UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K-A

 

   X  . ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended August 31, 2010

 

Commission File Number: 333-162022

 

FLAMERET, INC.

(Exact name of registrant as specified in its charter)

 

Wyoming	27-0755877
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

1810 E. Sahara Ave., Suite 1492, Las Vegas, NV 89104

(Address of principal executive offices) (Zip Code)

 

 (877) 861-0207

(Registrant’s telephone number, including area code)

 

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, Par Value $.001

(Title of class)

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

Yes      . No   X  .

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes      . No   X  .

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   X  . No      .

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

Yes   X  . No      .

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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 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).

Yes      . No   X  .

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, as of May 26, 2011, was approximately $-0- based on a share value of $0.0001. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing calculation, to be "affiliates" of the registrant.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 351,600,000 shares of $0.0001 par value common stock outstanding as of May 31, 2011.

 

 

 

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TABLE OF CONTENTS

		Page
PART I
Special Note Regarding Forward-Looking Statements		4
Item 1. Business		6
Item 1A. Risk Factors		9
Item 2. Properties		16
Item 3. Legal Proceedings		16
Item 4. Submission of Matters to a Vote of Security Holders		16
PART II
Item 5.  Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		17
Item 6.  Selected Financial Data		18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.		22
Item 8. Financial Statements and Supplementary Data		23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		24
Item 9A(T). Controls and Procedures		24
Item 9B. Other Information		25
PART III
Item10. Directors, Executive Officers and Corporate Governance		25
Item 11. Executive Compensation		29
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		30
Item 13. Certain Relationships and Related Transactions, and Director Independence		30
Item 14. Principal Accountant Fees and Services		31
PART IV
Item 15.  Exhibits and Financial Statement Schedules		31
SIGNATURES		32

 

 

 

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 FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements”.  All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.  Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer.  You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

	·	Our current deficiency in working capital;
	·	Increased competitive pressures from existing competitors and new entrants;

	·	Our ability to market our services to new subscribers;
	·	Inability to locate additional revenue sources and integrate new revenue sources into our organization;

	·	Adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
	·	Changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

	·	Consumer acceptance of price plans and bundled offering of our services;
	·	Loss of customers or sales weakness;

	·	Technological innovations;
	·	Inability to efficiently manage our operations;

	·	Inability to achieve future sales levels or other operating results;
	·	Inability of management to effectively implement our strategies and business plan

	·	Key management or other unanticipated personnel changes;
	·	The unavailability of funds for capital expenditures; and

	·	The other risks and uncertainties detailed in this report.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Item 1A. Risk Factors” in this document.

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EXPLANATORY NOTE

Unless otherwise noted, references in this registration statement to "FLAMERET, INC." the "Company," "we," "our" or "us" means FLAMERET, INC.

AVAILABLE INFORMATION

We file annual, quarterly and special reports and other information with the SEC that can be inspected and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company’s filings are also available through the SEC’s Electronic Data Gathering Analysis and Retrieval System which is publicly available through the SEC’s website (www.sec.gov). Copies of such materials may also be obtained by mail from the public reference section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed rates.

 

 

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PART I

 

ITEM 1.  BUSINESS

OVERVIEW

We were incorporated in the State of Nevada on August 13, 2009 under the name of Flameret, Inc.  Flameret; Inc. is a provider of a fire barrier product named Flamex.

FLAMERET, INC. is presently marketing for sale one product named (Flamex), a textile flame retardant treatment.  Flamex is a flame retardant liquid that is applied to textiles. These treated textiles are used at the production stage of such products as mattresses to resist ignition from smoldering cigarettes and resist ignition from an open-flame heat source.  Flameret is a development stage company with a limited history of development stage operations.

MARKET OPPORTUNITY

The fire barrier industry is a multidisciplinary and widely applicable industry.  Products enabled by fire barrier technology are applicable to a large number of industries including mattresses, sofas, chairs, carpeting, and workers’ coveralls.

All mattresses made on or after July 1, 2007 for sale in the United States must now meet two separate federal flammability standards administered by the Consumer Product Safety Commission (CPSC) and issued under the Flammable Fabrics Act.

The use of fire barriers in the mattresses and mattresses bedding for children in particular is an area of increasing interest, and these types of materials are the cornerstones of new generations of mattresses and mattresses beddings.  Flameret, Inc. aims to establish its Flamex product to the mattresses industry.  The Company believes that the combination of their Flamex product, aimed in an industry that has widespread applicability and furthermore is creating interest on a global scale, is one of its unique features.

DESCRIPTION OF PRODUCTS

Product Development:

In July 2009, Mr. Glover began working with Seatex LTD www.seatexcom, located at 445 TX-36 Rosenberg, Texas 77471, to blend, manufacture and package the Flamex product for Flameret, Inc. Mr. Glover provided Seatex with the United American, Inc. formula for Flamex.

Since 1968 Seatex has been providing turnkey chemical compounding, toll manufacturing and private label packaging services. Areas of expertise include food service, food processing, automotive, institutional and industrial laundry, janitorial, industrial and oilfield service markets.  Seatex can manufacture and package to strict specifications, duplicate formulas, or make available our own 400 plus finished formulations.  Seatex is employee owned.  Seatex is a full service contract manufacturer dedicated to the production and marketing of branded products and turnkey custom formulations.

Private Label:

Seatex offers a turn-key program for private labelers. They maintain a very large library of formulations compiled from 40 years of chemical blending experiences.  Seatex can assist in label design, maintain MSDS and all regulatory issues.  Seatex also carries full product liability insurance.

Seatex currently sits on approximately 20 acres occupying over 210,000 square feet of a modern manufacturing and warehousing facilities.  Rail service is available.

Flameret, Inc. will provide Seatex with its formula for Flamex.  The formula is based on two patents #4,961,865 and #4,950,410 which the company received from United American, Inc.  These two patents contain all required information to produce Flamex.

Flameret, Inc. intends to contract with Seatex to batch, mix, fill, package, label, palletize and ship a proprietary flame retardant compound product (Flamex) subject to strict requirements for quality control, cost control, timeliness and confidentiality, once it has sole Flamex to a customer.

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Manufacturing:

Flameret, Inc. intends to have Seatex manufacture Flamex for the company.  All key ingredients included in our product are readily available from Seatex.  The following ingredients are contained in Flamex (Sodium Chloride, Magnesium Chloride, Sodium Sulfate Decahydrate, Calcium Chloride, Magnesium Sulfate, Calcium Sulfate, Potassium Sulfate, Magnesium Bromide, Potassium Chloride and Water).  Seatex has not produced any Flamex for Flameret, Inc.  Flameret, Inc. does not have any formal agreements with Seatex to batch, mix, fill, package, label, palletize and ship a proprietary flame retardant compound product (Flamex).

