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EX-32.1 - CERTIFICATION - Fern Holdings Corp.f10k2015ex32i_fernholdings.htm
EX-31.1 - CERTIFICATION - Fern Holdings Corp.f10k2015ex31i_fernholdings.htm

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2015

 

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

For the transition period from ______________ to ______________

Commission File Number 000-54897

 

 

Fern Holdings Corp.

(Exact name of registrant as specified in its charter)

 

 

Delaware   30-1749642
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer Identification No.)

 

c/o Samir Masri CPA Firm P.C., 175 Great Neck Road, Suite 403, Great Neck, NY 11021

 

(Address of principal executive offices)

 

(516) 466-6193

 

(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, $0.0001 par value per share

 

(Title of Class)

Check whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐  No ☒

 

Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes ☐  No ☒

 

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☒  No ☐

 

Check whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No ☐

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

 

Check 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. (Check one):

 

  Large Accelerated Filer   ☐ Accelerated Filer   ☐
  Non-accelerated Filer    Smaller Reporting Company   ☒
  (Do not check if a smaller reporting company.)    

 

Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☒  No ☐

 

As of September 30, 2014, there were no non-affiliate holders of common stock of the Company.

 

As of July 14, 2015, there were 5,000,000 shares of common stock, par value $.0001, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

 

 

 

 
 

 

TABLE OF CONTENTS

 

        Page
         
    Forward-Looking Statements  
         
    Part I    
         
Item 1.   Business.   1
         
Item 1A.   Risk Factors.   5
         
Item 1B.   Unresolved Staff Comments.   5
         
Item 2.   Properties.   5
         
Item 3.   Legal Proceedings.   5
         
Item 4.   Mine Safety Disclosures.   5
         
    Part II    
         
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.   6
         
Item 6.   Selected Financial Data.   6
         
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results Of Operations.   6
         
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.   9
         
Item 8.   Financial Statements and Supplementary Data.   F-1
         
Item 9.   Changes in and Disagreements With Accountants on Accounting and  Financial Disclosure.   10
         
Item 9A.   Controls and Procedures.   10
         
Item 9B.   Other Information.   11
         
    Part III    
         
Item 10.   Directors, Executive Officers and Corporate Governance.   12
         
Item 11.   Executive Compensation.   14
         
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.   15
         
Item 13.   Certain Relationships and Related Transactions, and Director Independence.   16
         
Item 14.   Principal Accountant Fees and Services.   16
         
    Part IV    
         
Item 15.   Exhibits, Financial Statement Schedules.   18
         
    Signatures   19

 

 
 

 

FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Fern Holdings Corp. (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

  

 
 

 

PART I

 

Item 1. Business.

 

Fern Holdings Corp. (“we”, “us”, “our” or the "Company") was incorporated in the State of Delaware on August 29, 2012 and maintains its principal executive office at c/o Samir Masri CPA Firm P.C., 175 Great Neck Road, Suite 403, Great Neck, NY 11021. Since inception, the Company has been engaged in organizational efforts and obtaining initial financing.  The Company was formed as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation.  The Company filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on February 8, 2013, and since its effectiveness, the Company has focused on identifying a possible business combination. The Company selected March 31 as its fiscal year end.

 

The Company is currently considered to be a "blank check" company. The SEC defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Under SEC Rule 12b-2 under the Exchange Act, the Company also qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal operations.  Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being an SEC reporting company. On July 18, 2014, the Company entered into a binding letter of intent, dated July 17, 2014 (the “LOI”), with iQuitine Limited, a company organized in the United Kingdom (“iQuitine”), pursuant to which the Company agreed, subject to the terms of a definitive agreement (the “Definitive Agreement”) to be negotiated between the parties, to acquire no less than 100% of the issued and outstanding equity interests of iQuitine, in exchange for approximately 4,250,000 shares of common stock, par value $0.0001 per share (the “Common Stock”) of the Company issuable to the equity holders of iQuitine (the “Share Exchange”). In addition, subject to the terms and conditions of the Definitive Agreement, the existing sole shareholder of the Company agreed to cancel an aggregate of 4,250,000 shares of Common Stock, as an inducement for iQuitine to consummate the transactions contemplated by the LOI. The Definitive Agreement shall be subject to the approval and consent of holders of no less than 100% of the issued and outstanding equity interests of iQuitine. The Company’s principal business objective for the next 12 months will be to complete the transactions contemplated by the Share Exchange. In the event the Company does not consummate the transactions contemplated by the Share Exchange, then the Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with an operating business. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

 

As described above, our management has had discussions with iQuitine’s management in connection with the LOI. However, the parties have not entered into the Definitive Agreement. The Company cannot make any assurances that the Definitive Agreement will be prepared, nor whether the Share Exchange will be completed. Any target business, including iQuitine, that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

 

1
 

 

The analysis of new business opportunities will be undertaken by or under the supervision of the sole officer and director of the Company.  As of this date the Company has not entered into any definitive agreement with any party regarding business opportunities for the Company.  The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities in that it may seek a business combination target located in any industry or location. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:

 

(a)            Potential for growth, indicated by new technology, anticipated market expansion or new products;

 

(b)            Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;

 

(c)            Strength and diversity of management, either in place or scheduled for recruitment;

 

(d)            Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;

 

(e)            The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;

 

(f)             The extent to which the business opportunity can be advanced; and

 

(g)            The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items.

