Frelii, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBIT 32 SARBANES OXLEY 906 - Frelii, Inc.	ex32sarbanes906.htm
EX-31 - EXHIBIT 31 SARBANES OXLEY 302 - Frelii, Inc.	ex31sarbanes302.htm
EX-3.2 - EXHIBIT 3.2 CERTIFICATE OF DESIGNATION SERIES A - Frelii, Inc.	ex3_2certofdesignationa.htm
EX-3.3 - EXHIBIT 3.3 CERTIFICATE OF DESIGNATION SERIES B - Frelii, Inc.	ex3_3certofdesignationb.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission File Number 333-107179 &000-51210

TREMONT FAIR, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	980380519 (I.R.S. Employer Identification No.)

10497 Town & Country Way, Suite 214, Houston, TX 77024 (Address of principal executive offices) (Zip Code)

(832) 519-9282 (Registrant's telephone number, including area code)

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 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 [ ] 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 [ ] 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).

Yes [] No [X]

As of May 4, 2011, there were 89,840,020outstanding shares of the registrant's common stock, $0.001 par value per share.

TABLE OF CONTENTS

		Page No.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements		1
Item 2. Management's Discussion and Analysis		9
Item 3. Quantitative and Qualitative Disclosures About Market Risk		12
Item 4T. Controls and Procedures		12
PART II – OTHER INFORMATION
Item 1. Legal Proceedings		13
Item 1A. Risk Factors		13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		13
Item 3. Defaults Upon Senior Securities		14
Item 4. Submission of Matters to a Vote of Security Holders		14
Item 5. Other Information		14
Item 6. Exhibits		14

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

TREMONT FAIR, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

	March 31,			December 31,
	2011			2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	49,508		$	39,196
Accounts receivable-related parties		-			13,806
Prepaid expenses		1,993			2,455
Total current assets		51,501			55,457

Property and equipment, net of accumulated depreciation of $728
and $508, respectively		1,853			1,980
Other assets		2,565			2,565

TOTAL ASSETS	$	55,919		$	60,002


LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	23,750		$	51,537
Advances from third party		293,000			293,000
Accounts payable – related party		1,874			-
Note payable		75,000			100,000
TOTAL CURRENT LIABILITIES		393,624			444,537

SHAREHOLDERS’ DEFICIT
Preferred stock, $0.001 par value; 20,000,000 shares authorized,
no shares issued and outstanding		-			-
Common stock, $0.001 par value; 200,000,000 shares authorized,
115,638,520 and 104,360,185 shares issued and outstanding, respectively		115,639			104,361
Paid-in capital (deficit)		228,673			(231,124	)
Accumulated deficit		(682,017	)		(257,772	)
Total shareholders’ deficit		(337,705	)		(384,535	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	104,046		$	60,002
See notes to consolidated financial statements.

TREMONT FAIR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)



	For the Three			For the Three
	Months Ended			Months Ended
	March 31, 2011			March 31, 2010

REVENUE	$	59,287		$	44,523

OPERATING EXPENSES
Selling, general & administrative expense		107,155			203,619
Depreciation expense		127			127
Total operating expenses		107,282			203,746
Net operating loss		(47,995	)		(159,223	)

OTHER INCOME (EXPENSE)
Loss on extinguishment of debt		(375,000	)		-
Interest expense		(1,250	)		(1,250	)
Total other income (expense)		(376,250	)		(1,250	)

Net loss	$	(424,245	)	$	(160,473	)


Net loss per share-basic and diluted	$	(0.00	)	$	(0.00	)

Weighted average common shares outstanding-basic and diluted		108,234,043			97,428,128

See notes to consolidated financial statements.

TREMONT FAIR, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(unaudited)


	Preferred Stock				Common Stock				Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total

Balances, December 31, 2010		-	$	-		104,360,185	$	104,361	$	(231,124	)	$	(257,772	)	$	(384,535	)

Common stock issued for:
Conversion of debt		-		-		11,053,334		11,053		452,147			-			463,200
Services		-		-		225,000		225		7,650			-			7,875

Net loss													(424,245	)		(424,245	)

Balances, March 31, 2011		-	$	-		115,638,519	$	115,639	$	228,673		$	(682,017	)	$	(337,705	)

See notes to consolidated financial statements.