Flameret, Inc. Technology

UNITED AMERICAN AND FLAMEX

On May 18, 1989 United American Inc. (UAI) acquired patent #4,961,865 (fire extinguishing solutions for extinguishing phosphorus and metal fire) and patent #4,950,410 from the inventor Edmund Pennartz.  After acquiring the patents and the technology from Mr. Pennartz, UAI developed three fire retardant products, 1. Flamex, a textile FR treatment.  2. Ultra Flamex, a fire extinguishing product and,  3. Impex.

Flamex is applied as a liquid compound to textiles, this produces a carbon membrane which is activated when heat is applied to produce the fire retardant properties, and this protection is called a carbon barrier shield. [Fire barrier].

United American, Inc. has never sold their products to any manufacturers; the company’s sole business is the development of fire barrier products.  On August 14, 2009 Flameret, Inc. acquired the rights to market and sell United American, Inc.’s three products 1. Flamex, a textile FR treatment.  2. Ultra Flamex, a fire extinguishing product and  3. Impex. for 15 years worldwide.  Flameret has the rights to use all studies, reports and research conducted by UAI in regard to these three products.  Flameret, Inc. will compensate United American, Inc. by paying a 1.5% gross royalty to UAI on all products sold.

FLAMERET, INC. is presently attempting to market for sale one product named (Flamex), a textile FR treatment.  Flamex is a liquid that is applied to textiles, these treated textiles are used at the production stage of such products as mattresses to resist ignition from smoldering cigarettes and resist ignition from an open-flame heat source.  The company aims to focus on long-term client retention within the U.S. and Canadian mattress industries.

Flameret, Inc. is a development stage company. Flameret, Inc. has a limited history of development stage operations. We presently do not have the funding to execute our business plan.

We expect to provide one product named (Flamex), a textile FR treatment to mattress manufacturers.  As such, we may not always be successful in achieving a long-term contract or be immediately compensated for services rendered. Although we currently restrict our fire retardant products to mattress manufacturers our products are applicable to a wide range of fields and businesses, and therefore are not restricted to a particular industry.

Achievement of our business objective is basically dependent upon the judgment, skill and knowledge of our management. Mr. Glover, currently our sole executive officer and director. There can be no assurance that a suitable replacement could be found for any of our officers upon their retirement, resignation, inability to act on our behalf, or death.

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DISTRIBUTION

Flameret Fire Retardant

In July 2009, Mr. Glover provided Seatex with the United American, Inc. formula for Flamex to determine if Seatex was able to blend, manufacture and package the Flamex product for Flameret, Inc. Seatex LTD www.seatexcom, is located at 445 TX-36 Rosenberg, Texas, 77471.

After reviewing the formula Seatex advised Flameret, Inc. that they could batch, mix, fill, package, label, palletize and ship a proprietary flame retardant compound product (Flamex) subject to strict requirements for quality control, cost control, timeliness and confidentiality.

Seatex has not produced any Flamex for Flameret, Inc.  Flameret, Inc. does not have any formal agreements with Seatex to batch, mix, fill, package, label, palletize and ship a proprietary flame retardant compound product (Flamex). Flameret, Inc. intends to enter into a formal contract with Seatex once it has sold Flamex to a customer.

It is a light weight transparent liquid and does not leave white flaky residues and will not change the hand [feel] or scent of the fabric. It will not discolor or shrink the fabric and is odorless. It needs less than 24 hours for curing time depending upon the process and textile application to allow for complete fiber penetration and compound set up.

 

Flameret FR is a water based solution applied to the fresh milled textiles. The liquid solution first penetrates into the molecular structure. The treated textile is then dried through ovens that evaporate the water leaving a fire retardant compound thoroughly bound and bonded throughout the molecular structure of the fabric. It is this bound compound that creates fire resistance when an external heat source is applied - thus creating a carbon barrier shield. When external heat is applied to the treated surface by heat sources such as candles, matches, molten metal or any direct flame, this bound compound is changed into a carbon barrier shield. This carbon barrier shield triggers an interlocking effect of one fiber to another and produces a surface that deflects heat and will not allow fire to penetrate the surface. This carbon barrier shield will cause the fire to die out as the carbon barrier shield suffocates the fire by not allowing oxygen to the fire on the fibers. FLAMERET’s FR will be used on textiles that are natural as well as synthetic fibers.

Flameret will be used on the components of mattresses prior to their final assembly.

Mattress manufacturing use the following components in their mattresses, ticking, high loft non-woven and needle pointed fibers, filler cloths, universal borders and mattress socks.  Flamex can be applied to all of these materials to impart a carbon barrier shield.

These textiles include almost every fabric that is used to make a mattress

1.	Ticking      – A material used on the top and bottom sides of the top mattress and foundations.
2.	Universal Borders – The material that is used on the sides of the top mattress and foundation

3.	Non Woven Loft and Side Panels – In some applications a fire barrier inserted under the ticking is necessary as in the case of pillow top with heavy fuel load and some institutional beds
4.	Mattress Sock – Like the word implies in some applications such as with memory foam a stretchy material is needed to shape with the memory foam when it is slept on.

5.	Filler Cloth - is an inexpensive cotton cloth material that goes on the top of the foundation.

To utilize our second prong of sales approach conducted by Mr. Neil Glover the company will need to seek additional capital to fund this model.  Presently the Company does not have the additional capital needed to utilize the second prong of sales, setting up distributors of the Flamex product.

In, 2011 Flameret, Inc. intends to market through mattress distributors its Flamex product. In order for the company to begin the distributor model it will require the Company to seek additional capital of $1M in order to develop the distributor network. The Company believes it will not have the additional capital until 2011.

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COMPETITION

The fire retardant industry is highly competitive and is characterized by a large number of competitors ranging from small to large companies with substantial resources. The company’s main competition is 3M and DuPont, who provide oil based toxic retardants. Many of our potential competitors have substantially larger customer bases, greater name recognition, greater reputation, and significantly greater financial and marketing resources than we do. In the future, aggressive marketing tactics implemented by our competitors could impact our limited financial resources and adversely affect our ability to compete in these markets. There are some other small operators who claim that their products are non toxic but do not have the testing to support their claims.

Price competition exists in fire retardant products. Costs of raw materials decreases within the industry could adversely affect our operations and profitability. There are many fire retardant companies that could discount their products which could result in lower revenues for the entire industry. A shortfall from expected revenue levels would have a significant impact on our potential to generate revenue and possibly cause our business to fail.

 

EMPLOYEES

Christopher Glover is the sole Director, Chief Executive Officer, President, Secretary, and Principal Executive Officer and Principal Financial Officer of Flameret, Inc.  Presently, there are two additional employees of the Company, Michel O’Driscoll who will serve as Vice President of Finance and will be working with the Principal Financial Officer, Christopher Glover. Neil Glover will serve as Vice President of Sales.

The Company plans to employ individuals on an as needed basis.  The company anticipates that it will need to hire additional employees as the business grows. In addition, the Company may expand the size of our Board of Directors in the future.  Presently Christopher Glover, Michael O’Driscoll and Neil Glover will devote 40 hours a week to the affairs of the Company.  Christopher Glover, Michael O’Driscoll, and Neil Glover do not receive a salary or benefits in any form.  Presently the Company does not have any plans to begin paying salaries, cash or otherwise, or offering any form of benefits to our Board of Directors, Officer and employees.