 

In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, the Registrant may not discover or adequately evaluate adverse facts about the opportunity to be acquired. In addition, we will be competing against other entities that possess greater financial, technical and managerial capabilities for identifying and completing business combinations.

 

In evaluating a prospective business combination, we will conduct as extensive a due diligence review of potential targets as possible given the lack of information which may be available regarding private companies, our limited personnel and financial resources and the inexperience of our management with respect to such activities. We expect that our due diligence will encompass, among other things, meetings with the target business’s incumbent management and inspection of its facilities, as necessary, as well as a review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, including but not limited to attorneys, accountants, consultants or other such professionals. At this time the Company has not specifically identified any third parties that it may engage, except that Sunrise Securities Corp. (“Sunrise”), an SEC-registered broker-dealer and Financial Industry Regulatory Authority (“FINRA”) member, may assist the Company with due diligence in identifying a business combination target. Nathan Low, a principal of our sole stockholder, NLBDIT 2010 Services, LLC (“NLBDIT Services”), is founder and President of Sunrise. The costs associated with hiring third parties as required to complete a business combination may be significant and are difficult to determine as such costs may vary depending on a variety of factors, including the amount of time it takes to complete a business combination, the location of the target company, and the size and complexity of the business of the target company.  Sunrise may receive compensation for any services it might provide to the Company, which if paid will be comparable to unaffiliated third party fees. Also, although we do not currently intend to retain any entity to act as a “finder” to identify and analyze the merits of potential target businesses, if we do, at present, we contemplate that at least one of the third parties who may introduce business combinations to us may be Sunrise. There are currently no agreements or preliminary agreements or understandings between us and Sunrise. As of this date, Sunrise has not had any discussion or preliminary discussion with any potential business combination candidate regarding business opportunities for the Company.

 

2
 

 

Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business combination. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoters, owners, sponsors or others associated with the target business seeking our participation.

 

We do not currently intend to retain any entity to act as a “finder” to identify and analyze the merits of potential target businesses.  However, if we do, at present, we contemplate that at least one of the third parties who may introduce business combinations to us may be Sunrise. There are currently no agreements or preliminary agreements or understandings between us and Sunrise.  

 

The time and costs required to select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with any degree of certainty. The amount of time it takes to complete a business combination, the location of the target company and the size and complexity of the business of the target company are all factors that determine the costs associated with completing a business combination transaction. The time and costs required to complete a business combination transaction can be ascertained once a business combination target has been identified. Any costs incurred with respect to evaluation of a prospective business combination that is not ultimately completed will result in a loss to us.

 

Competition

 

In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. There are numerous “public shell” companies either actively or passively seeking operating businesses with which to merge in addition to a large number of “blank check” companies formed and capitalized specifically to acquire operating businesses. Additionally, we are subject to competition from other companies looking to expand their operations through the acquisition of a target business. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability to compete in acquiring certain sizable target businesses is limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business. Further, our outstanding warrants and the future dilution they potentially represent may not be viewed favorably by certain target businesses.

 

Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities with a business objective similar to ours to acquire a target business on favorable terms.

 

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. Many of our target business’ competitors are likely to be significantly larger and have far greater financial and other resources than we will. Some of these competitors may be divisions or subsidiaries of large, diversified companies that have access to financial resources of their respective parent companies. Our target business may not be able to compete effectively with these companies or maintain them as customers while competing with them on other projects. In addition, it is likely that our target business will face significant competition from smaller companies that have specialized capabilities in similar areas. We cannot accurately predict how our target business’ competitive position may be affected by changing economic conditions, customer requirements or technical developments. We cannot assure you that, subsequent to a business combination, we will have the resources to compete effectively.

 

3
 

 

Form of Acquisition

 

The manner in which the Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters.

 

It is likely that the Company will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code") depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were stockholders of the Company prior to such reorganization.

 

The stockholders of the Company will likely not have control of a majority of the voting securities of the Company following a reorganization transaction. As part of such a transaction, all or a majority of the Company's directors may resign and one or more new directors may be appointed without any vote by stockholders.

 

In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding securities. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval.

 

The Company intends to search for a target for a business combination by contacting various sources including, but not limited to, our affiliates, lenders, investment banking firms, private equity funds, consultants and attorneys. The approximate number of persons or entities that will be contacted is unknown and dependent on whether any opportunities are presented by the sources that we contact.  Due to our stockholder’s affiliation with Sunrise, we expect that Sunrise will assist the Company in identifying a business combination target for us. We currently do not have any agreements or preliminary agreements or understandings between us and Sunrise.

 

It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. The costs that will be incurred are difficult to determine at this time as the costs are expected to be tied to the amount of time it takes to identify and complete a business combination transaction as well as the specific factors related to the business combination target that is chosen, including such factors as the location, size and complexity of the business of the target company.  If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Registrant of the related costs incurred. The Company has not established a timeline with respect to the identification of a business combination target. We expect that the Company’s management will use its contacts and business relationships within Sunrise to identify a business combination target for the Company.