TREMONT FAIR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)


	For the Three			For the Three
	Months Ended			Months Ended
	March 31,2011			March 31,2010
Cash flows from operating activities:
Net income (loss)	$	(424,245	)	$	(160,473	)

Adjustments to reconcile net income(loss) to net
cash from operating activities:
Depreciation and amortization		127			127
Stock-based compensation		7,875			16,250
Loss on extinguishment of debt		375,000			-
Changes in operating assets and liabilities
Accounts receivable-related parties		13,806			(29	)
Prepaid expenses		462			4,787
Accounts payable and accrued liabilities		35,412			49,226
Accounts payable-related party		1,874			8,278
Net cash provided by (used in ) operating activities		10,312			(81,834	)

Cash flows from financing activities:
Proceeds from related party advances		-			72,089
Net cash provided by financing activities		-			72,089

Net increase (decrease) in cash and cash equivalents		10,312			(9,745	)
Cash and cash equivalents, at beginning of period		39,196			17,522
Cash and cash equivalents, at end of period	$	49,508		$	7,777

Supplemental cash flow information:
Cash paid for interest	$	1,250		$	1,250
Common stock issued for conversion of debt		400,000			-
Common stock issued for payables		63,200			-

See notes to consolidated financial statements.

TREMONT FAIR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Tremont Fair, Inc. ("the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Tremont’s annual report filed with the SEC on Form 10-K for the year ended December 31, 2010. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent year 2010 as reported in Form 10-K have been omitted.

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

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and financial instruments which mature within three months of the date of purchase.

Fair Value of Financial Instruments

As at March 31, 2011, the fair value of cash and accounts payable approximate carrying values because of the short-term maturity of these instruments.

Revenue Recognition

Revenue from management services is recognized when service is completed.

Stock-Based Compensation

The Company sometimes grants shares of stock for services. These grants are accounted for based on the grant date fair values.

Earnings per Share of Common Stock

Basic net income per share calculations are determined by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted net income per share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. During the reporting period when they are anti-dilutive, common share equivalents, if any, are not considered in the computation. As of March 31, 2011, the Company had no dilutive common share equivalents outstanding.

Recent Accounting Pronouncements

Recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material effect on our financial position or results of operations.

2. GOING CONCERN

The Company has a working capital deficit at March 31, 2011 and has not established a recurring source of revenues sufficient to cover its operating costs. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon its ability to obtain capital through the sales of equity and attaining additional profitable operations. Currently the Company is receiving cash advances from related parties, including stockholders and their affiliates, to cover operating expenses. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

3. EQUITY

On February 23, 2010, the Company issued 41,667 common shares valued at $1,250, based on fair market value using quoted market prices on the date of grant, to our former Chief Financial Officer for services rendered.

During 2010, our two independent directors are each paid $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter. On March 31, 2010, the Company issued 500,000 common shares valued at $10,000 based on fair market value using quoted market prices on the date of grant, to our two independent directors for services rendered.

On March 31, 2010, the Company issued 250,000 common shares valued at $5,000, based on fair market value using quoted market prices on the date of grant, to an Advisory Board member for services rendered.

John D. Thomas, who was an independent director in the first quarter of 2011, was entitled to be paid $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter. On February 7, 2011, the cash obligation of $6,333to Mr. Thomas for services rendered from July 2009 up to December 31, 2010, was converted into 253,334 shares of common stock valued at $15,200 based on the fair market value using quoted market prices on the date of grant.

On February 7, 2011, the Company converted $20,000 in cash payment obligations to a former director and a member of our advisory board for services rendered, into 800,000 common shares alued at $48,000, based on the fair market value using quoted market prices on the date of issuance.

On March 2, 2011, the Company converted $25,000 in loans payable into 10,000,000 shares of common stock valued at $400,000, based on fair market value using quoted market prices on the date of issuance. The difference between the value of the debt and the fair market value of the common stock was $375,000 which was treated as a loss on extinguishment of debt.

On March 31, 2011, the Company issued225,000 shares to John D. Thomas, the President of the company, in relation to the entitlement of $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter by serving as an independent board director prior to becoming President of the Company. The 225,000 shares includes the $5,000 worth of shares as well as the $2,000 in cash for the quarter ended March 31, 2011, which were converted into common stock.

