Statements
of Operations for the six months ended June 30, 2010 and 2009 and the
period from November 13, 2007 (date of inception) to June 30,
2010 (unaudited)
|
F-3
|
|
Statement
of Stockholder’s Deficit as of June 30, 2010 (unaudited)
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F-4
|
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Statements
of Cash Flows for the three months ended June 30, 2010 and 2009 and the
period from November 13, 2007 (date of inception) to June 30,
2010 (unaudited)
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F-5
|
|
Notes
to Financial Statements
|
F-6
|
1
(A Development Stage Company)
|
||||||||
Balance Sheet
|
||||||||
As of
|
||||||||
June 30, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash
|
$ | 77 | $ | 10 | ||||
TOTAL
CURRENT ASSETS
|
77 | 10 | ||||||
TOTAL
ASSETS
|
$ | 77 | $ | 10 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Note
Payable to Related Party
|
28,401 | 21,837 | ||||||
Accrued
Interest expense
|
2,583 | 1,664 | ||||||
TOTAL
CURRENT LIABILITIES
|
30,984 | 23,501 | ||||||
TOTAL
LIABILITIES
|
30,984 | 23,501 | ||||||
STOCKHOLDERS' DEFICIT
|
||||||||
Preferred
stock ($0.0001 par value; 10,000,000 shares authorized; no shares issued
and outstanding at June 30, 2010 and December 31, 2009)
|
- | - | ||||||
Common
stock ($0.0001 par value; 100,000,000 shares authorized: 1,000,000 issued
and outstanding at June 30, 2010 and December 31, 2009)
|
100 | 100 | ||||||
Additional
Paid in Capital
|
- | - | ||||||
Deficit
Accumulated During
the Development Stage
|
(31,007 | ) | (23,591 | ) | ||||
TOTAL
STOCKHOLDERS' DEFICIT
|
(30,907 | ) | (23,491 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 77 | $ | 10 |
F-1
(A Development Stage Company)
|
||||||||||||
Statements of Operations (Unaudited)
|
||||||||||||
For the
|
Cumulative
|
|||||||||||
3 months ended
|
Totals
|
|||||||||||
June 30,
|
Since Inception
|
|||||||||||
2010
|
2009
|
November 13, 2007
|
||||||||||
REVENUES
|
||||||||||||
Income
|
$ | - | $ | - | $ | - | ||||||
Total
Revenues
|
- | - | - | |||||||||
EXPENSES
|
||||||||||||
Selling,
general and administrative
|
1,464 | 33 | 5,524 | |||||||||
Professional
Fees
|
5,000 | - | 22,900 | |||||||||
TOTAL
EXPENSES
|
6,464 | 33 | 28,424 | |||||||||
Net
Loss from Operations
|
(6,464 | ) | (33 | ) | (28,424 | ) | ||||||
OTHER (EXPENSE)/INCOME
|
||||||||||||
Interest
Expense
|
(481 | ) | (273 | ) | (2,583 | ) | ||||||
Net
Loss
|
$ | (6,945 | ) | $ | (306 | ) | $ | (31,007 | ) | |||
Net
loss per share—basic and fully diluted
|
||||||||||||
Net
loss per share
|
$ | (0.01 | ) | * | $ | (0.03 | ) | |||||
Weighted
average shares outstanding—basic and fully diluted
|
1,000,000 | 1,000,000 | 1,000,000 |
·
|
Less
than $0.01 per share
|
F-2
Farrallon, Inc.