 

We presently have no employees apart from our management. Our sole officer and director is engaged in outside business activities and is employed on a full-time basis by certain unaffiliated companies. Our sole officer and director will be dividing his time amongst these entities and anticipates that he will devote very limited time to our business until the acquisition of a successful business opportunity has been identified. The specific amount of time that management will devote to the Company may vary from week to week or even day to day, and therefore the specific amount of time that management will devote to the Company on a weekly basis cannot be ascertained with any level of certainty. In all cases, management intends to spend as much time as is necessary to exercise its fiduciary duties as officer and director of the Company and believes that it will be able to devote the time required to consummate a business combination transaction as necessary.

 

4
 

 

We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.

 

Emerging Growth Company

 

The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

 

The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

We will remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1 billion, (2) the date on which we issue more than $1 billion in non-convertible debt in a three year period, (3) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, or (4) when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. 

 

To the extent that we continue to qualify as a “smaller reporting company”, as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.

 

Item 1ARisk Factors.

 

As a “smaller reporting company,” the Company is not required to provide this information.

 

Item 1B.  Unresolved Staff Comments.

 

As a “smaller reporting company,” the Company is not required to provide this information.

 

Item 2. Properties.

 

The Company neither rents nor owns any properties. The Company utilizes the office space and equipment of its management at no charge.  The Company currently has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.

 

Item 3. Legal Proceedings.

 

There are presently no pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

5
 

 

PART II

 

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

 

Common Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $.0001 per share (the “Common Stock”).  The Common Stock is not listed on a publicly-traded market.  As of the date of this filing, there was one (1) holder of record of the Common Stock.

 

Preferred Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, par value $.0001 per share with designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors of the Company (the “Preferred Stock”).  The Company has not yet issued any of its preferred stock. 

 

Dividend Policy

 

The Company has not declared or paid any cash dividends on its common stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.

 

Recent Sales of Unregistered Securities

 

None.

 

Issuer Purchases of Equity Securities

 

None.

 

Item 6. Selected Financial Data.

 

As a “smaller reporting company,” the Company is not required to provide this information.

 

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

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

 

6
 

 

The Company currently does not engage in any business activities that provide cash flow.  During the next twelve months we anticipate incurring costs related to:

 

(i)         filing Exchange Act reports, and

(ii)        investigating, analyzing and consummating an acquisition.

 

We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. As of the date of the period covered by this report, the Company had $3,041 in cash. There are no assurances that the Company will be able to secure any additional funding as needed. Currently, however our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances, however there is no assurance of additional funding being available.

  

The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

 

Our management has had discussions with iQuitine’s management in connection with the LOI. However, the parties have not entered into the Definitive Agreement. The Company cannot make any assurances that the Definitive Agreement will be prepared, nor whether the Share Exchange will be completed. Any target business, including iQuitine, that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

 

The Company anticipates that the selection of a business combination will be complex and extremely risky. Through information received from industry professionals and publications such as the Reverse Merger Report, our management believes that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

 

Liquidity and Capital Resources

 

As of March 31, 2015, the Company had assets equal to $3,041 comprised exclusively of cash, as compared to $1,520 as of March 31, 2014. As of March 31, 2015, the Company had total current liabilities equal to $99,630, comprised of a loan payable, a note payable, and accounts payable and accrued expenses, as compared to $57,800, comprised of a loan payable, a note payable, and accounts payable and accrued expenses. The increase in total current liabilities is primarily attributable to additional borrowings from the note payable. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.

 

7
 

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing:

 

   Year  Ended March 31,
2015
   Year Ended March 31,
2014
 
Net Cash (Used in) Operating Activities  $(25,782)  $(57,446)
Net Cash (Used in) Investing Activities  $-   $- 
Net Cash Provided by Financing Activities  $27,303   $54,914 
Net Increase in Cash and Cash Equivalents  $1,521   $(2,532)

 

The Company has nominal assets and has generated no revenues since inception. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

 

Emerging Growth Company

 

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

 

Results of Operations

 

The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from August 29, 2012 (Inception) to March 31, 2015.  It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance.  It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern.  The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates. 

 

For the year ended March 31, 2015, the Company had a net loss of $40,309, consisting of legal, accounting, audit, and other professional service fees incurred in relation to the filing of the Company’s periodic reports.

 

For the year ended March 31, 2014, the Company had a net loss of $34,162, consisting of legal, accounting, audit, and other professional service fees incurred in relation to the filing of the Company’s periodic reports.

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.  

 

8
 

 

Contractual Obligations

 

As a “smaller reporting company,” the Company is not required to provide this information.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company,” the Company is not required to provide this information.

 

9
 

 

Item 8.  Financial Statements and Supplementary Data.

 

Audited financial statements begin on the following page of this report.

  

FERN HOLDINGS CORP.