4. SUBSEQUENT EVENTS

Effective May 1, 2011, the Company is no longer managing the Braes Hollow Apartments, as the owners determined to self-manage the property. The decision was mutually agreed by the Company and such owners as being in the best interest of the property. The current management agreement for the property was otherwise set to expire on August 31, 2011.

On April 15, 2011, the Company redeemed 70,798,500 shares of common stock held by Cumbria Capital, L.P. in exchange for 100,000 shares of Series A Preferred Stock of the Company (“Series A Preferred Stock”) and a convertible promissory note of the Company in the original principal amount of $700,000. The fair value of the common shares redeemed was $7,079,850. The Series APreferred Stock carries no dividend, distribution, liquidation, or rights of conversion into common stock. However, each share of Series APreferred Stock holds 10,000 votes per share, giving the holder thereof an aggregate of 1,000,000,000 voting rights and, therefore, voting control over the election of the Company’s board of directors and other substantive matters requiring consent of holders of a majority of the voting shares of the Company. Also on April 15, 2011, the Company filed a Certificate of Designation to its Articles of Incorporation with the State of Nevada specifying the terms of the Series A Preferred Stock.

On April 19, 2011, the Company experienced a change of control, as Cumbria Capital, L.P., the holder of the Series A Preferred Stock described in the preceding paragraph, sold these shares to Sierra Vista Holdings, Inc., a Florida corporation (hereafter, “Sierra”).

On April 28, 2011, Cyrus Boga resigned from the Company’s Board of Directors (the “Board”) and as an officer of the Company. Also on April 28, 2011, the Board appointed Mark D. Klok as its Chairman and John D. Thomas as the Company’s President and Secretary. Mr. Klok is the owner of Sierra Vista Holdings, Inc., the controlling shareholder of the Company, and Mr. Thomas is a former independent director of the Company.

On April 28, 2011, the Company issued 45,000,000 shares of common stock valued at $675,000to various service providers of the Company, including 25,000,000 shares valued at $375,000to Sierra, which is owned and controlled by Mark D. Klok, the Chairman and controlling shareholder of the Company.

On April 28, 2011, the Company issued 5,000,000 shares of Series B Preferred Stock (“Series B Preferred Stock”) to Sierra as consideration for Mark Klok joining the Company’s Board of Directors as its Chairman. Each share of the Series B Preferred Stock may convert into six shares of the Company’s common stockand may vote on an as-converted basis with the holders of common stock of the Company. The fair value of the Series B Preferred Stock was $450,000 on the date of issuance. Also on April 28, 2011, the Company filed a Certificate of Designation to its Articles of Incorporation with the State of Nevada specifying the terms of the Series B Preferred Stock.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the Risk Factors section included in this Report on Form 10-Q.

Plan of Operation

Prior to July 31, 2009, we were a development stage company named “Cancer Detection Corporation” which sought to provide research and development to potential cancer and related pathogen vaccines. This business was discontinued in July 2009, when we reorganized the business as a real estate services company as described herein.

On July 31, 2009, we entered into an agreement to acquire all of the outstanding shares of Tremont Fair Holdings, Inc., a Texas corporation (hereafter, “TF-Texas”), in exchange for eighty million (80,000,000) shares of our restricted common stock (such transaction is hereafter referred to as the “Acquisition”). TF-Texas was organized to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States. Prior to the Acquisition, TF-Texas was wholly-owned by Cumbria Capital, L.P., a Texas limited partnership that is owned and controlled by Cyrus Boga.

On July 29, 2009, the Board of Directors and a majority of our shareholders agreed to amend and restate, in its entirety, the Articles of Incorporation. The restated Articles of Incorporation provide, among other things, for an increase in the authorized shares from 110,000,000 to 220,000,000, with 200,000,000 constituted as common stock and 20,000,000 constituted as preferred stock. The shares of preferred stock are considered “blank check” preferred shares, inasmuch as the Board of Directors may designate the rights, preferences, and privileges of such preferred shares and any classes thereof. The restated Articles of Incorporation also changed the name of the Company from Cancer Detection Corporation to Tremont Fair, Inc.