|
||||||||||||
(A Development Stage Company)
|
||||||||||||
Statements of Operations (Unaudited)
|
||||||||||||
For the
|
Cumulative
|
|||||||||||
6 months ended
|
Totals
|
|||||||||||
June 30,
|
Since Inception
|
|||||||||||
2010
|
2009
|
November 13, 2007
|
||||||||||
REVENUES
|
||||||||||||
Income
|
$ | - | $ | - | $ | - | ||||||
Total
Revenues
|
- | - | - | |||||||||
EXPENSES
|
||||||||||||
Selling,
general and administrative
|
1,497 | 66 | 5,524 | |||||||||
Professional
Fees
|
5,000 | - | 22,900 | |||||||||
TOTAL
EXPENSES
|
6,497 | 66 | 28,424 | |||||||||
Net
Loss from Operations
|
(6,497 | ) | (66 | ) | (28,424 | ) | ||||||
OTHER (EXPENSE)/INCOME
|
||||||||||||
Interest
Expense
|
(919 | ) | (821 | ) | (2,583 | ) | ||||||
Net
Loss
|
$ | (7,416 | ) | $ | (887 | ) | $ | (31,007 | ) | |||
Net
loss per share—basic and fully diluted
|
||||||||||||
Net
loss per share
|
$ | (0.01 | ) | * | $ | (0.03 | ) | |||||
Weighted
average shares outstanding—basic and fully diluted
|
1,000,000 | 1,000,000 | 1,000,000 |
·
|
Less
than $0.01 per share
|
F-3
(A Development Stage Company)
|
||||||||||||||||||||||||
Statements of Stockholders' Deficit (Unaudited)
|
||||||||||||||||||||||||
Deficit
|
||||||||||||||||||||||||
Additional
|
Accumulated
|
|||||||||||||||||||||||
Common Stock
|
Preferred stock
|
Paid-in
|
Since Inception
|
|||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
November 13, 2007
|
|||||||||||||||||||
Balances,
December 31, 2007
|
1,000,000.00 | $ | 100 | - | $ | - | $ | - | $ | (2,683 | ) | |||||||||||||
Net
loss
|
- | - | - | - | - | (14,031 | ) | |||||||||||||||||
Issuance
of common shares
|
- | - | - | - | - | - | ||||||||||||||||||
Balances,
December 31, 2008
|
1,000,000 | $ | 100 | - | $ | - | $ | - | $ | (16,714 | ) | |||||||||||||
Net
loss
|
- | - | - | - | - | (6,877 | ) | |||||||||||||||||
Balances,
December 31, 2009
|
1,000,000 | $ | 100 | - | $ | - | $ | - | $ | (23,591 | ) | |||||||||||||
Net
loss
|
- | - | - | - | - | (7,416 | ) | |||||||||||||||||
Balances,
June 30, 2010
|
1,000,000 | $ | 100 | - | $ | - | $ | - | $ | (31,007 | ) |
F-4
(A Development Stage Company)
|
||||||||||||
Statements of Cash Flows (Unaudited)
|
||||||||||||
Cumulative
|
||||||||||||
For the 6 months ended
|
Totals
|
|||||||||||
June 30,
|
Since Inception
|
|||||||||||
2010
|
2009
|
November 13, 2007
|
||||||||||
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (7,416 | ) | $ | (887 | ) | $ | (31,007 | ) | |||
Adjustments
to reconcile net (loss) to net cash used in operations:
|
||||||||||||
Increase/(decrease)
in Accrued Expenses
|
919 | (679 | ) | 2,583 | ||||||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(6,497 | ) | (1,566 | ) | (28,424 | ) | ||||||
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
||||||||||||
Proceeds
from Note Payable to Related Party
|
6,564 | 1,600 | 28,401 | |||||||||
Capital
Stock purchase
|
- | - | 100 | |||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
6,564 | 1,600 | 28,501 | |||||||||
NET
INCREASE IN
CASH AND CASH EQUIVALENTS
|
67 | 34 | 77 | |||||||||
CASH
AND CASH EQUIVALENTS,
|
||||||||||||
BEGINNING
OF THE PERIOD
|
10 | 42 | - | |||||||||
END
OF THE PERIOD
|
$ | 77 | $ | 76 | $ | 77 | ||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||||
CASH
PAID DURING THE PERIOD FOR:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Taxes
|
$ | - | $ | - | $ | - |
F-5
FARRALLON,
INC.
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2010
NOTE A—BUSINESS
ACTIVITY
Business
Activity—Farrallon, Inc. (the “Company”) was organized under the laws of
the State of Nevada on November 13, 2007 as a corporation. The
Company’s objective is to acquire or merge with a target business or company in
a business combination.
NOTE B—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation—The financial statements included herein were prepared under
the accrual basis of accounting.