ITEM 1A.  RISK FACTORS

In addition to the other information in this Annual Report, the following risk factors, among others, should be considered carefully in evaluating the Company and its business.

A) RISKS RELATED TO OUR BUSINESS

THE COMPANY HAS A LIMITED DEVELOPMENT STAGE OPERATING HISTORY UPON WHICH TO BASE AN EVALUATION OF ITS BUSINESS AND PROSPECTS. WE MAY NOT BE SUCCESSFUL IN OUR EFFORTS TO GROW OUR BUSINESS AND TO EARN INCREASED REVENUES. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT.

We have a limited history of development stage operations and we may not be successful in our efforts to grow our business and to earn revenues. Our business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies providing services to a rapidly evolving market such as fire retardants. As a result, management may be unable to adjust its spending in a timely manner to compensate for any unexpected revenue shortfall. This inability could cause net losses in a given period to be greater than expected. An investment in our securities represents significant risk and you may lose all or part of your entire investment.

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WE HAVE A HISTORY OF LOSSES. FUTURE LOSSES AND NEGATIVE CASH FLOW MAY LIMIT OR DELAY OUR ABILITY TO BECOME PROFITABLE. IT IS POSSIBLE THAT WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT.

We have yet to establish profitable development stage operations or a history of profitable development stage operations. We anticipate that we will continue to incur substantial development stage operating losses for an indefinite period of time due to the significant costs associated with the development of our business.

Since incorporation, we have expended financial resources on the development of our business. As a result, losses have been incurred since incorporation. Management expects to experience development stage operating losses and negative cash flow for the foreseeable future. Management anticipates that losses will continue to increase from current levels because the Company expects to incur additional costs and expenses related to: marketing and promotional activities; the possible addition of new personnel; and the development of relationships with strategic business partners.

The Company’s ability to become profitable depends on its ability to generate and sustain sales while maintaining reasonable expense levels. If the Company does achieve profitability, it cannot be certain that it would be able to sustain or increase profitability on a quarterly or annual basis in the future. An investment in our securities represents significant risk and you may lose all or part of your entire investment.

IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.

We will need to obtain additional financing in order to complete our business plan because we currently do not have any income. We do not have any arrangements for financing and we may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including investor acceptance. These factors may adversely affect the timing, amount, terms, or conditions of any financing that we may obtain or make any additional financing unavailable to us. If we do not obtain additional financing our business will fail.

OUR DEVELOPMENT STAGE OPERATING RESULTS WILL BE VOLATILE AND DIFFICULT TO PREDICT. IF THE COMPANY FAILS TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE SIGNIFICANTLY.

Management expects both quarterly and annual development stage operating results to fluctuate significantly in the future. Because our development stage operating results will be volatile and difficult to predict, in some future quarter our development stage operating results may fall below the expectations of securities analysts and investors. If this occurs, the trading price of our common stock may decline significantly.

A number of factors will cause gross margins to fluctuate in future periods. Factors that may harm our business or cause our development stage operating results to fluctuate include the following: the inability to obtain new customers at reasonable cost; the ability of competitors to offer new or enhanced services or products; price competition; the failure to develop marketing relationships with key business partners; increases in our marketing and advertising costs; increased labor costs that can affect demand for fire retardant products; the amount and timing of development stage operating costs and capital expenditures relating to expansion of operations; a change to or changes to government regulations; a general economic slowdown. Any change in one or more of these factors could reduce our ability to earn and grow revenue in future periods.

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WE HAVE INCURRED LOSSES SINCE INCEPTION AND EXPECT TO INCUR LOSSES FOR THE FORSEEABLE FUTURE. IF WE DO NOT RECEIVE ADDITIONAL FUNDING, WE WOULD HAVE TO CURTAIL OR CEASE DEVELOPEMNT STAGE OPERATIONS. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT.

We have incurred recurring net losses from operations resulting in an accumulated deficit of $507,612 and a working capital deficit of $505,112 as of August 31, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  At August 31, 2010, our cash on hand was $264. We do not currently have sufficient capital resources to fund operations. To stay in business, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing.

We will need additional capital to fully implement our business, operating and development plans. However, additional funding from an alternate source or sources may not be available to us on favorable terms, if at all. To the extent that money is raised through the sale of our securities, the issuance of those securities could result in dilution to our existing security holder. If we raise money through debt financing or bank loans, we may be required to secure the financing with some or all of our business assets, which could be sold or retained by the creditor should we default in our payment obligations. If we fail to raise sufficient funds, we would have to curtail or cease operations.

OUR CURRENT BUSINESS DEVELOMENT STAGE OPERATIONS RELY HEAVILY UPON OUR KEY EMPLOYEE AND FOUNDER, MR. CHRISTOPHER GLOVER.

We have been heavily dependent upon the expertise and management of Mr. Christopher Glover, our Chief Executive Officer and President, and our future performance will depend upon his continued services. The loss of the services of Mr. Glover’s services could seriously interrupt our business operations, and could have a very negative impact on our ability to fulfill our business plan and to carry out our existing development stage operations. The Company currently does not maintain key man life insurance on this individual. There can be no assurance that a suitable replacement could be found for him upon retirement, resignation, inability to act on our behalf, or death.

OUR FUTURE GROWTH MAY REQUIRE RECRUITMENT OF QUALIFIED EMPLOYEES.

In the event of our future growth in administration, marketing, and customer support functions, we may have to increase the depth and experience of our management team by adding new members. Our future success will depend to a large degree upon the active participation of our key officers and employees. There is no assurance that we will be able to employ qualified persons on acceptable terms. Lack of qualified employees may adversely affect our business development.

 

(B) RISKS RELATED TO THE INDUSTRY

 

THE FIRE RETARDANT INDUSTRY IS COST COMPETITIVE AND IS CHARACTERIZED BY LOW FIXED COSTS. A REDUCTION IN COST FOR THE INDUSTRY COULD AFFECT THE DEMAND FOR OUR FIRE RETARDANT PRODUCTS.

The fire retardant industry is highly competitive and is characterized by a large number of competitors ranging from small to large companies with substantial resources. Many of our potential competitors have substantially larger customer bases, greater name recognition, greater reputation, and significantly greater financial and marketing resources than we do. In the future, aggressive marketing tactics implemented by our competitors could impact our limited financial resources and adversely affect our ability to compete in these markets.

Price competition exists in fire retardant products. Costs of raw material decreases within the industry could adversely affect our operations and profitability. There are many fire retardant companies that could discount their products which could result in lower revenues for the entire industry. A shortfall from expected revenue levels would have a significant impact on our potential to generate revenue and possibly cause our business to fail.

