FOCUS AFFILIATES, INC.
FORM 10-Q
(Quarterly Report)
Filed August 24, 2009 for the Period Ending 06/30/09
Address 3500 South Dupont Highway,
Dover, DE 19901
Telephone 1-800-346-4646
CIK 0001025557
Symbol FONE
SIC Code 5065 - Electronic Parts and Equipment,
Not Elsewhere Classified
Fiscal Year 12/31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2009
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ______ to _____
Commission File Number : 001- 12571
FOCUS AFFILIATES, INC.
( Exact name of registrant as specified in its charter )
Delaware 95 - 4467726
-------------------------------- ---------------------------
( State or other jurisdiction of ( I.R.S. Empl. Ident. No. )
incorporation or organization )
3500 South Dupont Highway, Dover, DE 19901
-------------------------------------------------
( Address of principal executive offices ) ( Zip Code )
1 - 800 - 346 - 4646
-------------------------------
( Issuer's telephone number )
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES ( X ) NO ( )
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T ( 232.405 of this chapter ) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ( ) No ( )
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer,
or a small reporting company. See definitions of "large accelerated
filer," "accelerated filer," and "small reporting
company" in Rule 12B-2 of the Exchange Act. (Check one) :
Large accelerated filer ( ) Accelerated filer ( )
Non-accelerated filer ( ) Smaller reporting company ( X )
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
( X ) Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding the issuer's common stock,
$0.001 par value, was 29,758,526 as of July 31, 2009.
FOCUS AFFILIATES, INC.
FORM 10-Q
For the Period Ended June 30, 2009
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Pages
Item 1. Financial Statements .... 1 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations.............. 12 - 17
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.... 17
Item 4T.Controls and Procedures............... 18
PART II
Item 1. Legal Proceedings.................... 18
Item 1A.Risk Factors.......................... 18
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.. 18 - 19
Item 3. Defaults Upon Senior Securities............... 19
Item 4. Submission of Matters to a Vote of Security Holders... 19
Item 5. Other Information..................... 19
Item 6. Exhibits and Certifications...... 20 - 26
Part 1. Item 1. Financial Statements
FOCUS AFFILIATES, INC.
Page No.
Balance Sheets as at June 30, 2009 and December 31, 2008 1
Statements of Operations
For the Three Months and Six Months Ended June 30, 2009 and 2008 2
Statements of Cash Flows
For the Six Months Ended June 30, 2009 and 2008 and
For the Period From Inception March, 1994 to June 30, 2009 3 - 4
Notes to Financial Statements 5 - 11
FOCUS AFFILIATES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 2009
(Stated in US Dollars)
(Unaudited)
FOCUS AFFILIATES, INC.
(FORMERLY : INTELLICEL CORP.)
(a development stage company)
Balance Sheets As At June 30, 2009 and December 31, 2008
(U.S. Dollars )
(unaudited)
June 30, Dec 31,
2009 2008
Assets
Current Assets $ - -
Total Assets $ - -
Liabilities
Current Liabilities
Related parties accounts $ 32,981 26,748
Total Liabilities $ 32,981 26,748
Stockholders' Equity (Deficit)
Common stock, $0.001 par value
Authorized 1,000,000,000 shares
10,758,526 shares issued and
outstanding at June 30, 2009
and 10,758,526 shares issued
and outstanding at
December 31, 2008 $ 10,759 10,759
Additional paid-in capital 28,094,241 28,094,241
Accumulated deficit (28,137,981) (28,131,748)
Total Stockholders' Equity
(Deficit) $ (32,981) (26,748)
Total Liabilities and
Stockholders' (Deficit) $ - -
The accompanying notes are an integral part of the financial statements
1
FOCUS AFFILIATES, INC.
(FORMERLY : INTELLICEL CORP.)
