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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 30, 2006
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
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Commission File Number 333-130906
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FAIRVIEW ENERGY CORPORATION, INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada Pending
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
585 Milsom Wynd
Delta, British Columbia V6B 2M9
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (604) 943-5200
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N/A
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(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer 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 is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
[ ] Yes [ x ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 6,946,250 shares of $0.001 par value
common stock outstanding as of June 13, 2006.
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
April 30, 2006
(Unaudited)
BALANCE SHEETS
INTERIM STATEMENTS OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY
INTERIM STATEMENTS OF CASH FLOWS
NOTES TO INTERIM FINANCIAL STATEMENTS
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, October 31,
2006 2005
---- ----
(Unaudited) (Audited)
ASSETS
------
Current assets
Cash $ 25,006 $ 29,879
================ ================
LIABILITIES
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Current liabilities
Accounts payable $ 13,663 $ 5,463
Due to related party (Note 4) - 81
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13,663 5,544
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STOCKHOLDERS' EQUITY
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Capital stock (Note 3)
Authorized
75,000,000 common shares, par value $0.001 per share
Issued and outstanding
6,946,250 common shares (October 31, 2005-6,946,250) 6,946 6,946
Additional paid-in capital 27,229 24,529
Deficit accumulated during the development stage (22,832) (7,140)
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11,343 24,335
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$ 25,006 $ 29,879
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The accompanying notes are an integral part of these interim financial
statements
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
Three months Six months July 29,2005
ended ended (Inception) to
April 30, April 30, April 30,
2006 2006 2006
---- ---- ----
Expenses
Accounting and audit fees $ 6,204 $ 8,204 $ 12,167
Donated rent (Note 4)
1,350 2,700 4,050
Filing 959 1,697 1,697
Legal fees 1,500 3,000 4,500
Office and sundry 21 91 418
Net loss $ (10,034) $ (15,692) $ (22,832)
=============== =============== ===============
Basic and diluted loss per share $ (0.00) $ (0.00)
=============== ===============
Weighted average number of shares outstanding 6,946,250 6,946,250
=============== ===============
The accompanying notes are an integral part of these interim financial
statements
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
for the period July 29, 2005 (Date of Inception) to April 30, 2006
Deficit
Accumulated
Additional During the
Common Shares Paid-in Development
--------------------------------
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Capital stock issued for cash
August, 2005 - at $0.001 3,250,000 $ 3,250 $ - $ - $ 3,250
August, 2005 - at $0.005 3,675,000 3,675 14,700 - 18,375
August, 2005 - at $0.40 21,250 21 8,479 - 8,500
Donated rent - - 1,350 - 1,350
Net loss - - - (7,140) (7,140)
--------------- -------------- --------------- ---------------- --------------
Balance, October 31, 2005 (Audited) 6,946,250 6,946 24,529 (7,140) 24,335
Donated rent - - 2,700 - 2,700
Net loss - - - (15,692) (15,692)
-------------- -------------- --------------- ---------------- --------------
Balance, April 30, 2006 (Unaudited) 6,946,250 $ 6,946 $ 27,229 $ (22,832) $ 11,343
============== ============== =============== ================ ==============
The accompanying notes are an integral part of these interim financial
statements
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
Six months July 29,2005
ended (Inception) to
April 30, April 30,
2006 2006
---- ----
Cash flows from operating activities
Net loss $ ( 15,692) $ ( 22,832)
Items not effecting cash
Non-cash donated rent 2,700 4,050
Changes to non cash working capital items
Accounts payable and accrued liabilities 8,200 13,663
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Net cash used in operations ( 4,792) ( 5,119)
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Cash flows from financing activities
Due to related party (81) -
Capital stock issued - 30,125
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Net cash from (used in) financing activities (81) 30,125
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Increase (decrease) in cash ( 4,873) 25,006
Cash, beginning 29,879 -
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Cash, ending $ 25,006 $ 25,006
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Supplemental disclosure of cash flow information Cash paid for:
Interest $ - $ -
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Income taxes $ - $ -
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The accompanying notes are an integral part of these interim financial
statements
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
April 30, 2006
Note 1 Nature and Continuance of Operations
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The Company was incorporated in the State of Nevada on July 29,
2005 and is in the development stage.