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THE COMPANY’S RELIANCE ON MATTRESS MANUFACTURERS MAY HAVE A SIGNIFICANT IMPACT ON THE COMPANY’S ABILITY TO GENERATE REVENUE AND POSSIBLY CAUSE OUR BUSINESS TO FAIL.

The Company intends to provide a fire retardant product to mattress manufactures. As such, the Company may not always be successful in achieving a long-term contract or be immediately compensated for products and services rendered. Since we expect our fire retardant product to be sold to mattress manufactures any slowdown in that industries would greatly affect the company.

The company’s success is dependent on its ability to obtain and maintain clients. No assurances can be given that the Company will be able to create a client or maintain a client base or that it will be able to attract new clients. The loss of one or more new clients of the Company or a significant reduction in business from such new clients could have a material adverse effect on the Company. The Company does not have contracts with any clients at this time.

OUR DEVELOPMENT STAGE OPERATING RESULTS MAY FLUCTUATE DUE TO FACTORS WHICH ARE NOT WITHIN OUR CONTROL.

Our development stage operating results are expected to fluctuate in the future based on a number of factors, many of which are not in our control. Our development stage operating expenses primarily include marketing and general administrative expenses that are relatively fixed in the short-term. If our revenues are lower than we expect because demand for our product and service diminishes, or if we experience an increase in defaults among approved applicants or for any other reasons we may not be able to quickly return to acceptable revenue levels.

Because of the unique nature of our business and the fact that there are no comparable past business models to rely on, future factors that may adversely affect our business are difficult to forecast. Any shortfall in our revenues would have a direct impact on our business. In addition, fluctuations in our quarterly results could adversely affect the market price of our common stock in a manner unrelated to our long-term operating performance.

 

WE HAVE A SHORT DEVELOPMENT STAGE OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY A YOUNG COMPANY.

We have a short development stage operating history from August 13, 2009 to present for investors to evaluate the potential of our business development. We are continuing to build our customer base and our brand name. We do not have any customers at this time.  In addition, we also face many of the risks and difficulties inherent in introducing new products and services. These risks include the ability to:

	●	Increase awareness of our brand name;
	●	Develop an effective business plan;
	●	Meet customer standards;
	●	Implement advertising and marketing plan;
	●	Attain customer loyalty;
	●	Maintain current strategic relationships and develop new strategic relationships;
	●	Respond effectively to competitive pressures;
	●	Continue to develop and upgrade our service; and
	●	Attract, retain and motivate qualified personnel.

 

Our future will depend on our ability to raise additional capital and bring our product and service to the marketplace, which requires careful planning to provide a product and service that meets customer standards without incurring unnecessary cost and expense.

  

WE MAY NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS.

The development of our services will require the commitment of resources to increase the advertising, marketing and future expansion of our business. In addition, expenditures will be required to enable us in 2011 to conduct planned business research, development of new affiliate and associate offices, and marketing of our existing and future products and services. Currently, we have no established bank-financing arrangements. Therefore, it is possible that we would need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners.

 

We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities could result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations.

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WE MAY NOT BE ABLE TO BUILD OUR BRAND AWARENESS.

Development and awareness of our brand Flameret will depend largely upon our success in creating a customer base and potential referral sources. In order to attract and retain customers and to promote and maintain our brand in response to competitive pressures, management plans to gradually increase our marketing and advertising budgets. If we are unable to economically promote or maintain our brand, then our business, results of operations and financial condition could be severely harmed. The company presently has a deficit of $505,112 in working capital.

OUR FUTURE SUCCESS RELIES UPON A COMBINATION OF PATENTS AND PATENTS PENDING, PROPRIETARY TECHNOLOGY AND KNOW-HOW, TRADEMARKS, CONFIDENTIALITY AGREEMENTS AND OTHER CONTRACTUAL COVENANTS TO ESTABLISH AND PROTECT OUR INTELLECTUAL PROPERTY RIGHTS. IF OUR PRODUCTS ARE DUPLICATED OUR RESULTS OF OPERATIONS WOULD BE NEGATIVELY IMPACTED.

Our application for trademark protection has been approved for "Flameret.” Because intellectual property protection is critical to our future success, we intend to rely heavily on trademark, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect proprietary rights. However, effective trademark, service mark and trade secret protection may not be available in every country in which we intend to sell our products and services.   Unauthorized parties may attempt to copy aspects of our products or to obtain and use our proprietary information. As a result, litigation may be necessary to enforce our intellectual property rights to protect our trade secrets and to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of recourses and could significantly harm our business and operating results.

Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. Therefore, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of intended trademarks and other proprietary rights.

There can be no assurance that third parties will not assert infringement claims against us. If infringement claims are brought against us, there can be no assurance that we will have the financial resources to defend against such claims or prevent an adverse judgment against us. In the event of an unfavorable ruling on any such claim, there can be no assurance that a license or similar agreement to utilize the intellectual property rights in question relied upon by us in the conduct of our business will be available to us on reasonable terms, if at all. The loss of such rights (or the failure by us to obtain similar licenses or agreements) could have a material adverse effect on our business, financial condition and results of operations.

 

OUR BUSINESS EMPLOYS LICENSED UNITED AMERICAN, INC. TECHNOLOGY WHICH MAY BE DIFFICULT TO PROTECT AND MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

We currently license our technology from United American, Inc.   United American, Inc. owns two U.S. patents, (patent #4,961,865 and patent#4,950,410) and may file more patent applications in the future. Patent #4,961,865 will expire on 10-09-2010 and Patent #4,950,410 will expire on 8-21-2010.  Both Patents will need to be renewed before they expire. Our success depends, on these patents and on our ability to use the United American, Inc. Technology, and for United American, Inc. to obtain patents, maintain trade secrecy and not infringe the proprietary rights of third parties. We cannot assure you that the patents of others will not have an adverse effect on our ability to conduct our business, that we will develop additional proprietary technology that is patentable or that any patents issued to us or United American, Inc. will provide us with competitive advantages or will not be challenged by third parties. Further, we cannot assure you that others will not independently develop similar or superior technologies, duplicate elements of the United American, Inc. Technology or design around it. It is possible that we may need to acquire other licenses to, or to contest the validity of, issued patents or claims of third parties. We cannot assure you that any license would be made available to us on acceptable terms, if at all, or that we would prevail in any such contest. In addition, we could incur substantial costs in defending ourselves in suits brought against us for alleged infringement of another party’s patents in bringing patent infringement suits against other parties based on our licensed patents.

In addition to licensed patent protection, we also rely on United American Inc. trade secrets, proprietary know-how and technology that we seek to protect, in part, by confidentiality agreements with our prospective blenders, manufactures employees and consultants. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by others.

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WE MAY INCUR SUBSTANTIAL COSTS OR LOSE IMPORTANT RIGHTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS RELATING TO OUR PRODUCTS, PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS.