(a development stage company)
Statements Of Operations for the three months and six months
ended June 30, 2009 and 2008 and for the period March, 1994
(Inception) to June 30, 2009
(U.S. Dollars )
(Unaudited)
Inception
For the 3 months For the 6 months March, 1994
ended June 30, ended June 30, to June 30,
2009 2008 2009 2008 2009
Revenue - - - - 379,652,000
Cost of sale - - - - (362,417,000)
---------------------------------------------
Gross profit - - - - 17,235,000
Selling, general and
administrative expenses 6,020 843 6,233 1,142 31,845,981
Non-recurring legal
and auditing fees 1,300,000
Restructuring charges 1,957,000
---------------------------------------------
Total operating expenses 6,020 843 6,233 1,142 35,102,981
Operating loss (6,020) (843) (6,233) (1,142) (17,867,981)
Other income (expenses)
Interest (expense) (3,424,000)
Other income (loss) 275,000
---------------------------------------------
Total other income (expenses) - - - - (3,149,000)
Net loss for the period (6,020) (843) (6,233) (1,142) (21,016,981)
Income tax benefit (26,000)
Extraordinary item (105,000)
Reorganization in 2000 as
per financials statements
of June 30, 2000 (5,608,000)
Balance from partnership
distribution to
stockholders etc (1,382,000)
--------------------------------------------
Net loss for the period
after adjustments (6,020) (843) (6,233) (1,142) (28,137,981)
Basic and diluted loss
per share (0.00) (0.00) (0.00) (0.00)
Weighted average number
of shares outstanding 10,758,526 10,758,526 10,758,526 10,758,5266
The accompanying notes are an integral part of the financial statements
2
FOCUS AFFILIATES, INC.
(FORMERLY : INTELLICEL CORP.)
(a development stage company)
Statements Of Cash Flows for the six months ended June 30, 2009 and 2008
and for the period March 1994 (Inception) to June 30, 2009
(U.S. Dollars )
(Unaudited)
Inception
For the six months March 1994
ended June 30, to June 30,
2009 2008 2009
Cash Flows (Used In) Provided By :
Operating Activities
Net income (loss) - historical $ (6,020) (1,142) (28,137,768)
Adjustments to reconcile net
income to net cash
provided by (used in) operating
activities:
Depreciation and amortization 3,093,000
Loss on impairment of goodwill 765,000
Non cash restructuring charges 7,417,000
Loss on conversion of debt 105,000
Loss on disposal of fixed assets 87,000
Noncash compensation expense 847,000
Provision for doubtful accounts 6,661,000
Provision for inventory reserves 1,488,000
Acquisition of marketable securities (927,000)
Proceeds from sale of marketable
securities 858,000
Loss on marketable securities 85,000
Changes in operating assets and liabilities:
(Increase) in accounts receivable (95,000)
(Increase) in inventories 4,848,000
Due from related parties 6,020 1,142 855,768
(Increase) in deposits for purchases
of inventory (1,443,000)
(Increase) in other receivable (500,000)
(Increase) decrease in prepaid expenses
and other current assets 140,000
(Increase) decrease in other assets 16,000
Increase in accounts payable and
accrued expenses 2,531,000
-------------------------------------
Net cash provided by (used in)
operating activities $ - - (1,306,000)
Cash flows from investing activities:
Acquisition of CWI and The Wireless
Group, Net of cash acquired (5,122,000)
Purchases of property and equipment (1,800,000)
Proceeds from the sale of
property & equipment 40,000
Advances to officer (372,000)
Repayments of advances to officer 192,000
Loans to employees and third parties (211,000)
Repayments of loans to employees and
third parties 211,000
Repayments of notes receivable 1,916,000
-------------------------------------
Net cash provided by
(used in) investing activities $ - - (5,146,000)
Cash flows from financing activities:
Net proceeds from sale of common stock 8,047,000
Proceeds from long-term debt 5,610,000
Payments on long-term debt (925,000)
Proceeds from sale of warrants 1,512,000
Bank overdraft (451,000)
Proceeds from loans payable 935,000
Payments on loans payable (2,419,000)
Distributions to stockholders (319,000)
Advances (repayments) under
credit facility (9,021,000)
Proceeds from the exercise of warrants 999,000
Proceeds from the exercise of options 2,698,000
Deferred financing costs (214,000)
----------------------------------
Net cash provided by (used in)
financing activities - - 6,452,000
Net increase (decrease) in cash - - -
Cash - beginning of period - - -
Cash - end of period - - -
The accompanying notes are an integral part of the financial statements
4
FOCUS AFFILIATES, INC.
(FORMERLY : INTELLICEL CORP.)