The Company will focus its resources on developing renewable
energy sources that create "green" hydro-electric energy, by
identifying run-of-river projects in the province of British
Columbia, Canada.
Going Concern
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These financial statements have been prepared on the going concern
basis of accounting. The Company has incurred losses since
inception resulting in an accumulated deficit of $22,832 and
further losses are anticipated in the development of its business
raising doubt about the Company's ability to continue as a going
concern. The ability to continue as a going concern is dependent
upon the Company generating profitable operations in the future
and/or to obtain the necessary financing to meet its obligations
and repay its liabilities arising from normal business operations
when they come due.
Most of the Company's cash on hand will be utilized
registering the Company as a reporting issuer with the Securities
and Exchange Commission and listing the Company's common stock on
the Over the Counter Bulletin Board leaving no funds to finance
the Company's operations. Management estimates that $20,000 is
required over the next twelve months to finance the Company's
operations. Management will therefore need to raise additional
capital to finance the Company's operations.
Management anticipates that funding for the Company's operations
for the next twelve months will be available through cash on hand,
advances from its sole director or additional equity financing by
means of private placements of the Company's common stock.
Unaudited interim financial statements
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The accompanying unaudited interim financial statements have been
prepared in accordance with United States generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-QSB of Regulation S-B. They may not
include all information and footnotes required by United States
generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no
material changes in the information disclosed in the notes to the
financial statements for the year ended October 31, 2005 included
in the Company's Registration Statement on Form SB-2 filed with
the Securities and Exchange Commission. The interim unaudited
financial statements should be read in conjunction with those
financial statements included in the Form SB-2. In the opinion of
management, all adjustments considered necessary for a fair
presentation, consisting solely of normal and recurring
adjustments have been made. Operating results for the six months
ended April 30, 2006 are not necessarily indicative of the results
that may be expected for the year ending October 31, 2006.
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
April 30, 2006
Note 2 Summary of Significant Accounting Policies
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Basis of Presentation
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These financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of
America and are presented in US dollars. The Company's fiscal year
end is October 31.
Development Stage Company
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The Company complies with Financial Accounting Standards Board
Statement ("FASB") No. 7 for its characterization of the Company
as a development stage enterprise.
Use of Estimates and Assumptions
---------------------------------
The preparation of financial statements in conformity with United
States generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those
estimates.
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated to their United States
dollar equivalents using foreign exchange rates which prevailed at
the balance sheet date. Non monetary assets and liabilities are
translated into United States dollars using the foreign exchange
rates prevailing at the transaction date. Revenue and expenses are
translated at average rates of exchange during the period. Gains
or losses resulting from foreign currency transactions are
included in results of operations
Fair Value of Financial Instruments
-----------------------------------
The carrying value of cash and accounts payable and accrued
liabilities approximates their fair value because of the short
maturity of these instruments. It is management's determination
that the Company is not exposed to significant interest, currency
or credit risks arising from these financial instruments.
Environmental Costs
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Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do
not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the cost can be
reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or
the Company's commitments to plans of action based on the then
known facts.
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
April 30, 2006
Note 2 Summary of Significant Accounting Policies - (cont'd)
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Income Taxes
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The Company follows the liability method of accounting for income
taxes. Under this method, deferred income tax assets and
liabilities are recognized for the estimated tax consequences
attributable to differences between the financial statement
carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. At April 30, 2006 a
full deferred tax asset valuation allowance has been provided and
no deferred tax asset benefit has been recorded.
Basic and Diluted Loss Per Share
--------------------------------
Basic earnings per share includes no dilution and is computed by
dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive earnings per share reflect the potential dilution of
securities that could share in the earnings of the Company.
Because the Company does not have any potentially dilutive
securities, the diluted loss per share equals the basic loss per
share.