In recent years, there has been significant litigation involving patents and other intellectual property rights in many technology-related industries. Until recently, patent applications were retained in secrecy by the US Patent and Trademark Office until and unless a patent was issued. As a result, there may be US patent applications pending of which we are unaware that may be infringed by the use of our technology or a part thereof, thus substantially interfering with the future conduct of our business. In addition, there may be issued patents in the United States or other countries that are pertinent to our business of which we are not aware. We and future customers could be sued by other parties for patent infringement in the future. Such lawsuits could subject us and them to liability for damages or require us to obtain additional licenses that could increase the cost of our products, which might have an adverse affect on our sales.

In addition, in the future we may assert our intellectual property rights by instituting legal proceedings against others. We may not be able to successfully enforce United American, Inc. patents in any lawsuits we may commence. Defendants in any litigation we may commence to enforce United American, Inc. patents may attempt to establish that United American, Inc. patents are invalid or are unenforceable. Any patent litigation could lead to a determination that one or more of our patents are invalid or unenforceable. If a third party succeeds in invalidating one or more of our patents that party and others could compete more effectively against us. Our ability to derive sales from products or technologies covered by these patents could be adversely affected.

Whether we are defending the assertion of third party intellectual property rights against our business as a result of the use of United American, Inc. technology, or we are asserting our own intellectual property rights against others, such litigation can be complex, costly, protracted and highly disruptive to our business operations by diverting the attention and energies of management and key technical personnel. As a result, the pendency or adverse outcome of any intellectual property litigation to which we are subject could disrupt business operations, require the incurrence of substantial costs and subject us to significant liabilities, each of which could severely harm our business.

Plaintiffs in intellectual property cases often seek injunctive relief. Any intellectual property litigation commenced against us could force us to take actions that could be harmful to our business and thus to our future sales.

WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS.

We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company, which will negatively affect our business operations.

THE LIMITED PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS.

Our management team has limited public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had sole responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company.

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C) RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES

WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS.

We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

OUR CONTROLLING SECURITY HOLDER MAY TAKE ACTIONS THAT CONFLICT WITH YOUR INTERESTS.

Mr. Christopher Glover beneficially owns approximately 55% of our capital stock with voting rights. In this case, Mr. Glover will be able to exercise control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions, and they will have significant control over our management and policies. The directors elected by our controlling security holder will be able to significantly influence decisions affecting our capital structure. This control may have the effect of delaying or preventing changes in control or changes in management, or limiting the ability of our other security holders to approve transactions that they may deem to be in their best interest. For example, our controlling security holder will be able to control the sale or other disposition of our operating businesses and subsidiaries to another entity.

AS OUR SOLE DIRECTOR AND OFFICER AND OUR ASSETS ARE LOCATED IN ENGLAND, INVESTORS MAY BE LIMITED IN THEIR ABILITY TO ENFORCE CIVIL ACTIONS IN THE UNITED STATES AGAINST OUR DIRECTOR OR OUR ASSETS. YOU MAY NOT BE ABLE TO RECEIVE COMPENSATION FOR DAMAGES TO THE VALUE OF YOUR INVESTMENT CAUSED BY WRONGFUL ACTIONS BY OUR DIRECTOR OR OFFICERS.

Our assets are located in England and our director is a resident of England. Consequently, it may be difficult for United States investors to affect service of process within the United States on our director.  A judgment of a US court predicated solely upon such civil liabilities may not be enforceable in England by a English court if the US court in which the judgment was obtained did not have jurisdiction, as determined by the English court, in the matter. There is substantial doubt whether an original action could be brought successfully in England against any of our future assets or our director predicated solely upon such civil liabilities. You may not be able to recover damages as compensation for a decline in your investment.

YOU MAY EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK.

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 2,000,000,000 shares of capital stock consisting of 1,800,000,000 shares of common stock, par value $0.0001 per share, and 200,000,000 shares of preferred stock, par value $0.0001 per share.

We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes.

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OUR COMMON STOCK IS CONSIDERED PENNY STOCKS, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.

If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the SEC that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.

Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK.

There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.

ITEM 2.  PROPERTIES

The principal executive office of Flameret, Inc. is located at 3280 Sunrise Highway Suite 51 Wantagh, NY 11793. Our telephone number is: (516) 816-2563.

ITEM 3.  LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We did not submit any matters to a vote of our security holders during the fourth quarter of the fiscal year 2010.

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PART II

 

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

(a) Market Information

The Company's Common Stock is currently traded on the National Association of Security Dealers' over-the-counter bulletin board market (OTCBB) under the symbol FLRE.OB. The following table sets forth the high and low bid prices for each quarter within the last fiscal year, beginning with the commencement of our trading in June of 2010. The source of these quotations is the OTCBB Trade Activity Report. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

		COMMON STOCK MARKET PRICE
		HIGH				LOW
FISCAL YEAR ENDED AUGUST 31, 2010:
Fourth Quarter		$	0.65			$	0.01
Third Quarter		$	N/A			$	N/A
Second Quarter		$	N/A			$	N/A
First Quarter		$	N/A			$	N/A

(b) Holders of Common Stock

We are authorized to issue 1,800,000,000 shares of common stock, $0.0001 par value per share. Currently we have 18,000,000 shares of common stock issued and outstanding.  As of August 31, 2010, there were approximately thirty eight (38) shareholders of the Company’s common stock.  As of August 31, 2010, the closing price of the Company’s shares of common stock was $0.15 per share.  Island Stock Transfer (telephone: (727) 289-0010; facsimile: (727) 289-0069) is the registrar and transfer agent for our common stock.

Each share of common stock shall have one (1) vote per share for all purposes. The holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of our shareholders. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of the board of directors.

Holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available therefore as well as any distributions to the security holder. We have never paid cash dividends on our common stock, and do not expect to pay such dividends in the foreseeable future.

In the event of a liquidation, dissolution or winding up of our company, holders of common stock are entitled to share ratably in all of our assets remaining after payment of liabilities. Holders of common stock have no preemptive or other subscription or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock.

(c) Dividends

Flameret has never declared or paid dividends on its Common Stock. Flameret intends to follow a policy of retaining earnings, if any, to finance the growth of the business and does not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be at sole discretion of the Board of Directors and will depend on Flameret's profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

(d) Securities Authorized for Issuance under Equity Compensation Plans

The Company has not established any compensation plans to which our securities are authorized for issuance to employees or non-employees (such as directors, consultants and advisors) in exchange for consideration in the form of services.

(e) Recent Sales of Unregistered Securities

Common Shares Issued

On August 13, 2009, the Company issued 18,000,000 of founder’s shares at the par value of $0.0001.

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Options and Warrants Issued

No options or warrants were issued during the year ended August 31, 2010.

Options and Warrants Cancelled

No options or warrants were cancelled during the year ended August 31, 2010.

Options and Warrants Expired

No options or warrants expired during the year ended August 31, 2010.

Options Exercised

No options were exercised during the year ended August 31, 2010.

The foregoing securities were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended.