(a development stage company)
Notes to Financial Statements
June 30, 2009
(Stated in US Dollars)
(Unaudited)
Note 1. General Organization and Business
Focus Affiliates, Inc. ( the "Company") is a Delaware
corporation. It was incorporated on March 1994 as Cellular
Telecom Corporation and subsequently changed its name to
Intellicel Corp. in June 1996 and then to Focus Affiliates,
Inc. in October, 1999.
The Company was reinstated on December 8, 2006 in the State
of Delaware by an incorporator. The Company has been
dormant since 2001 and was reorganized under new management
on March 16, 2007 which will put the Company into the
Development Stage.
These financial statements have been prepared in accordance
with generally accepted accounting principles applicable to
a going concern, which assumes that the Company will be
able to meet its obligations and continue its operations
for its next fiscal year. Realization values may be
substantially different from carrying values as shown and
these financial statements do not give effect to
adjustments that would be necessary to the carrying values
and classification of assets and liabilities should the
Company be unable to continue as a going concern. At June
30, 2009, the Company had not yet achieved profitable
operations, has accumulated losses of $28,137,981 since
inception and expects to incur further losses in the
development of its business, of which cast substantial
doubt about the Company's ability to continue as a going
concern.
The Company's ability to continue as a going concern is
dependent upon future profitable operations and/or the
necessary financing to meet its obligations and repay its
liabilities arising from normal business operations when
they come due. Management has obtained additional funds by
5
related parties advances, however there is no assurance
that this additional funding is adequate and further
funding may be necessary.
Note 2. Significant Accounting Policies
These financial statements have been prepared in
accordance with generally accepted accounting
principles in the United States of America and are
stated in US dollars. Because a precise determination
of many assets and liabilities is dependent upon
future events, the preparation of financial statements
for a period necessarily involves the use of estimates
which have been made using careful judgment. Actual
results may differ from these estimates.
The financial statements have, in management's
opinion, been properly prepared within the framework
of the significant accounting policies summarized
below :
(a) Development Stage Company
The Company is a development stage company as defined
in the Statements of Financial Accounting Standards
("SFAS") No. 7. The Company is devoting substantially
all of its present efforts to establish a new business
and none of its planned principal operations have
commenced. All losses accumulated since inception has
been considered as part of the Company's development
stage activities.
(b) Financial Instruments
The carrying values of cash, accounts receivable,
accounts payable, promissory notes payable and due to
related parties approximate fair value because of the
short-term nature of these instruments. Management is
of the opinion that the Company is not exposed to
significant interest, currency or credit risks arising
from these financial instruments.
6
(c) Stock Issued in Exchange for Services
The valuation of common stock issued in exchange for
services is valued at an estimated fair market value as
determined by officers and directors of the Company based
upon other sales and issuances of the Company's common
stock within the same general time period.
(d) Stock-based Compensation
In December 2004, the Financial Accounting Standards Board
issued FAS 123R "Share-Based Payment", a revision to FAS
123. FAS 123R replaces existing requirements under FAS 123
and APB 25, and requires public companies to recognize the
cost of employee services received in exchange for equity
instruments, based on the grant-date fair value of those
instruments, with limited exceptions. FAS 123R also
affects the pattern in which compensation cost is
recognized, the accounting for employee share purchase
plans, and the accounting for income tax effects of share-
based payment transactions. For small business filers, FAS
123R is effective for interim or annual periods beginning
after December 15, 2005. The Company adopted FAS 123R on
October 1, 2007.
(e) Foreign Currency Translation
The Company translates foreign currency transactions and
balances to its reporting currency, United States Dollars,
in accordance with SFAS No. 52, "Foreign Currency
Translation". Monetary assets and liabilities are
translated into the functional currency at the exchange
rate in effect at the end of the year. Non-monetary assets
and liabilities are translated at the exchange rate
prevailing when the assets were acquired or the
liabilities assumed. Revenue and expenses are translated
at the rate approximating the rate of exchange on the
transaction date. All exchange gains and losses are
included in the determination of net income (loss) for the
year.