INDEX TO FINANCIAL STATEMENTS

 

  Page(s)
   
Report of Independent Registered Public Accounting Firm F-2
   
Financial Statements:  
   
Balance Sheets as of March 31, 2015 and 2014 F-3
   
Statements of Operations for the years ended March 31, 2015 and 2014 F-4
   
Statements of Changes in Stockholder’s Deficiency for the years ended March 31, 2015 and March 31, 2014 F-5
   
Statements of Cash Flows for the years ended March 31, 2015 and 2014 F-6
   
Notes to Financial Statements F-7 – F-11

 

F-1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Stockholder
Fern Holdings Corp.

New York, NY

 

We have audited the accompanying balance sheets of Fern Holdings Corp. (the “Company”) as of March 31, 2015 and 2014 and the related statements of operations, changes in stockholder’s deficiency, and cash flows for each of the years in the two-year period ended March 31, 2015. The Company’s management is responsible for these financial statements. 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 audit 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 Fern Holdings Corp. as of March 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2015, 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 3 to the financial statements, the Company has negative working capital and has incurred net losses since inception. This raises substantial doubt about the Company's ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Raich Ende Malter & Co. LLP
Raich Ende Malter & Co. LLP
New York, New York 

July 14, 2015

 

F-2
 

 

FERN HOLDINGS CORP.

BALANCE SHEETS

 

   March 31,
2015
   March 31,
2014
 
         
ASSETS
         
CURRENT ASSETS:        
Cash  $3,041   $1,520 
           
Total Current Assets   3,041    1,520 
           
TOTAL ASSETS  $3,041   $1,520 
           
LIABILITIES AND STOCKHOLDER'S DEFICIENCY          
           
CURRENT LIABILITIES:          
Accounts payable and accrued expenses  $17,413   $2,886 
Loan payable - related party   3,400    3,400 
Note payable - related party   78,817    51,514 
           
Total Current Liabilities   99,630    57,800 
           
COMMITMENTS AND CONTINGENCIES   -    - 
           
STOCKHOLDER'S DEFICIENCY:          
Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding   -    - 
Common stock, $.0001 par value; 100,000,000 shares authorized; 5,000,000 shares issued and outstanding   500    500 
Additional paid-in capital   9,500    9,500 
Accumulated deficit   (106,589)   (66,280)
Total Stockholder's Deficiency   (96,589)   (56,280)
           
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY  $3,041   $1,520 

 

See accompanying notes to the financial statements.

 

F-3
 

 

FERN HOLDINGS CORP.

STATEMENTS OF OPERATIONS

 

 

   For The Year Ended   For The Year Ended 
   March 31,   March 31, 
   2015   2014 
         
REVENUES  $-   $- 
           
GENERAL AND ADMINISTRATIVE EXPENSES   36,384    32,687 
           
(LOSS) BEFORE OTHER EXPENSES   (36,384)   (32,687)
           
OTHER EXPENSE:          
INTEREST EXPENSE   3,925    1,475 
           
(LOSS) BEFORE BENEFIT FROM INCOME TAXES   (40,309)   (34,162)
           
BENEFIT FROM INCOME TAXES   -    - 
           
NET (LOSS)  $(40,309)  $(34,162)
           
BASIC AND DILUTED LOSS PER SHARE   -    - 
           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED   5,000,000    5,000,000 

 

See accompanying notes to the financial statements.

 

F-4
 

 

FERN HOLDINGS CORP.

STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIENCY

FOR THE YEARS ENDED MARCH 31, 2015 AND MARCH 31, 2014

 

                   Additional       Total 
   Preferred Stock   Common Stock   Paid-in   Accumulated   Stockholder's 
   Shares   Amount   Shares   Amount   Capital   Deficit   Deficiency 
                             
Balance at April 1, 2013   -   $-    5,000,000   $500   $9,500   $(32,118)  $(22,118)
                                    
Net (loss)   -    -    -    -    -    (34,162)   (34,162)
                                    
Balance at March 31, 2014   -    -    5,000,000    500    9,500    (66,280)   (56,280)
                                    
Net (loss)   -    -    -    -    -    (40,309)   (40,309)
                                    
Balance at March 31, 2015   -   $-    5,000,000   $500   $9,500   $(106,589)  $(96,589)

 

See accompanying notes to the financial statements.

 

F-5
 

 

FERN HOLDINGS CORP.

STATEMENTS OF CASH FLOWS

 

   For The Year Ended   For The Year Ended 
   March 31,
2015
   March 31,
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES:        
NET (LOSS)  $(40,309)  $(34,162)
           
ADJUSTMENT TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:          
Increase (decrease) in accounts payable and accrued expenses   14,527    (23,284)
           
NET CASH USED IN OPERATING ACTIVITIES   (25,782)   (57,446)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Increase in loan payable - related party   -    3,400 
Increase in note payable - related party   27,303    51,514 
           
NET CASH PROVIDED BY FINANCING ACTIVITIES   27,303    54,914 
           
NET INCREASE (DECREASE) IN CASH   1,521    (2,532)
           
CASH, BEGINNING OF PERIOD   1,520    4,052 
           
CASH, END OF PERIOD  $3,041   $1,520 

 

See accompanying notes to the financial statements.