ITEM 6.  SELECTED FINANCIAL DATA

Not Required

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

OVERVIEW AND OUTLOOK

Flameret, Inc. (“Flameret”) is a Nevada corporation that intends to manufacture and distribute a fire barrier product named, Flamex.  Flamex is a liquid that is applied to textiles which are used at the production stage of products, such as mattresses, to resist ignition from smoldering cigarettes and impede ignition from open-flame heat sources.  Production and distribution has not yet commenced, as such, the Company is considered to be in the development stage.

We had a net loss of $503,741 and $3,871 for the years ended August 31, 2010 and 2009, respectively.  Our accumulated deficit as of August 31, 2010 was $507,612.  These conditions raise substantial doubt about our ability to continue as a going concern over the next twelve months.

Results of Operations for the Years Ended August 31, 2010 and 2009 (Restated)

The following table summarizes selected items from the statement of operations for the years ended August 31, 2010 and 2009.  The comparative year ended August 31, 2010 only includes operations from August 13, 2009 (inception) through August 31, 2010.

EXPENSES:

		For the Year Ended August 31, 2010				August 13, 2009 (inception) to August 31, 2009				Increase / (Decrease)
General and administrative		$	50,823			$	44			$	50,779
Professional fees			428,950				3,827			$	425,123
Net operating loss			479,773				3,871			$	475,902
Interest expense			23,968				-			$	23,968
Net loss		$	503,741			$	3,871			$	499,870

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General and administrative expenses

General and administrative expenses for the year ended August 31, 2010 were $50,823 compared to $44 for the period ended August 31, 2009, an increase of $50,779.  The increase in our general and administrative expenses consisted of payroll, bank fees, automobile, postage and delivery, and stock services expenses, with $10,065 of these costs attributed to the costs incurred to establish and maintain an account with a transfer agent to handle our stock servicing needs.

Professional fees

Professional fees for the year ended August 31, 2010 were $428,950 compared to $3,827 for the period ended August 31, 2009, an increase of $425,123.  The increase in our professional fees was a result of increased services provided by consultants to aid in the process of taking our company public and costs associated with maintaining our filings with the Securities and Exchange Commission (SEC).  The majority of these costs were paid through debt or were paid by related parties on behalf of the Company.

Net operating loss

The net operating loss for the year ended August 31, 2010 was $479,773 compared to $3,871 for the period ended August 31, 2009, an increase of $475,902.  Our net operating loss consisted primarily of professional fees and stocks services expense as we created the entity in anticipation of developing our flame retardant products.

Interest expenses

Interest expenses for the years ended August 31, 2010 was $23,968 compared to $-0- for the period ended August 31, 2009.  The increase in other expenses was a result of interest expenses accrued on notes payable to various parties for consulting services rendered and on short term loans from the Company’s CEO, Christopher Glover that were not outstanding in the previous year.

Net loss

The net loss for the year ended August 31, 2010 was $503,741 compared to $3,871 for the period ended August 31, 2009, an increase of $499,870 or 129%.  Our net loss consisted primarily of professional fees and stocks services expense as we created the entity in anticipation of developing our flame retardant product.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at August 31, 2010 and 2009.

		August 31, 2010				August 31, 2009
Current Assets		$	264			$	3,225
Current Liabilities		$	505,376			$	4,596
Working Capital (Deficit)		$	(505,112	)		$	(1,371)

While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and projected cash flow deficits from operations and development of alternative revenue sources.  As of August 31, 2010, we had a working capital deficit of $505,112.  Our poor financial condition raises substantial doubt about our ability to continue as a going concern and we have incurred losses since inception and may incur future losses.  In the past, we have raised money through contributions from related parties and through issuing notes.  During the year ended August 31, 2010, related parties paid $43,889 in expenses on behalf of the Company, notes totaling $325,000 were issued in exchange for services, and the Company received $8,867 in cash from related parties. Should we not be able to continue to secure additional financing when needed, we may be required to slow down or suspend our growth or reduce the scope of our current operations, any of which would have a material adverse effect on our business. Our future capital requirements will depend on many factors, including the development of our flame retardant products; the cost and availability of third-party financing for development; and administrative and legal expenses.

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We anticipate that we will incur operating losses in the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development.  Such risks for us include, but are not limited to, an evolving and unpredictable business model; recognition of revenue sources; and the management of growth. To address these risks, we must, among other things, expand our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel.  There can be no assurance that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.

Satisfaction of our cash obligations for the next 12 months.

As of August 31, 2010, our cash balance was $264. Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, sale of shares of our common stock, third party financing, and/or traditional bank financing.  We anticipate sales-generated income during that same period of time, but do not anticipate generating sufficient amounts of revenues to meet our working capital requirements.  Consequently, we intend to make appropriate plans to secure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.

Going concern.

Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business.  We have incurred continuous losses from operations, have an accumulated deficit of $507,612 and a working capital deficit of $505,112 at August 31, 2010, and have reported negative cash flows from operations since inception.  In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months.  The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.

Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt.  There can be no assurance, however, that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our future operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.

Summary of product and research and development that we will perform for the term of our plan.

We are not anticipating significant research and development expenditures in the near future.

Expected purchase or sale of plant and significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment as such items are not required by us at this time.

Significant changes in the number of employees.

As of August 31, 2010, we had no employees, other than our non-paid CEO, Christopher Glover.  Currently, there are no organized labor agreements or union agreements and we do not anticipate any in the future.

Assuming we are able to pursue revenue through the commencement of sales of our flame retardant products, we anticipate an increase of personnel and may need to hire employees.  In the interim, we intend to use the services of independent consultants and contractors to perform various professional services when appropriate.  We believe the use of third-party service providers may enhance our ability to control general and administrative expenses and operate efficiently.

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 or operations, liquidity, capital expenditures or capital resources that are material to investors.

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Recently Issued Accounting Standards

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration.  Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in this Update are effective for modifications 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 adoption is permitted. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our financial statements.

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

 

In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective for the Company on September 1, 2010.

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective for the Company on September 1, 2010.

In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard is effective for the Company on September 1, 2009. The Company does not expect the impact of its adoption to be material to its financial statements.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (the “ASC”). The ASC has become the single source of non-governmental accounting principles generally accepted in the United States (“GAAP”) recognized by the FASB in the preparation of financial statements. The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (“SEC”), therefore, the rules and interpretive releases of the SEC continue to be additional sources of GAAP for the Company. The Company adopted the ASC as of September 1, 2009. The ASC does not change GAAP and did not have an effect on the Company’s financial position, results of operations or cash flows.

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In May 2009, the FASB issued ASC 855-10 entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. ASC 855-10 provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. ASC 855-10 is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of ASC 855-10 did not have a significant effect on the Company’s financial statements. In connection with preparing the accompanying unaudited condensed financial statements, management evaluated subsequent events through the date that such financial statements were issued (filed with the Securities and Exchange Commission).

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

This item in not applicable as we are currently considered a smaller reporting company.