7
(f) Basic and Diluted Loss Per Share
The Company computes net loss per share in accordance with
SFAS No. 128, "Earnings per Share". SFAS 128 requires
presentation of both basic and diluted earnings per share
("ESP") on the face of the income statement. Basic loss
per share is computed by dividing the net loss available to
common shareholders by the weighted average number of
common shares outstanding during the year. Diluted ESP
gives effect to all dilative potential common shares
outstanding during the year including stock options, using
the treasury stock method, and convertible preferred stock,
using the if-converted method. In computing diluted ESP,
the average stock price for the year is used in determining
the number of shares assumed to be purchased from the
exercise of stock options or warrants. Diluted ESP excludes
all dilative potential common shares if their effect is
anti dilative.
(g) Income Taxes
The Company follows SFAS no. 109, "Accounting for Income
Taxes" which requires the use of the asset and liability
method of accounting for income taxes. Under the asset and
liability method of SFAS 109, deferred tax assets and
liabilities are recognized for future tax consequences
attributable to temporary differences between the financial
statements carry amounts of existing assets and liabilities
and loss carry forwards and their respective tax rates
expected to apply to taxable income in the year in which
those temporary differences are expected to be recovered or
settled.
(h) Recently Issued Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 162, The Hierarchy of Generally Accepted
Accounting Principles. SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting
the principles that are presented in conformity with
generally accepted accounting principles in the United
States. SFAS No. 162 is effective 60 days following the
Securities and Exchange Commission's approval of the Public
Company Accounting Oversight Board amendments to AU Section
8
411, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles. The Company does
not believe SFAS No. 162 will have a material impact on its
financial statements.
In March 2008, the FASB issued SFAS No. 161, Disclosure
about Derivative Instruments and Hedging Activities, an
amendment of FASB Statement No. 133. SFAS No. 161 changes
the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under Statement No.
133 and its related interpretations and (c) how derivative
instruments and related hedged items affect an entity's
financial position, financial performance and cash flows.
SFAS No. 161 is effective for financial statements issued
for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The
Company does not believe SFAS No. 161 will have a material
impact on its financial statements.
In December 2007, the FASB issued SFAS No. 141(R),
Business Combinations. SFAS No. 141(R) retains the
fundamental requirements in SFAS No. 141, Business
Combinations, that the acquisition method of accounting be
used for all business combinations and for an acquirer to
be identified for each business combination. SFAS No.
141(R) requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree at the acquisition date, measured
at their fair values as of that date, with limited
exceptions specified in SFAS No. 141(R). In addition, SFAS
No. 141(R) requires acquisition costs and restructuring
costs that the acquirer expected but was not obligated to
incur to be recognized separately from the business
combination, therefore, expensed instead of part of the
purchase price allocation. SFAS No. 141(R) will be applied
prospectively to business combinations for which the
acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15,
2008. Early adoption is prohibited. The Company expects to
adopt SFAS No. 141(R) to any business combinations with an
acquisition date on or after January 1, 2009. The Company
does not believe SFAS No. 141(R) will have a material
impact on its financial statements.
9
In February 2007, the FASB issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial
Liabilities. SFAS No. 159 permits an entity to irrevocably
elect fair value on a contract-by-contract basis as the
initial and subsequent measurement attribute for many
financial assets and liabilities and certain other items
including insurance contracts. Entities electing the fair
value option would be required to recognize changes in
fair value in earnings and to expense upfront cost and
fees associated with the item for which the fair value
option is elected. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins
on or before November 15, 2007, provided the entity also
elects to apply the provisions of SFAS No. 157, Fair Value
Measurements. The Company does not expect the adoption of
SFAS No. 159 to have a material impact on its financial
condition or results of operations.
Note 3. Common Stock
For The Six Months Ended June 30, 2009
On July 16, 2009, the Company entered into an agreement to
issued 9,000,000 restricted shares in accordance with
Regulation 144 of the United States Securities Act at
$0.001 per share with two corporations, several
individuals and the president of the Company.
On July 16, 2009, the Company entered into an agreement to
issued 10,000,000 free trading at $0.001 per share with
Presidents Corporate Group in accordance with the opinion
letter provided by the lawyer.
Note 4. Related Parties Accounts
On June 30, 2009, $32,981 was due to several corporations
related to the Company. These amounts bear no interest and
are due on demand, the Company recorded no imputed
interest on these borrowings.
10
Note 5. Income Taxes
The Company provides for income taxes under Statement of
Financial Accounting Standards No. 109, Accounting for
Income Taxes. SFAS No. 109 requires the use of an asset
and liability approach in accounting for income taxes.