 

F-6
 

 

FERN HOLDINGS CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 1 - Organization and Business

 

Business Activity

 

Fern Holdings Corp., ("the Company") was incorporated in the state of Delaware on August 29, 2012 with the objective to acquire, or merge with, an operating business.

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly traded corporation. The Company’s principal business objective over the next twelve months and beyond will be to achieve long-term growth potential through a combination with a business rather than immediate short-term earnings. The Company will not restrict its potential target companies to any specific business, industry or geographical location. The analysis of business opportunities will be undertaken by, or under the supervision of, the officers and directors of the Company.

 

Note 2 - Summary of Significant Accounting Policies

 

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 disclosure of contingent assets and liabilities at the dates of the balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

F-7
 

 

fern HOLDINGS CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 2 - Summary of Significant Accounting Policies (cont’d.)

 

Cash Equivalents

 

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There are no cash equivalents at the balance sheet dates.

 

Income Taxes

 

The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.

 

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. As of March 31, 2015, the Company has no accrued interest or penalties related to uncertain tax positions.

 

Loss Per Common Share

 

Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments for the periods presented.

 

Emerging Growth Company

 

The Company is an “emerging growth company” and  has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.

 

F-8
 

 

fern HOLDINGS CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 2 - Summary of Significant Accounting Policies (cont’d.)

 

Recent Accounting Pronouncements

 

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10 to eliminate certain financial reporting requirements. In accordance with that pronouncement we have elected to adopt the elimination of certain financial reporting requirements including the presentation of inception-to-date information in the statements of operations, cash flows, and changes in stockholder's deficiency and labeling the financial statements as those of a development stage entity.

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

Note 3 - Going Concern

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.

 

The Company has incurred losses from inception of approximately $107,000 and has negative working capital of approximately $97,000 at March 31, 2015, which among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plan to find a suitable acquisition or merger candidate, raise additional capital from the sale of stock, and receive loans from related parties. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.

 

Note 4 - Income Taxes

 

As of March 31, 2015, the Company has net operating loss carryforwards of approximately $107,000 to reduce future federal and state taxable income through 2035.

 

The Company currently has no federal or state tax examinations in progress nor has it had any federal or state examinations since its inception. All of the Company’s tax years are subject to federal and state tax examination.

 

F-9
 

 

fern HOLDINGS CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 4 - Income Taxes (cont’d.)

 

The benefit from income taxes consists of the following:

 

     For The Year Ended
March 31,
2015
   For The Year Ended
March 31,
2014
 
  Current Expense:        
  Federal and State  $-   $- 
  Deferred tax benefit:          
  Federal and State   14,000    12,000 
  Valuation allowance   (14,000)   (12,000)
  Total  $-   $- 

 

The income tax benefit differs from the amount computed by applying the federal statutory income tax rate to the loss before income taxes due to the following:

 

     For The Year Ended
March 31,
2015
   For The Year Ended
March 31,
2014
 
  Statutory federal income tax rate   (34)%   (34)%
  Valuation allowance   34%   34%
  Effective income tax rate   0%   0%

 

Note 5 - Common Stock

 

The Company is authorized to issue one hundred million (100,000,000) shares of $.0001 par value common stock, of which five million (5,000,000) shares have been issued.

 

Note 6 - Preferred Stock

 

The Company is authorized to issue ten million (10,000,000) shares of $.0001 par value preferred stock with designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors of the Company.

 

F-10
 

 

fern HOLDINGS CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 7 - Related Party Transactions

 

The Company utilizes the office space and equipment of its management at no cost.

 

During the year ended March 31, 2014, professional fees of $3,400 were paid on behalf of the Company by Sunrise Financial Group Inc. (“SFG”). The President of SFG has control of NLBDIT 2010 Services, LLC, the Company’s sole shareholder. As of March 31, 2015, the outstanding balance of $3,400 is reported as loan payable - related party. The amount is unsecured, non-interest bearing and has no stipulated repayment terms.

 

On October 15, 2012, the Company issued a Promissory Note payable (the “Note”) to NLBDIT 2010 Enterprises, LLC, a company controlled by the President of SFG. The Note bears interest at 6% and is payable upon completion of a business combination with a private company in a reverse merger or other transaction after which the Company would cease to be a shell company. At March 31, 2015, the outstanding balance of $78,817 is reported as note payable - related party. At March 31, 2015, and 2014, $5,400 and $1,475, respectively, of accrued interest related to this loan is reported as accounts payable and accrued expenses. Subsequent to March 31, 2015, the Company borrowed an additional $12,000.

 

During each of the years ended March 31, 2015 and 2014, the Company incurred costs of $10,000, for accounting services provided by an entity owned by the President of the Company.