Pursuant to the acquisition of TF-Texas described above, our business plan consisted of identifying, acquiring, rehabilitating and renovating value-added multifamily properties in southern United States, and eventually refinancing and/or selling these properties once they are stabilized and cash flowing. These purchases may be direct acquisitions of the property or via purchase of the first liens on such properties, after which we would foreclose on such properties.

Our former President (who still manages the operations of TF-Texas) hassuccessfully pursued this business model in recent years as part of other organizations which served as general partner to property-oriented limited partnerships, as well as the management and construction management company to these limited partnerships. In the 12 months previous to the Acquisition, this team facilitated the purchase, rehabilitation, and stabilization of almost 1,000 apartment units. The efforts of our new team have been a result of a proprietary turnaround model, and has benefited from their relationships with lenders, vendors and property brokers.

By consolidating both control of the property (via a general partner stake) and the construction and property management functions within the Company, we believe the Company can offer investors who participate in these projects a stake in all aspects of the value-added chain for distressed properties and a benefit to the Company from its participation in providing services relating thereto. We believe the current economic environment offers exceptional opportunities to continue implementing this business model, principally because there appears to be a large and growing supply of distressed properties available for purchase, and a shrinking number of stabilized properties available for sale.

We believe our timing is advantageous to acquire quality multifamily properties with a reduction in new apartment construction, lending institutions eager to remove real estate assets off their books, interest rates at near historical lows and less competition today for the acquisition of distressed assets. In the long term, we believe our business plan will improve our operating cash flows as multifamily fundamentals strengthen from a reduction in new supply, declining homeownership, population growth and economic growth.

Liquidity and Capital Resources

As of March 31, 2011, our working capital deficit of $342,123 was comprised of total current assets of $51,501 consisting of cash and cash equivalents of $49,508,and prepaid expenses of $1,993, and total current liabilities of $393,624 comprised of accounts payable and accrued liabilities of $23,750,notes payable to third parties of $75,000, advances from third parties of $293,000, and accounts payable – related party of $1,874. We continued to consume working capital in the pursuit of our business plan utilizing proceeds from notes payable and advances from related and unrelated parties. We anticipate that we will need to obtain additional funds of approximately $250,000 to fund our operations for the next 12 months.

Management does not believe that the Company’s current capital resources will be sufficient to fund its operating activity and other capital resource demands during the next year. Our ability to continue as a going concern is contingent upon our ability to obtain capital through the sale of equity or issuance of debt, joint venture or sale of assets, and ultimately attaining profitable operations. There is no assurance that we will be able to successfully complete any one of these activities.

We are presently seeking additional debt and equity financing to provide sufficient funds for payment of obligations incurred and to fund our ongoing business plan.

We expect to generate revenue pursuant to our business plan as a real estate services provider and expect to rely on equity and debt financings to fund our capital resources requirements. We will be dependent on additional debt and equity financing to develop our new business.

Our ability to pay accounts payable and accrued expenses and repay borrowings is dependent upon receipt of new funding from related parties, private placements or debt financing. Cumbria Capital,L.P,,formerlyour largest shareholder, has periodically advanced funds to us to meet our working capital needs. Cumbria is under no obligation to continue these advances and will likely not do so now that it is not a shareholder of the Company and its president, Cyrus Boga, is no longer an officer or director of the Company. Cumbria sold all of its debts through June 30, 2010 to a third party on July 1, 2010. As of March 31, 2011, the outstanding balance of advances and loans from related and unrelated parties was $369,874.

Net cash provided by operating activities was $10,312for the three months ended March 31, 2011, with net loss of $424,245, adjustments for depreciation and amortization of $127along with stock-based compensation of $44,742, loss on extinguishment of debt of $375,000, and an increase in accounts receivable of $13,806,an increase in prepaid expenses of $462,a decrease in accounts payable and accrued expenses of $1,454, and an increase in accounts payable-related party of $1,874.

Net cash for investing and financing activities for the three months ended March 31, 2011 was $0 for both.