22

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

Report of Independent Registered Public Accounting Firm		F-1
Balance Sheets as of August 31, 2010 and 2009 (Restated)		F-2
Statements of Operations for the periods ended August 31, 2010 and 2009 (Restated)		F-3
Statement of Stockholders' Equity (Deficit) for the periods ended August 31, 2010 and 2009 (Restated)		F-4
Statements of Cash Flow for the periods ended August 31, 2010 and 2009 (Restated)		F-5
Notes to Financial Statements (Restated)		F-6

23

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Flameret, Inc.

(A Development Stage Company)

We have audited the accompanying balance sheets of Flameret, Inc. (A Development Stage Company) as of August 31, 2010 and 2009, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the period from August 13, 2009 (inception) through August 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Flameret, Inc. (A Development Stage Company) as of August 31, 2010 and 2009, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the period from August 13, 2009 (inception) through August 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet established an ongoing source of revenue sufficient to cover its operating costs which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Sadler, Gibb & Associates

Salt Lake City, UT

May 31, 2011

F-1

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FLAMERET, INC.
(A Development Stage Company)
Balance Sheets
(Restated)
ASSETS
			August 31,			August 31,
			2010			2009
CURRENT ASSETS
	Cash		$	264		$	3,225
		Total Current Assets		264			3,225
		TOTAL ASSETS	$	264		$	3,225
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	10,556		$	1,500
	Accrued interest payable			23,968			-
	Accrued salaries			90,000			-
	Related party payables			55,852			3,096
	Notes payable			325,000			-
		Total Current Liabilities		505,376			4,596
		Total Liabilities		505,376			4,596
STOCKHOLDERS' EQUITY (DEFICIT)
	Series A Preferred Stock, $0.0001 par value,
	1,000,000 shares authorized, -0- shares
	issued and outstanding			-			-
	Series B Preferred Stock, $0.0001 par value,
	10,000,000 shares authorized, -0- shares
	issued and outstanding			-			-
	Series C Preferred Stock, $0.0001 par value,
	10,000,000 shares authorized, -0- shares
	issued and outstanding			-			-
	Series D Preferred Stock, $0.0001 par value,
	30,000,000 shares authorized, -0- shares
	issued and outstanding			-			-
	Common stock, $0.0001 par value, 1,800,000,000 shares
	authorized, 180,000,000 shares issued and outstanding			1,800			1,800
	Additional paid-in capital			700			700
	Deficit accumulated during the development stage			(507,612)			(3,871)
		Total Stockholders' Equity (Deficit)		(505,112)			(1,371)
		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	264		$	3,225
The accompanying notes are an integral part of these financial statements.

 

 

F-2

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FLAMERET, INC.
(A Development Stage Company)
Statements of Operations
(Restated)
						From Inception			From Inception
			For the			on August 13,			on August 13,
			Year Ended			2009 Through			2009 Through
			August 31,			August 31,			August 31,
			2010			2009			2010
REVENUE			$	-		$	-		$	-
OPERATING EXPENSES
	General and administrative expenses			50,823			44			50,867
	Professional fees			428,950			3,827			432,777
		Total Operating Expenses		479,773			3,871			483,644
LOSS FROM OPERATIONS				(479,773)			(3,871)			(483,644)
OTHER EXPENSES
	Interest expense			(23,968)			-			(23,968)
		Total Other Expenses		(23,968)			-			(23,968)
LOSS BEFORE INCOME TAXES				(503,741)			(3,871)			(507,612)
PROVISION FOR INCOME TAXES				-			-			-
NET LOSS			$	(503,741)		$	(3,871)		$	(507,612)
BASIC AND DILUTED LOSS PER SHARE			$	(0.03)		$	(0.00)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED				18,000,000			18,000,000
The accompanying notes are an integral part of these financial statements.

 

  

F-3

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FLAMERET, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
(Restated)
									Deficit
									Accumulated
						Additional			During the
	Common Stock					Paid-in			Development
	Shares		Amount			Capital			Stage			Total
Balance at inception on August 13, 2009	-		$	-		$	-		$	-		$	-
Common stock issued to founder
at $0.0001 per share	18,000,000			1,800			(1,800)			-			-
Contributed capital	-			-			2,500			-			2,500
Net loss for the year ended
August 31, 2009	-			-			-			(3,871)			(3,871)
Balance, August 31, 2009	18,000,000			1,800			700			(3,871)			(1,371)
Net loss for the year ended
August 31, 2010	-			-			-			(503,741)			(503,741)
Balance, August 31, 2010	18,000,000		$	1,800		$	700		$	(507,612)		$	(505,112)

The accompanying notes are an integral part of these financial statements.

F-4

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F-5

---

FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

   

Nature of Business

Flameret, Inc. (“the Company”) was incorporated in the state of Nevada on August 13, 2009 (“Inception”).  The Company was formed to market a range of liquid fire retardants and treatments, initially in the textile industries.  The company will market an innovative range of fire barriers for the mattress industry, and for industrial workers coveralls.  Our products will help revolutionize the mattress and furniture materials usage industry by creating a non-toxic product which does not change the feel or texture of the end product.  Our products will also meet the legislation standards that have been passed and are set to go into effect in the near future, thus making these textile products easier to handle, cost effective and comfortable, as well as being non-toxic, environmentally friendly, and safe for the end user.

Basis of Presentation

The accompanying audited consolidated financial statements and related notes include the activity of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-K.  

Development Stage Company Classification

The Company is considered to be in the development stage as defined by FASB ASC 915. This standard requires companies to report their operations, shareholders equity and cash flows from inception through the reporting date. The Company will continue to be reported as a development stage entity until, among other factors, revenues are generated from management’s intended operations. Management has provided financial data since inception (August 13, 2009).

Accounting Method

The Company’s financial statements are prepared using the accrual method of accounting.  The Company has elected an August 31 year-end.

Use of Estimates

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

  

Cash and Cash Equivalents

We maintain cash balances in non-interest-bearing accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.

  

Property and Equipment

Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives of the related asset.  

F-6

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment (Continued)

Maintenance and repairs will be charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and any resulting gain or loss will be reflected in operations.

The Company will assess the recoverability of equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.

Impairment of Long-Lived Assets

The Company follows the provisions of ASC 360 for its long-lived assets.  The Company’s long-lived assets, which include test equipment and purchased intellectual property rights, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts.  Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.  

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

Revenue Recognition

Revenues from fixed price contracts and cost-plus-fee contracts are recognized as services are performed. Revenue is recognized at the time of sale if collection is reasonably assured. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

  

F-7

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basic and Diluted Loss per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure.

Stock-based Compensation

The Company adopted FASB guidance on stock based compensation upon inception at August 13, 2009. Under FASB ASC 718, all share-based payments to employees, including grants of employee stock options, are to be recognized in the income statement based on their fair values.

Fair Value of Financial Instruments

The Company adopted ASC 820 which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under this standard certain assets and liabilities must be measured at fair value, and disclosures are required for items measured at fair value.