Deferred tax assets and liabilities are recorded based on
the differences between the financial statement and tax
bases of assets and liabilities and the tax rates in
effect currently.
At June 30, 2009, the Company had deficits accumulated
during the development stage of $28,137,981 available
to offset future taxable income.
11
PART I
This Interim Report on Form 10-Q contains forward-
looking statements that have been made pursuant to the
provisions of Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934, and
the Private Securities Litigation Reform Act of 1995 and
concern matters that involve risks and uncertainties that
could cause actual results to differ materially from
historical results or from those projected in the
forward-looking statements. Discussions containing
forward-looking statements may be found in the material
set forth under "Business," "Management's Discussion and
Analysis of Financial Condition and Results of
Operations" and in other sections of this Form 10-Q.
Words such as "may," "will," "should," "could," "expect,"
"plan," "anticipate," "believe," "estimate," "predict,"
"potential," "continue" or similar words are intended to
identify forward-looking statements, although not all
forward-looking statements contain these words. Although
we believe that our opinions and expectations reflected
in the forward-looking statements are reasonable as of
the date of this Report, we cannot guarantee future
results, levels of activity, performance or achievements,
and our actual results may differ substantially from the
views and expectations set forth in this Interim Report
on Form 10-Q. We expressly disclaim any intent or
obligation to update any forward-looking statements after
the date hereof to conform such statements to actual
results or to changes in our opinions or expectations.
Readers should carefully review and consider the
various disclosures made by us in this Report, set forth
in detail in Part I, under the heading "Risk Factors," as
well as those additional risks described in other
documents we file from time to time with the Securities
and Exchange Commission, which attempt to advise
interested parties of the risks, uncertainties, and other
factors that affect our business. We undertake no
obligation to publicly release the results of any
revisions to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances
occurring after the date of such statements.
12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
General
The Company has been in the process of identifying and
discussing strategic merger or acquisitions. The
Company will need to raise substantial additional
capital to fund this strategy. The Company is seeking
such additional funds through private equity or debt
financing. There can be no assurance that such funding
will be available on acceptance terms. The Company's
continued existence as a going concern is ultimately
dependent upon its ability to secure additional
funding.
Operation
The Company has not been active since 2001. The losses
for the six months ended June 30, 2009 was $6,233 for
filing, general and administrative expenses. There was
no revenue for those periods stated above.
We currently have minimal cash reserves and a
significant working capital deficit. Accordingly, our
ability to pursue our plan of operations is contingent
on our being able to obtain funding for the
development of our projects.
Liquidity and Financial Resources
The Company remains in the development stage.
Operations were financed through advances and loans
from directors and related parties. The directors and
related parties have also advanced funds into the
Company to cover cash flow deficiencies. These
advances have no stated repayment terms.
The Company's financial statements are presented on a
going concern basis, which contemplates the
realization of assets and the satisfaction of
liabilities in the normal course of business. At June
30, 2009, we have been unsuccessful in our efforts to
raise additional capital to meet our plan of
operations.
13
Critical Accounting Policies
The Company's discussion and analysis of its financial
condition and results of operations are based upon the
Company's financial statements, which have been
prepared in accordance with accounting principles
generally accepted in the United States of America.
The preparation of the financial statements requires
the Company to make estimates and judgments that
affect the reported amount of assets, liabilities, and
expenses, and related disclosures of contingent assets
and liabilities. On an on-going basis, the Company
evaluates its estimates, including those related to
intangible assets, income taxes and contingencies and
litigation. The Company bases its estimates on
historical experience and on various assumptions that
are believed to be reasonable under the circumstances,
the results of which form the basis for making
judgments about carrying values of assets and
liabilities that are not readily apparent from other
sources. Actual results may differ from these
estimates under different assumptions or conditions.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
141, Business Combinations, and Statement of Financial
Accounting Standards No. 142, Goodwill and Other
Intangible Assets. They also issued Statement of
Financial Accounting Standards No. 143, Accounting for
Obligations Associated with the Retirement of Long-Lived
Assets, and Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, in August and October 2001,
respectively. SFAS 141 requires all business
combinations initiated after June 30, 2001 to be
accounted for under the purchase method. SFAS 141
supersedes APB Opinion No. 16, Business Combinations,
and Statement of Financial Accounting Standards No. 38,
Accounting for Pre-acquisition Contingencies of
Purchased Enterprises, and is effective for all business
combinations initiated after June 30, 2001.