Cash and Cash
Equivalents—For purposes of the Statement of Cash Flows, the Company
considers liquid investments with an original maturity of three months or less
to be cash equivalents.
Management’s Use of
Estimates—The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. The financial statements above
reflect all of the costs of doing business.
Revenue
Recognition—The Company’s policy is to recognize income when it is
earned.
Comprehensive Income
(Loss)—The Company adopted Financial Accounting Standards Board Statement
of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
Income”, which establishes standards for the reporting and display of
comprehensive income and its components in the financial
statements. There were no items of comprehensive income (loss)
applicable to the Company during the period covered in the financial
statements.
Net Income per Common
Share—Statement of Financial Accounting Standard (SFAS) No. 128 requires
dual presentation of basic and diluted earnings per share (EPS) with a
reconciliation of the numerator and denominator of the EPS
computations. Basic earnings per share amounts are based on the
weighted average shares of common stock outstanding. If applicable,
diluted earnings per share would assume the conversion, exercise or issuance of
all potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Accordingly, this presentation has been adopted for the period
presented. There were no adjustments required to net income for the
period presented in the computation of diluted earnings per share.
Deferred Taxes—Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), “Accounting for Income
Taxes.” A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry
forwards.
Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that, some portion or all of the deferred
tax asset will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of
enactment.
Fair Value of Financial
Instruments—The carrying amounts reported in the balance sheet for cash,
accounts receivable and payable approximate fair value based on the short-term
maturity of these instruments.
F-6
NOTE B—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Accounts
Receivable—Accounts deemed uncollectible are written off in the year they
become uncollectible. As of June 30, 2010, the balance in Accounts
Receivable was $0.
Impairment of Long-Lived
Assets—The Company evaluates the recoverability of its fixed assets and
other assets in accordance with Statement of Financial Accounting Standards No.
144, “Accounting for the
Impairment or Disposal of Long-Lived Assets” (“SFAS 144’). SFAS 144
requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds its expected cash flows, it is considered to
be impaired and is written down to fair value, which is determined based on
either discounted future cash flows or appraised values. The Company adopted the
statement on inception. No impairments of these types of assets were recognized
as of June 30, 2010.
Going Concern— The
accompanying financial statements have been prepared on a going concern basis,
which assumes the Company will realize its assets and discharge its liabilities
in the normal course of business. As reflected in the accompanying
financial statements, the Company has a deficit accumulated during the
development stage of $31,007, used cash from operations of $28,424 since its
inception, and has a negative working capital of $30,907 at June 30,
2010.
The
Company’s ability to continue as a going concern is dependent upon its ability
to generate future profitable operations and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. The Company’s ability to
continue as a going concern is also dependent on its ability to find a suitable
target company and enter into a possible reverse merger with such
company. Management’s plan includes obtaining additional funds by
equity financing through a reverse merger transaction and/or related party
advances; however there is no assurance of additional funding being
available. These circumstances raise substantial doubt about the
Company’s ability to continue as a going concern. The accompanying financial
statements do not include any adjustments that might arise as a result of this
uncertainty.
Stock-Based
Compensation—The Company accounts for stock-based compensation using the
fair value method of Financial Accounting Standard No. 123R. This
Statement requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions). That cost will be
recognized over the period during which an employee is required to provide
service in exchange for the award—the requisite service period (usually the
vesting period). No compensation cost is recognized for equity
instruments for which employees do not render the requisite
service.
Recent Accounting
Pronouncements—In March 2010, the FASB issued Accounting Standard Update
No. 2010-11 “Derivatives and Hedging” (Topic 815). ASU No. 2010-11 update
provides amendments to subtopic 815-15, Derivatives and hedging. The amendments
clarify about the scope exception in paragraph 815-10-15-11 and section
815-15-25 as applicable to the embedded credit derivatives. The ASU is effective
on the first day of the first fiscal quarter beginning after June 15, 2010.