Results of Operations

Until the reorganization of the Company in July 2009, we were considered a development stage company for accounting purposes, since we had not yet received any revenues from operations. Effective September 1, 2009, Tremont Fair Holdings, Inc. acquired two property management agreements from Creekstone Equity Management, a company controlled by Cyrus Boga (the “Management Agreements”).

Three Months Ended March 31, 2011 compared to Three Months Ended March 31, 2010

Revenues. For the three months ended March 31, 2011, total revenues were $59,287, an increase of33% from the comparable three months ended March 31, 2010, during which total revenues were $44,523. This was due primarily to construction management fees received during the first quarter of 2011 as compared to no such fees in the first quarter of 2010.

Selling General and Administrative Expenses (“SG&A”). Our SG&A expenses for the three months ended March 31, 2011of $107,155 were lowerthan the $203,619 of SG&A expenses reported for the comparable three months ended March 31, 2010. The decrease in SG&A expenses is due primarily to lower personnel costs, as the Company had fewer employees in the first quarter of 2011.

Other Expense. We recorded a loss on extinguishment of debt of $375,000 for the three months ended March 31, 2011 in connection with the conversionof debt to common stock. No such loss was recorded during the three months ended March 31, 2010.

Net Loss. We had a net loss for the three months ended March 31, 2011 of $424,245compared to a net loss of $160,473 for the three months ended March 31, 2010. The increase was principally due to a loss on extinguishment of debt related to converting debt into common stock.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based

upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. On an on-going basis, we evaluate our estimates. Actual results may differ from these estimates if our assumptions do not materialize or conditions affecting those assumptions change.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

Revenue Recognition

Revenue from management services is recognized when service is completed.

Stock-Based Compensation

The Company sometimes grants shares of stock for services. These grants are accounted for based on the grant date fair values.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Required.

Item 4. Controls and Procedures.

(a) We maintain a system of controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of March 31, 2011, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective due to several adjustments proposed by our auditors.

(b) There were no changes in our internal control over financial reporting during the quarter ended March 31, 2011 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our properties, results of operation, or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

Item 1A. Risk Factors

Since we are a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February 7, 2011, the Company issued 1,0253,334shares of common stock to current and former members of its Board of Directors and a former member of the Company’s Advisory Board in payment of fees related to services provided in connection therewith.

On March 2, 2011, the Company converted loans and interest held by an accredited investor in the amount of $25,000 into 10,000,000 shares of common stock.

On March 31, 2011, the Company issued 225,000 shares to John D. Thomas, the President of the company, in relation to the entitlement of $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter by serving as an independent board director prior to becoming President of the Company. The 225,000 shares includes the $5,000 worth of shares as well as the $2,000 in cash, which were converted into common stock.

On April 15, 2011, the Company issued 100,000 shares of Series A Preferred Stock and a convertible promissory note in the original principal amount of $700,000 as consideration for the redemption of 70,798,500 shares of common stock held by an accredited investor.

On April 28, 2011, the Company issued 45,000,000 shares of common stock to various service providers of the Company, all of whom were accredited investors, including 25,000,000 shares to Sierra Vista Holdings, Inc. (“Sierra”), which is owned and controlled by Mark D. Klok, the Chairman and controlling shareholder of the Company.

On April 28, 2011, the Company issued 5,000,000 shares of Series B Preferred Stock to Sierra.

Exemption From Registration Claimed

All of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management, through pre-existing business relationships. All

purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. No underwriting discounts or commissions were given or paid in connection with these issuances. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, as applicable, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

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.

The following exhibits are filed with or incorporated by referenced in this report:

Item No.	Description
3.1	Amended and Restated Articles of Incorporation (incorporated by reference from our report on form 8-K filed on August 4, 2009).
3.2*	Certificate of Designation in Respect of Series “A” Preferred Stock.
3.3*	Certificate of Designation in Respect of Series “B” Preferred Stock.
3.4	Amended and Restated Bylaws (incorporated by reference from our report on form 8-K filed on August 4, 2009).
31*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for John D. Thomas.
32*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for John D. Thomas.

* filed herewith

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.

	TREMONT FAIR, INC.

Date: May 20, 2011	By:	/s/ John D. Thomas
		John D. Thomas
		President

Frelii, Inc. - FORM 10-Q - May 20, 2011

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Frelii, Inc. Reports