14
SFAS No. 142 addresses the financial accounting and
reporting for acquired goodwill and other intangible
assets. Under the new rules, the Company is no longer
required to amortize goodwill and other intangible
assets with indefinite lives, but will be subject to
periodic testing for impairment. SFAS 142 supersedes APB
Opinion No. 17, Intangible Assets. The Company's
operational policy for the assessment and measurement of
any impairment in the value of goodwill and intangible
assets, which primarily relates to contract-based
intangibles such as license agreements and extensions,
is to evaluate annually, the recoverability and
remaining life of its intangible assets to determine the
fair value of these assets. The methodologies to be
used to estimate fair value include the use of estimates
and assumptions, including projected revenues, earnings
and cash flows. If the fair value of any of these
assets is determined to be less than its carrying value,
the Company will reflect the impairment of any such
asset over its appraised value.
SFAS No. 143 establishes accounting standards for the
recognition and measurement of an asset retirement
obligation and its associated asset retirement cost. It
also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived
assets. SFAS 143 is effective in fiscal years beginning
after June 15, 2002, with early adoption permitted. The
adoption of SFAS No. 143 is not expected to have a
material impact on the Company's financial statements.
SFAS 144 establishes a single accounting model for the
impairment or disposal of long-lived assets, including
discontinued operations. SFAS 144 superseded Statement
of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of (SFAS 121), and APB
Opinion No. 30, Reporting the Results of Operations--
Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. The provisions of
SFAS 144 are effective in fiscal years beginning after
December 15, 2001, with early adoption permitted, and in
general are to be applied prospectively. The Company
15
records impairment losses on long lived assets used in
operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by
those assets are less than the asset's carrying amount.
In such cases, the amount of the impairment is
determined on the relative values of the impaired
assets.
Financial Accounting Standards Board Interpretation No.
46, Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin No. 51,
Financial Statements, addresses consolidation by business
enterprises of variable interest entities. It is
effective immediately for variable interest entities
created after January 31, 2003. It applies in the first
fiscal year or interim period beginning after June 15,
2003, to variable interest entities acquired before
February 1, 2003. The implementation of Interpretation
No. 46 did not have a material effect on the Company's
financial statements.
SFAS No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities, amends and clarifies
accounting for derivative instruments under SFAS No. 133.
It is effective for contracts entered into after June 30,
2003. The impact of adoption of this statement is not
expected to be significant.
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity, establishes standards for how an issuer
classifies and measures certain financial instruments
with characteristics of both liability and equity. It
requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in
some circumstances). This statement is effective for
financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003.
The impact of adoption of this statement is not expected
to be significant.
16
In December 2004, the FASB issued SFAS 153, Exchanges of
Non-monetary Assets, an amendment of APB No. 29,
Accounting for Non-monetary Transactions. SFAS 153
requires exchanges of productive assets to be accounted
for at fair value, rather than at carryover basis,
unless (1) neither the asset received nor the asset
surrendered has a fair value that is determinable
within reasonable limits or (2) the transactions lack
commercial substance. SFAS 153 is effective for non-
monetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. The Company does not
expect the adoption of this standard to have a material
effect on its financial position,
results of operations or cash flows.
In December 2004, the FASB issued Statement 123 (revised
2004) which is a revision of FASB Statement No. 123,
Accounting for Stock-Based Compensation. This Statement
supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees, and its related implementation
guidance. This Statement establishes standards for the
accounting for transactions in which an entity exchanges
its equity instruments for goods or services.
It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are
based on the fair value of the entity's equity
instruments or that may be settled by the issuance of
those equity instruments. This Statement focuses
primarily on accounting for transactions in which an
entity obtains services in share-based payment
transactions. This Statement requires a public entity to
measure the cost of services received in exchange for an
award of equity instruments based on the grant-date fair
value of the award (with limited exceptions). That cost
will be recognized over the period during which an
employee is required to provide service in exchange for
the award the requisite service period (usually the
vesting period).
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.