Therefore, for a calendar-year-end entity, the ASU becomes effective on July 1,
2010. Early application is permitted at the beginning of the first fiscal
quarter beginning after March 5, 2010
In April
2010, the FASB issued Accounting Standard Update No. 2010-12. “Income Taxes”
(Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification
subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. On March 30,
2010 The President signed the Health Care & Education Affordable Care Act
reconciliation bill that amends its previous Act signed on March 23, 2010. FASB
Codification topic 740, Income Taxes, requires the measurement of current and
deferred tax liabilities and assets to be based on provisions of enacted tax
law. The effects of future changes in tax laws are not anticipated.” Therefore,
the different enactment dates of the Act and reconciliation measure may affect
registrants with a period-end that falls between March 23, 2010 (enactment date
of the Act), and March 30, 2010 (enactment date of the reconciliation measure).
However, the announcement states that the SEC would not object if such
registrants were to account for the enactment of both the Act and the
reconciliation measure in a period ending on or after March 23, 2010, but notes
that the SEC staff “does not believe that it would be appropriate for
registrants to analogize to this view in any other fact
patterns.”
F-7
NOTE B—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Recent Accounting
Pronouncement (cont.)
In April
2010, the FASB issued Accounting Standard Update No. 2010-13 “Stock
Compensation” (Topic 718). ASU No.2010-13 provides amendments to Topic 718 to
clarify that an employee share-based payment award with an exercise price
denominated in the currency of a market in which a substantial portion of the
entity's equity securities trades should not be considered to contain a
condition that is not a market, performance, or service condition. Therefore, an
entity would not classify such an award as a liability if it otherwise qualifies
as equity. The amendments in this Update are effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2010. The amendments in this Update should be applied by recording a
cumulative-effect adjustment to the opening balance of retained earnings. The
cumulative-effect adjustment should be calculated for all awards outstanding as
of the beginning of the fiscal year in which the amendments are initially
applied, as if the amendments had been applied consistently since the inception
of the award. The cumulative-effect adjustment should be presented separately.
Earlier application is permitted.
In April
2010, the FASB issued Accounting Standards Update No.2010-14, “Accounting for
Extractive Activities – Oil & Gas” (Topic 932). ASU No. 2010-14 amends FASB
accounting Standard paragraph 932-10-S99-1 due to SEC release no. 33-8995 [FR
78], Modernization of Oil and Gas Reporting and provides update as to amendments
to SEC Regulation S-X, Rule 4-10.
In April
2010, the FASB issued Accounting Standard Update No. 2010-15. “Financial
Services-Insurance” (Topic 944) ASU No.2010-15 gives direction on how
investments through separate accounts affect an insurer’s consolidation analysis
of those investments. Under the ASU: an insurance entity should not consider any
separate account interests held for the benefit of policy holders in an
investment to be the insurer's interests and should not combine those interests
with its general account interest in the same investment when assessing the
investment for consolidation, unless the separate account interests are held for
the benefit of a related party policy holder as defined in the Variable Interest
Entities Subsections of Subtopic 810-10 and those Subsections require the
consideration of related parties. The amendments in this Update are effective
for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2010. Early adoption is permitted. The amendments in this Update
should be applied retrospectively to all prior periods upon the date of
adoption.
In April
2010, the FASB issued Accounting Standard Update No. 2010-16.
“Entertainment-Casinos” (Topic 924). ASU No.2010-16 addresses diversity in
practice regarding whether an entity accrues liabilities for a base jackpot
before it is won because they could avoid the payment. The amendments in this
update clarify that an entity should not accrue jackpot liabilities (or portions
thereof) before a jackpot is won if the entity can avoid paying that jackpot.
Jackpots should be accrued and charged to revenue when an entity has the
obligation to pay the jackpot. This guidance applies to both base and
progressive jackpots. The ASU amendments are effective for fiscal years, and the
interim periods within those fiscal years, beginning on or after December 15,
2010.