The Company’s financial instruments that must be measured under the new fair value standard include cash and the amount due to officer. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

     

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

F-8

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Pronouncements

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration.  Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in this Update are effective for modifications 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 adoption is permitted. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our financial statements.

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective for the Company on September 1, 2010.

F-9

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Pronouncements (Continued)

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective for the Company on September 1, 2010.

 

In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard is effective for the Company on September 1, 2009. The Company does not expect the impact of its adoption to be material to its financial statements.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (the “ASC”). The ASC has become the single source of non-governmental accounting principles generally accepted in the United States (“GAAP”) recognized by the FASB in the preparation of financial statements. The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (“SEC”), therefore, the rules and interpretive releases of the SEC continue to be additional sources of GAAP for the Company. The Company adopted the ASC as of September 1, 2009. The ASC does not change GAAP and did not have an effect on the Company’s financial position, results of operations or cash flows.

In May 2009, the FASB issued ASC 855-10 entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. ASC 855-10 provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. ASC 855-10 is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of ASC 855-10 did not have a significant effect on the Company’s financial statements. In connection with preparing the accompanying unaudited condensed financial statements, management evaluated subsequent events through the date that such financial statements were issued (filed with the Securities and Exchange Commission).

F-10

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 2 – GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – RELATED PARTY TRANSACTIONS

Through August 31, 2010 and 2009, the Company has borrowed $55,852 and $3,096, respectively from related parties to fund continuing operations.  These notes accrue interest at eight percent per annum, are due on demand and are uncollateralized.  The Company has accrued interest of $4,468 as of August 31, 2010 related to the note payable due to officers of the Company.

On August 13, 2009, the Company issued 18,000,000 founder’s shares at the par value of $0.0001.  On August 13, 2009, the Company received $2,500 in capital contributed from the Company’s founder and CEO.

  

NOTE 4 – NOTES PAYABLE

During the year ended August 31, 2010, the Company executed $325,000 in notes payable in exchange for services rendered to the Company.  The notes are unsecured, bear interest at six percent and are due on demand. The Company has accrued interest payable of $19,500 on the notes payable as of August 31, 2010.

  

F-11

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 5 – STOCKHOLDERS’ EQUITY

Preferred Stock

As of August 31, 2010, the Company has authorized 200,000,000 shares of preferred stock with a par value of $0.0001 made up of 1,000,000 authorized shares of series A preferred stock, 10,000,000 authorized shares of series B preferred stock, 10,000,000 shares of series C preferred stock, and 30,000,000 authorized shares of series D preferred stock.  As of August 31, 2010 no shares of preferred stock were issued and outstanding.

Common stock

As of August 31, 2010, the Company has authorized 1,800,000,000 shares of common stock with a par value of $0.0001.

On August 13, 2009, the Company issued 18,000,000 of founder’s shares at the par value of $0.00001.

NOTE 6 – RESTATED FINANCIAL STATEMENTS

During the six months ended February 28, 2011, the Company discovered unrecorded liabilities and related expenses. The Company has restated its financial statements for the period from inception through August 31, 2010 to reflect the unrecorded liabilities and related expenses.  Summarized financial statements reflecting the restatements are as follows:

F-12

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 6 – RESTATED FINANCIAL STATEMENTS (CONTINUED)

ASSETS
			August 31.			August 31.
			2009			2009
			(original)			(restated)
CURRENT ASSETS
	Cash		$	3,225		$	3,225
		Total Current Assets		3,225			3,225
		TOTAL ASSETS	$	3,225		$	3,225
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	-		$	1,500
	Related party payables			-			3,096
		Total Current Liabilities		-			4,596
		Total Liabilities		-			4,596
STOCKHOLDERS' EQUITY (DEFICIT)
	Common stock, $0.0001 par value, 1,800,000,000 shares
	authorized, 180,000,000 shares issued and outstanding			18,000			1,800
	Additional paid-in capital			2,500			700
	Deficit accumulated during the development stage			(17,275)			(3,871)
		Total Stockholders' Equity (Deficit)		3,225			(1,371)
		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	3,225		$	3,225

F-13

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 6 – RESTATED FINANCIAL STATEMENTS (CONTINUED)

ASSETS
			August 31,			August 31,
			2010			2010
			(original)			(restated)
CURRENT ASSETS
	Cash		$	265		$	264
		Total Current Assets		265			264
		TOTAL ASSETS	$	265		$	264
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	13,471		$	10,556
	Accrued interest payable			487			23,968
	Accrued salaries			13,867			90,000
	Related party payables			-			55,852
	Notes payable			-			325,000
		Total Current Liabilities		27,825			505,376
		Total Liabilities		27,825			505,376
STOCKHOLDERS' EQUITY (DEFICIT)
	Common stock, $0.0001 par value, 1,800,000,000 shares
	authorized, 180,000,000 shares issued and outstanding			18,000			1,800
	Additional paid-in capital			2,500			700
	Deficit accumulated during the development stage			(48,060)			(507,612)
		Total Stockholders' Equity (Deficit)		(27,560)			(505,112)
		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	265		$	264

F-14

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 6 – RESTATED FINANCIAL STATEMENTS (CONTINUED)

			From Inception			From Inception
			on August 13,			on August 13,
			2009 Through			2009 Through
			August 31,			August 31,
			2009			2009
			(original)			(restated)
REVENUE			$	-		$	-
OPERATING EXPENSES
	General and administrative expenses			44			44
	Professional fees			17,231			3,827
		Total Operating Expenses		17,275			3,871
LOSS FROM OPERATIONS				(17,275)			(3,871)
OTHER EXPENSES
	Interest expense			-			-
		Total Other Expenses		-			-
LOSS BEFORE INCOME TAXES				(17,275)			(3,871)
PROVISION FOR INCOME TAXES				-			-
NET LOSS			$	(17,275)		$	(3,871)
BASIC AND DILUTED LOSS PER SHARE			$	(0.00)		$	(0.00)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED				18,000,000			18,000,000

F-15

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FLAMERET, INC.

(A Development Stage Company)

Notes to Financial Statements

August 31, 2010 and 2009

NOTE 6 – RESTATED FINANCIAL STATEMENTS (CONTINUED)

			For the			For the
			Year Ended			Year Ended
			August 31,			August 31,
			2010			2010
			(original)			(restated)
REVENUE			$	-		$	-
OPERATING EXPENSES
	General and administrative expenses			16,348			50,823
	Professional fees			13,950			428,950
		Total Operating Expenses		30,298			479,773
LOSS FROM OPERATIONS				(30,298)			(479,773)
OTHER EXPENSES
	Interest expense			(487)			(23,968)
		Total Other Expenses		(487)			(23,968)
LOSS BEFORE INCOME TAXES				(30,785)			(503,741)
PROVISION FOR INCOME TAXES				-			-
NET LOSS			$	(30,785)		$	(503,741)
BASIC AND DILUTED LOSS PER SHARE			$	(0.00)		$	(0.03)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED				18,000,000			18,000,000