  

Note 8 - Letter of Intent

 

On July 18, 2014, the Company entered into a binding letter of intent, dated July 17, 2014 (the “LOI”), with iQuitine Limited, a company organized in the United Kingdom (“iQuitine”), pursuant to which the Company agreed, subject to the terms of a definitive agreement (the “Definitive Agreement”) to be negotiated between the parties, to acquire no less than 100% of the issued and outstanding equity interests of iQuitine, in exchange for approximately 4,250,000 shares of common stock, par value $0.0001 per share (the “Common Stock”) of the Company issuable to the equity holders of iQuitine (the “Share Exchange”). In addition, subject to the terms and conditions of the Definitive Agreement, the existing sole shareholder of the Company agreed to cancel an aggregate of 4,250,000 shares of Common Stock, as an inducement for iQuitine to consummate the transactions contemplated by the LOI. The Definitive Agreement shall be subject to the approval and consent of holders of no less than 100% of the issued and outstanding equity interests of iQuitine. As of July 14, 2015, the Share Exchange has not occurred.

F-11
 

  

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

 

There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

 

Item 9A. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s President, Principal Financial Officer and Secretary, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report.  Based on that evaluation, the Company’s management including the President, Principal Financial Officer and Secretary, concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K, were effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms. 

 

Evaluation of Internal Controls and Procedures

 

Our management is also responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Our internal control over financial reporting includes those policies and procedures that:

 

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

   
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
   
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on financial statements.

 

As of March 31, 2015, we carried out an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2015. 

 

10
 

 

This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the company's registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

 

Changes in Internal Controls over Financial Reporting

 

There have been no significant changes to the Company’s internal controls over financial reporting that occurred during our last fiscal quarter of the year ended March 31, 2015, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

 

Item 9B. Other Information.

 

None.

 

11
 

 

PART III

 

Item 10.  Directors, Executive Officers, Promoters and Corporate Governance.

 

(a)        Identification of Directors and Executive Officers.  

 

The following table sets forth certain information regarding the Company’s sole director and executive officer:

 

Name   Age   Position
         
Samir N. Masri   70   Chief Executive Officer, Chief Financial Officer, President, Secretary and Director

 

The Company’s officers and directors are elected annually for a one year term or until their respective successors are duly elected and qualified or until their earlier resignation or removal.

 

Samir N. Masri, the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and director since October 15, 2012, is the founder and President of Samir Masri CPA Firm P.C. since 2006. Mr. Masri has also served as President and a director of Iron Sands Corp. and Putnam Hills Corp. since May 26, 2011 and Chief Executive Officer, Chief Financial Officer, President, Secretary and director of Dutchess Holdings Corp. and Oneida Resources Corp. since October 15, 2012. Mr. Masri served as an executive officer and a director of China Display Technologies, Inc. (formerly Lincoln International Corp.), a publicly reporting and non-trading shell company, from 2004 until a share exchange with an operating company was completed in 2007. Mr. Masri received a B.A. in 1967 and a M.A. in 1970 in Politics, Philosophy and Economics from St. Catherine’s College in Oxford, England. Mr. Masri is a fellow of the Institute of Chartered Accountants in England and Wales and a CPA licensed in New York. Mr. Masri’s past experience as executive officer and director of a shell company which has completed a business combination will be beneficial to the Company as it seeks to carry out its business plan.

 

(b)        Significant Employees.

 

As of the date hereof, the Company has no significant employees.

 

(c)        Family Relationships.

 

None. 

 

12
 

 

(d)        Involvement in Certain Legal Proceedings.

 

To the best of our knowledge, our sole officer and director has not, during the past ten years:

 

  been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

  had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

 

  been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

 

  been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

  been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

  been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Exchange Act requires the Company’s directors and officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

 

Based solely on the Company’s review of the copies of the forms received by it during the fiscal year ended March 31, 2015 and written representations that no other reports were required, the Company believes that no person who, at any time during such fiscal year, was a director, officer or beneficial owner of more than 10% of the Company’s common stock failed to comply with all Section 16(a) filing requirements during such fiscal years.

 

13
 

 

Code of Ethics

 

On June 15, 2013, the Company adopted a formal code of ethics statement for senior officers and directors (the “Code of Ethics”) that is designated to deter wrongdoing and promote ethical conduct and full, fair, accurate, timely and understandable reports that the Company files or submits to the SEC and others. A form of the Code of Ethics was filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2013 filed with the SEC on July 16, 2013, and is incorporated herein by reference.

 

Nominating Committee

 

We have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.

 

Audit and Compensation Committee

 

The Board of Directors acts as the audit committee. The Company does not have a qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this time to hire such an expert.  The Company intends to continue to search for a qualified individual for hire.

 

Item 11.Executive Compensation.

 

The following table sets forth the cash and other compensation paid by the Company to its officers and directors for the years ended March 31, 2014 and 2015.

 

Name and Position Year Salary Bonus Stock Awards Option Awards All other
Compensation
Total

Samir N. Masri (1)

Chief Executive Officer, President, Chief Financial Officer,

Secretary and Director

2015

2014 

None

None

None

None

None

None

None

None

None

None

None

None

 

(1)   Samir N. Masri was appointed to serve as Chief Executive Officer, Chief Financial Officer, President, Secretary and a director of the Company on October 15, 2012.