In April
2010, the FASB issued Accounting Standard Update No. 2010-17. “Revenue
Recognition-Milestone Method” (Topic 605) ASU No.2010-17 provides guidance on
defining a milestone and determining when it may be appropriate to apply the
milestone method of revenue recognition for research or development
transactions. An entity often recognizes these milestone payments as revenue in
their entirety upon achieving a specific result from the research or development
efforts. A vendor can recognize consideration that is contingent upon
achievement of a milestone in its entirety as revenue in the period in which the
milestone is achieved only if the milestone meets all criteria to be considered
substantive. Determining whether a milestone is substantive is a matter of
judgment made at the inception of the arrangement. The ASU is effective for
fiscal years and interim periods within those fiscal years beginning on or after
June 15, 2010. Early application is permitted. Entities can apply this guidance
prospectively to milestones achieved after adoption. However, retrospective
application to all prior periods is also permitted.
F-8
NOTE B—SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Recent Accounting
Pronouncements (cont.)
In April
2010, the FASB issued Accounting Standard Update No. 2010-18. “Receivables”
(Topic 310). ASU No.2010-18 provides guidance on accounting for acquired loans
that have evidence of credit deterioration upon acquisition. Paragraph
310-30-15-6 allows acquired assets with common risk characteristics to be
accounted for in the aggregated as a pool. Upon establishment of the pool, the
pool becomes the unit of accounting. When loans are accounted for as a pool, the
purchase discount is not allocated to individual loans; thus all of the loans in
the pool accrete at a single pool rate (based on cash flow projections for the
pool). Under subtopic 310-30, the impairment analysis also is performed on the
pool as a whole as opposed to each individual loan. Paragraphs 310-40-15-4
through 15-12 establish the criteria for evaluating whether a loan modification
should be classified as a troubled debt restructuring. Specifically paragraph
310-40-15-5 states that “a restructuring of a debt constitutes a troubled debt
restructuring for purposes of this subtopic if the creditor for economic or
legal reasons related to the debtor’s financial difficulties grants a concession
to the debtor that it would not otherwise consider.” The ASU is effective for
modification of loans accounted for within pools under subtopic 310-30 occurring
in the first interim or annual period ending on or after July 15, 2010. The
amendments are to be applied prospectively. Early application is
permitted.
In May
2010, the FASB issued Accounting Standard Update No. 2010-19 “Foreign Currency”.
(“ASU No. 2010-19”). ASU 2010-19, codifies the SEC staff announcement made at
the March 18, 2010, EITF meeting. The ASU “provides the SEC staff’s views on
certain foreign currency issues related to investments in Venezuela.” These
issues relate to Venezuela’s highly inflationary status. The ASU became
effective on March 18, 2010.
Other
ASUs not effective until after June 30, 2010, are not expected to have a
significant effect on the Company’s consolidated financial position or results
of operations.
NOTE C—SUPPLEMENTAL CASH
FLOW INFORMATION
Supplemental
disclosures of cash flow information for the six months ended June 30,
2010 and 2009 is summarized as follows:
Cash paid
during the six months ended June 30, 2010 and 2009 for interest and
income taxes are as follows:
2010
|
2009
|
|||||||
Income
Taxes
|
$ | — | $ | — | ||||
Interest
|
$ | — | $ | — |
NOTE D—SEGMENT
REPORTING
In June
1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information.” This statement requires
companies to report information about operating segments in interim and annual
financial statements. It also requires segment disclosures about
products and services, geographic areas and major customers. The
Company determined that it did not have any separately reportable operating
segments as of June 30, 2010.
NOTE E—INCOME
TAXES
Due to
the operating loss and the inability to recognize an income tax benefit, there
is no provision for current or deferred federal or state income taxes for
the six months ended June 30, 2010.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amount used for federal and state income tax purposes.
F-9
NOTE E—INCOME TAXES
(CONT’D)
The
Company’s total deferred tax asset, calculated using federal and state effective
tax rates, as of June 30, 2010 is as follows:
Total
Deferred Tax Asset
|
$ | (8,000 | ) | |
Valuation
Allowance
|
8,000 | |||
Net
Deferred Tax Asset
|
$ | - |
The
reconciliation of income taxes computed at the federal statutory income tax rate
to total income taxes as of June 30, 2010 is as follows:
2010
|
2009
|
|||||||
Income
tax computed at the federal statutory rate
|
34.0 | % | 34.0 | % | ||||
State
income tax, net of federal tax benefit
|
0.0 | % | 0.0 | % | ||||
Total
|
34.0 | % | 34.0 | % | ||||
Valuation
allowance
|
-34.0 | % | -34.0 | % | ||||
Total
deferred tax asset
|
0.0 | % | 0.0 | % |
Because
of the Company’s lack of earnings history, the deferred tax asset has been fully
offset by a valuation allowance. The valuation allowance
increased by approximately $2,400 for the six months ended June 30,
2010.