The Company at present does not engage in any business
activities thus will not be subjected to any
quantitative or qualitative influences to market risk.
17
Item 4T. Controls and Procedures.
The Company's Chief Executive Officer and its Chief
Financial Officer are primarily responsible for the
accuracy of the financial information that is presented
in this quarterly Report. These officers have as of the
close of the period covered by this Quarterly Report,
evaluated the Company's disclosure controls and
procedures (as defined in Rules 13a-4c and 15d-14c
promulgated under the Securities Exchange Act of 1934 and
determined that such controls and procedures were
effective in ensuring that material information relating
to the Company was made known to them during the period
covered by this Quarterly Report.
There have been no changes in our internal control over
financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the fourth
quarter of our 2008 fiscal year that have materially
affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART II
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors
The Company at present does not engage in any business
activities thus will not be subjected to any risk.
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds.
On July 16, 2009, the Company entered into an agreement to
issued 9,000,000 restricted shares in accordance with
Regulation 144 of the United States Securities Act at
$0.001 per share with two corporations, several
individuals and the president of the Company.
18
On July 16, 2009, the Company entered into an agreement to
issued 10,000,000 free trading at $0.001 per share with
Presidents Corporate Group in accordance with the opinion
letter provided by the lawyer.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security
Holders.
Not Applicable.
Item 5. Other Information.
None
19
Item 6. Exhibits
31.1 Certification of the Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
31.2 Certification of the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
32.1 Certification of the Chief Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
32.1 Certification of the Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
SIGNATURES
In accordance with 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.
Dated: August 24, 2009
FORMCAP CORP.
By: /S/ Brian Stewart
Brian Stewart
Chief Executive Officer
& Director
By: /S/ Michael Lee
Michael lee
Chief Financial
Officer
20
Exhibit 31.01
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT AND
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brain Stewart, Director and Chief Executive Officer of
Focus Affiliates, Inc. certify that :
1. I have reviewed this Quarterly Report on Form 10-Q of
Focus Affiliates, Inc. ;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements
were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have :
a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
made known to us by others within those entities,
particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of
financial reporting and the
21
preparation of financial statements for external purpose in
accordance with general accepted accounting principles;
c. Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's
internal control over financial
reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of
internal control over financial reporting, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing
the equivalent functions ):
a. All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarized and report financial information;
and
b. Any fraud, whether or not material, that involves
management or other employees
who have a significant role in the registrant's internal
control over financial reporting.
Dated : August 24, 2009
Signature : /s/ Brian Stewart
Brian Stewart
Director and Chief
Executive Officer
22
Exhibit 31.02
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT AND
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Lee, Chief Financial Officer of Focus
Affiliates, Inc. certify that :
1. I have reviewed this Quarterly Report on Form 10-Q of
Focus Affiliates, Inc. ;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements
were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have :
a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
made known to us by others within those entities,
particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of
financial reporting and the
23
preparation of financial statements for external purpose in
accordance with general accepted accounting principles;
c. Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's
internal control over financial
reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of
internal control over financial reporting, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing
the equivalent functions ):
a. All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarized and report financial information;
and
b. Any fraud, whether or not material, that involves
management or other employees
who have a significant role in the registrant's internal
control over financial reporting.
Dated : August 24, 2009
Signature : /s/ Michael Lee
Michael Lee
Chief Financial Officer
24
EXHIBIT 32 .01
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS
ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Focus
Affiliates, Inc. (the "Company") on Form 10-Q for the
period ended June 30, 2009 as filed with the
Securities and Exchange Commission on the date hereof
(the "Report"),
I, Brian Stewart, Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:
(1) The Report fully complies with the
requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the
financial condition and result of operations of
the Company.
/s/ Brian Stewart
-------------
Brian Stewart
Chief Executive Officer
August 24, 2009
25
EXHIBIT 32 .02
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS
ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Focus
Affiliates, Inc.. (the "Company") on Form 10-Q for
the period ended June 30, 2009 as filed with the
Securities and Exchange Commission on the date hereof
(the "Report"),
I, Michael Lee, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:
(1) The Report fully complies with the
requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the
financial condition and result of operations of
the Company.
/s/ Michael Lee
-------------
Michael Lee
Chief Financial Officer
August 24, 2009
26