 

The following compensation discussion addresses all compensation awarded to, earned by, or paid to the Company’s officers and directors. The Company’s sole officer and director has not received any cash or other compensation since inception. He will not receive any compensation until the consummation of an acquisition. No compensation of any nature has been paid for on account of services rendered by the director in such capacity. Our sole officer and director intends to devote very limited time to our affairs.

 

It is possible that, after the Company successfully consummates a business combination with an unaffiliated entity, that entity may desire to employ or retain our management for the purposes of providing services to the surviving entity.

 

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

 

Except as otherwise disclosed herein, there are no understandings or agreements regarding compensation our management will receive after a business combination.

 

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Compensation Committee and Insider Participation

 

The Company does not have a standing compensation committee or a committee performing similar functions, since the Board of Directors has determined not to compensate the officers and directors until such time that the Company completes a reverse merger or business combination.

 

Compensation Committee Report

 

The Company does not have a standing compensation committee or a committee performing similar function, and therefore does not have a compensation committee report.

 

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

 

(a)           The following tables set forth certain information as of the date of this filing, regarding (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director, nominee and executive officer of the Company and (iii) all officers and directors as a group.

 

Name and Address 

Amount and Nature of

Beneficial Ownership

   Percentage of Class 
NLBDIT 2010 Services, LLC
c/o Sunrise Securities Corp
600 Lexington Avenue, 23rd Floor
New York, NY 10022
   5,000,000    100%
           
The Nathan Low 2008 Irrevocable Trust
c/o Sunrise Securities Corp.
600 Lexington Avenue, 23rd Floor
New York, NY 10022
   5,000,000(1)   100%
           
Nathan A. Low
c/o Sunrise Securities Corp.
600 Lexington Avenue, 23rd Floor
New York, NY 10022
   5,000,000(2)   100%
           
Samir N. Masri (3)
175 Great Neck Rd
Suite 403
Great Neck, NY 11021
   0(4)   0%
           
All Directors and Officers as a Group
(1 individual)
          

 

 

(1) Represents the 5,000,000 shares of Common Stock owned of record by NLBDIT 2010 Services, LLC (“NLBDIT Services”). The Nathan Low 2008 Irrevocable Trust (“Low Trust”) owns 100% of the outstanding membership interests of NLBDIT Services and may be deemed to beneficially own the shares of Common Stock held of record by NLBDIT Services.
(2) Represents the 5,000,000 shares of Common Stock owned of record by NLBDIT Services and beneficially by the Low Trust. Nathan Low is the family trustee of the Low Trust and has voting and dispositive control over any securities owned of record or beneficially by the Low Trust, subject to the agreement of the independent trustee.
(3) Samir N. Masri serves as Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of the Company.

 

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(4) Does not include the 5,000,000 shares owned of record by NLBDIT Services. Samir Masri is the Managing Member of NLBDIT Services but does not have any voting or dispositive power over the shares of Common stock owned of record by NLBDIT Services.

 

(b)           The Company currently has not authorized any compensation plans or individual compensation arrangements.

 

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

 

Transactions with Related Persons

 

Since April 1, 2013, there have been no related party transactions in which the amount involved exceeded the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, except as disclosed below.

 

On October 15, 2012, the Company issued a Promissory Note payable (the “Note”) to NLBDIT 2010 Enterprises, LLC, a company controlled by the President of SFG. The Note bears interest at 6% and is payable upon completion of a business combination with a private company in a reverse merger or other transaction after which the Company would cease to be a shell company. At March 31, 2015, the outstanding balance of $78,817 is reported as note payable - related party. At March 31, 2015, and 2014, $5,400 and $1,475, respectively, of accrued interest related to this loan is reported as accounts payable and accrued expenses. Subsequent to March 31, 2015, the Company borrowed an additional $12,000.

 

The Company engaged Samir Masri CPA Firm P.C. to provide accounting services to the Company. Samir Masri, the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and director, is the founder and President of Samir Masri CPA Firm P.C. The Company has agreed to pay Samir Masri CPA Firm P.C. for services rendered in connection with the preparation of the financial statements for the Company’s periodic reports in an aggregate amount equal to $10,000 for the year. There are no written agreements in connection with this arrangement.

 

The Company currently uses the office space and equipment of its management at no cost.

 

During the year ended March 31, 2015 and 2014, professional fees of were paid on behalf of the Company by Sunrise Financial Group Inc. (“SFG”). The President of SFG has control of NLBDIT 2010 Services, LLC. As of March 31, 2015, the outstanding balance of $3,400 is reported as loan payable - related party. The amount is unsecured, non-interest bearing and has no stipulated repayment terms.

 

Director Independence

 

The Company is not a listed issuer whose securities are listed on a national securities exchange, or an inter-dealer quotation system which has requirements that a majority of the board of directors be independent.  Under NASDAQ Rule 5605(a)(2)(A), a director is not considered to be independent if he or she also is an executive officer or employee of the corporation.  Under such definition, our sole director, Samir N. Masri would not be considered independent as he also serves as an executive officer of the Company.

 

Item 14.  Principal Accounting Fees and Services

 

Raich Ende Malter & Co. LLP is the Company's independent registered public accounting firm.