As of
June 30, 2010, the Company had a federal and state net operating loss carry
forward in the amount of approximately $31,007, which expires in the year
2029.
NOTE F—CAPITAL
STOCK
The
Company is authorized to issue 100,000,000 common shares at $.0001 par value per
share.
As of
June 30, 2010, the Company had the following common stock issued:
DYP
Enterprises, LLC
|
550,000 | |||
Garvin
Investments, LLC
|
150,000 | |||
Garvin
Strategic Capital
|
300,000 | |||
Total | 1,000,000 |
The
Company is authorized to issue 10,000,000 preferred shares at $.0001 par value
per share. As of June 30, 2010, the Company issued no preferred
shares.
NOTE G – DEVELOPMENT STAGE
COMPANY
The
Company is in the development stage as of June 30, 2010 and to date has had no
significant operations. Recovery of the Company’s assets is dependent
on future events, the outcome of which is indeterminable. In addition,
successful completion of the Company’s development program and its transition,
ultimately, to attaining profitable operations is dependent upon obtaining
adequate financing to fulfill its development activities and achieving a level
of sales adequate to support the Company’s cost structure.
NOTE H—SHAREHOLDER
LOAN/RELATED PARTY
The
Company has signed a promissory note with two related parties. The
notes are demand notes bearing interest at 8% per annum. The total
outstanding balance as of June 30, 2010 was $28,401. The accrued
interest not paid as of June 30, 2010 is $2,583, respectively.
F-10
Item
2. Management’s Discussion and Analysis or Plan of Operation.
Overview.
Farrallon,
Inc. (“we”, “us” or the “Company”) was organized in the State of Nevada on
November 13, 2007. We are a developmental stage company and have not
generated any revenues to date. We were organized to serve as a
vehicle for a business combination through a capital stock exchange, merger,
reverse acquisition, asset acquisition or other similar business combination (a
“Business Combination”) with an operating or development stage business (the
“Target Business”) which desires to utilize our status as a reporting company
under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). We are in the process of identifying and evaluating Targets
Businesses. We are not presently engaged in, nor will we engage in,
any substantive commercial business operations unless and until we consummate a
Business Combination.
Our
management has broad discretion with respect to identifying and selecting a
prospective Target Business. We have not established any specific
attributes or criteria (financial or otherwise) for prospective Target
Businesses. Our sole officer and director has never served as an
officer or director of a development stage public company with the business
purpose of acquiring a Target Business. Accordingly, he may not
successfully identify a Target Business or conclude a Business
Combination.
Any
entity with which we may enter into a Business Combination is subject to
numerous risks in connection with its operations. To the extent we
affect a Business Combination with a financially unstable company or an entity
in its early stage of development or growth, including entities without
established records of sales or earnings, we may be affected by numerous risks
inherent in the business and operations of financially unstable and early stage
or potential emerging growth companies. If we consummate a Business
Combination with a foreign entity, we will be subject to all of the risks
attendant to foreign operations. Although our management will
endeavor to evaluate the risks inherent in a particular Target Business, we
cannot assure you that we will properly ascertain or assess all significant risk
factors.
We expect
that in connection with any Business Combination, we will issue a significant
number of shares of our common stock (equal to at least 80% of the total number
of shares outstanding after giving effect to the transaction and likely a
significantly higher percentage) in order to ensure that the Business
Combination qualifies as a tax-free transaction under federal tax
laws. The issuance of additional shares of our capital stock
will:
|
·
|
significantly
reduce the equity interest of our stockholders prior to the transaction;
and
|
|
·
|
cause
a change in control of our Company and likely result in the resignation or
removal of one or more of our present officers and
directors.
|
Our
management anticipates that the Company will affect only one Business
Combination, due primarily to our financial resources and the dilution of
interest for present and prospective stockholders, which is likely to occur as a
result of our management's plan to offer a controlling interest to a Target
Business in order to achieve a tax-free reorganization. This lack of
diversification should be considered a substantial risk in investing in us
because it will not permit us to offset potential losses from one venture
against potential gains from another.