 

Audit Fees

 

The aggregate fees billed by Raich Ende Malter & Co. LLP for professional services rendered for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q or services that are normally provided in connection with statutory and regulatory filings were approximately $12,000  and $10,000 for the fiscal years ended March 31, 2015 and March 31, 2014, respectively.

 

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Audit-Related Fees

 

There were no fees billed by Raich Ende Malter & Co. LLP for assurance and related services that are reasonably related to the performance of the audits or reviews of the Company’s financial statements for the fiscal years ended March 31, 2015 and March 31, 2014.

 

Tax Fees

 

There were no fees billed by Raich Ende Malter & Co. LLP for professional services for tax compliance, tax advice, and tax planning for the fiscal years ended March 31, 2015 and March 31, 2014.

 

All Other Fees

 

There were no fees billed by Raich Ende Malter & Co. LLP for other products and services for the fiscal years ended March 31, 2015 and March 31, 2014.

 

Audit Committee’s Pre-Approval Process

 

The Board of Directors acts as the audit committee of the Company, and accordingly, all services are approved by all the members of the Board of Directors.

 

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Part IV

 

Item 15. Exhibits, Financial Statement Schedules

 

(a)  We set forth below a list of our audited financial statements included in Item 8 of this annual report on Form 10-K.

 

Statement   Page*
Index to Financial Statements   F-1
     
Report of Independent Registered Public Accounting Firm   F-2
     
Balance Sheets   F-3
     
Statements of Operations   F-4
     
Statement of Changes in Stockholder’s Deficiency   F-5
     
Statements of Cash Flows   F-6
     
Notes to Financial Statements   F-7 – F-11

 

(b) Index to Exhibits required by Item 601 of Regulation S-K.

 

Exhibit   Description
3.1   Certificate of Incorporation(1)
     
3.2   By-laws(1)
     
4.1   Promissory Note issued by the Company to NLBDIT 2010 Enterprises LLC, dated October 15, 2012(2)
     
10.1   Common Stock Purchase Agreement by and between the Company and NLBDIT 2010 Services, LLC, dated October 15, 2012(2)
     
10.2   Letter of Intent by and between the Company and iQuitine Limited, dated July 17, 2014(4)
     
14.1   Code of Ethics(3)
     
31.1   Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual Report on Form 10-K for the year ended March 31, 2015
     
31.2   Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
     
101.INS   XBRL INSTANCE DOCUMENT
     
101.SCH   XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
     
101.CAL   XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT
     
101.DEF   XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT
     
101.LAB   XBRL TAXONOMY LABEL LINKBASE DOCUMENT
     
101.PRE   XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT

 

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 

(1) Filed as an exhibit to the Company's registration statement on Form 10, as filed with the SEC on February 8, 2013, and incorporated herein by this reference.

 

(2) Filed as an exhibit to the Company's amended registration statement on Form 10/A, as filed with the SEC on March 22, 2013, and incorporated herein by this reference.
   
(3) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended March 31, 2013, as filed with the SEC on July 16, 2013, and incorporated herein by this reference.
   
(4) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the period ended December 31, 2014, as filed with the SEC on February 17, 2015 and incorporated herein by this reference.

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  FERN HOLDINGS CORP.
     
Dated: July 14, 2015 By: /s/ Samir N. Masri
    Samir N. Masri
   

President, Secretary and Director

Principal Executive Officer

Principal Financial Officer

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

    Title   Date
         
/s/ Samir N. Masri   Chief Executive Officer, Chief Financial Officer,   July 14, 2015
Samir N. Masri   President, Secretary and Director    
    (Principal Executive Officer and Principal Financial Officer)  

 

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EXHIBIT INDEX

 

Exhibit   Description
     
3.1   Certificate of Incorporation(1)
     
3.2   By-laws(1)
     
4.1   Promissory Note issued by the Company to NLBDIT 2010 Enterprises LLC, dated October 15, 2012(2)
     
10.1   Common Stock Purchase Agreement by and between the Company and NLBDIT 2010 Services, LLC, dated October 15, 2012(2)
     
10.2   Letter of Intent by and between the Company and iQuitine Limited, dated July 17, 2014(4)
     
14.1   Code of Ethics(3)
     
31.1   Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual Report on Form 10-K for the year ended March 31, 2015
     
31.2   Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
     
101.INS   XBRL INSTANCE DOCUMENT
     
101.SCH   XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
     
101.CAL   XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT
     
101.DEF   XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT
     
101.LAB   XBRL TAXONOMY LABEL LINKBASE DOCUMENT
     
101.PRE   XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT

 

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 

(1) Filed as an exhibit to the Company's registration statement on Form 10, as filed with the SEC on February 8, 2013, and incorporated herein by this reference.

 

(2) Filed as an exhibit to the Company's amended registration statement on Form 10/A, as filed with the SEC on March 22, 2013, and incorporated herein by this reference.
   
(3) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended March 31, 2013, as filed with the SEC on July 16, 2013, and incorporated herein by this reference.
   
(4) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the period ended December 31, 2014, as filed with the SEC on February 17, 2015 and incorporated herein by this reference.

 

 

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