Liquidity and Capital
Resources.
At June
30, 2010, we had a de minimus amount of cash on hand. Our existing
cash reserves will not be sufficient to cover our operating costs and expenses
over the next twelve months which we expect will comprise costs and expenses in
connection with the preparation and filing of reports under the Securities
Exchange Act, the identification and evaluation of targets and, possibly, in
connection with consummating a Business Combination, and we will require funds
therefor.
To date,
we have funded our operations through loans from our stockholders and, as of
June 30, 2010, we had borrowed an aggregate of $28,401 from them. Our
stockholders have advised us that they expect to fund additional costs and
expenses that we will incur through loans or further investment in the Company,
as and when necessary.
2
We cannot
provide investors with any assurance that we will have sufficient capital
resources to identify a suitable Target Business, to conduct effective due
diligence as to any Target Business or to consummate a Business
Combination. As a result of our negative working capital, our losses
since inception, and failure to generate revenues from operations, our financial
statements include a note in which our auditor has expressed doubt about our
ability to continue as a "going concern."
Results of
Operations.
Since our inception, we have not
generated any revenues. We reported a net loss for the three and six
month periods ended June 30, 2010 of $6,945 and $7,416, respectively, and a net
loss since inception of $31,007. The Company has a deficit
accumulated during the development stage of $31,007, used cash from operations
of $28,424 since its inception, and has a negative working capital of $30,907 at
June 30, 2010.
We do not expect to engage in any
substantive activities unless and until such time as we enter into a Business
Combination, if ever. We cannot provide investors with any assessment
as to the nature of a Target Business’s operations or speculate as to the status
of its products or operations, whether at the time of the Business Combination
it will be generating revenues or its future prospects.
Item
3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item
4(T). Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
As of
June 30, 2010, the Company’s management carried out an evaluation, under the
supervision and with the participation of the Company’s Chief Executive Officer,
who is the Company’s principal executive officer and principal financial
officer, of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under
the Exchange Act), pursuant to Exchange Act Rule 13a-15. Based on such
evaluation, the Company’s Chief Executive Officer has concluded that the
Company's disclosure controls and procedures were effective.
Changes
in Internal Controls
There
have been no changes in the Company’s internal control over financial reporting
(as defined in Rules 13a-15 and 15d-15 under the Exchange Act) during the three
months ended June 30, 2010 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
PART
II — OTHER INFORMATION
Item
1. Legal Proceedings.
The
Company is not a party to any legal proceeding or litigation.
Item
1A. Risk Factors.
Smaller
reporting companies are not required to provide the information required by this
item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) During
the three months ended June 30, 2010, the Company did not issue any
securities.
(b) Not
applicable.
3
(c)
During the three months ended June 30, 2010, neither the issuer nor any
"affiliated purchaser," as defined in Rule 10b-18(a)(13), purchased any shares
or other units of any class of the issuer's equity securities.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. (Removed and Reserved)
Item
5. Other Information.
(a) None.
(b) The Company has not adopted any
procedures by which security holders may recommend nominees to the registrant's
board of directors.
Item
6. Exhibits.
Index to
Exhibits
Exhibit
|
Description
|
|
31.1
|
Certification
of the Company’s Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with
respect to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2010.
|
|
32.1*
|
Certification
of the Company’s Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes Oxley Act of
2002.
|
* Pursuant
to Commission Release No. 33-8238, this certification will be treated as
“accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of
such report for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of Section 18 of
the Securities Exchange Act of 1934, as amended, and this certification will not
be deemed to be incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the registrant specifically incorporates it by
reference.
4
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
FARRALLON,
INC.
|
|||
Date:
August 20, 2010
|
By:
|
/s/ Bryan
Arthur
|
|
Name:
|
Bryan
Arthur
|
||
Title:
|
President,
Principal Executive Officer
and
Principal Financial
Officer
|
5