Recent Accounting Pronouncements
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In February 2006, the FASB issued SFAS No. 155, Accounting for
Certain Hybrid Financial Instruments-an amendment of FASB
Statements No. 133 and 140, to simplify and make more consistent
the accounting for certain financial instruments. SFAS No. 155
amends SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, to permit fair value remeasurement for any
hybrid financial instrument with an embedded derivative that
otherwise would require bifurcation, provided that the whole
instrument is accounted for on a fair value basis. SFAS No. 155
amends SFAS No. 140, Accounting for the Impairment or Disposal of
Long-Lived Assets, to allow a qualifying special-purpose entity to
hold a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial
instrument. SFAS No. 155 applies to all financial instruments
acquired or issued after the beginning of an entity's first fiscal
year that begins after September 15, 2006, with earlier
application allowed. This standard is not expected to have a
significant effect on the Company's future reported financial
position or results of operations.
In March 2006, the FASB issued SFAS No. 156, "Accounting for
Servicing of Financial Assets, an amendment of FASB Statement No.
140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities". This statement requires all
separately recognized servicing assets and servicing liabilities
be initially measured at fair value, if practicable, and permits
for subsequent measurement using either fair value measurement
with changes in fair value reflected in earnings or the
amortization and impairment requirements of Statement No. 140. The
subsequent measurement of separately recognized servicing assets
and servicing liabilities at fair value eliminates the necessity
for entities that manage the risks inherent in servicing assets
and servicing liabilities with derivatives to qualify for hedge
accounting treatment and eliminates the characterization of
declines in fair value as impairments or direct write-downs. SFAS
No. 156 is effective for an entity's first fiscal year beginning
after September 15, 2006. This adoption of this statement is not
expected to have a significant effect on the Company's future
reported financial position or results of operations.
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
April 30, 2006
Note 3 Capital Stock
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The total number of common shares authorized that may be issued by
the Company is 75,000,000 shares with a par value of one tenth of
one cent ($0.001) per share.
During the period from July 29, 2005 (Inception) to October 31,
2005, the Company issued 6,946,250 shares of common stock for
total proceeds of $30,125.
At April 30, 2006 there were no outstanding stock options or
warrants and has not recorded any stock based compensation to
date.
Note 4 Related Party Transactions
--------------------------
The President provided a cash advance of $81 to the Company during
the period ended October 31, 2005. This amount was unsecured,
non-interest bearing and has no specific terms of repayment. This
cash advance was repaid during the six months ended April 30,
2006.
The President provides office premises to the Company. The office
premises are valued by management at $450 per month. During the
period ended April 30, 2006, donated rent expense of $2,700 was
charged to operations. Related party transactions occurred in the
normal course of operations and are measured at the exchange
amount, which is the amount of consideration established and
agreed by the related parties.
Note 5 Income Taxes
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The significant components of the Company's potential deferred tax
assets are as follows:
April 30, October 31,
2006 2005
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Deferred Tax Assets
Non-capital loss carryforward $ 3,425 $ 1,071
Less: valuation allowance for potential deferred tax (3,425) (1,071)
asset
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$ - $ -
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There were no temporary differences between the Company's tax and
financial bases that result in deferred tax assets, except for the
Company's net operating loss carryforwards amounting to
approximately $22,832 at April 30, 2006, which may be available to
reduce future year's taxable income. These carryforwards will
expire, if not utilized, commencing in 2025. Management believes
that the realization of the benefits from these deferred tax
assets appears uncertain due to the Company's limited operating
history and continuing losses. Accordingly a full, deferred tax
asset valuation allowance has been provided and no deferred tax
asset benefit has been recorded.
Item 2. Management's Discussion and Analysis or Plan of Operation
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in this Risk Factors section and elsewhere in this quarterly report.
Plan of Operation
Our plan of operation for the twelve months following the date of this quarterly
report is to conduct watershed hydrology assessments on selected properties that
have the potential to host a run of river hydro-electric project. At least
twelve months of detailed in-stream hydrology is required to accurately
determine the potential of the resource. If the data is not currently available,
we will conduct the hydrology assessment at a cost of approximately $10,000.
We will also conduct initial environmental and fisheries assessments using known
public domain resource sources, and those available from the Department of
Fisheries and Oceans, a federal regulatory agency at a cost of $10,000.
Hydrology and the environmental data will provide the constraints for the
economic modeling to be initially performed.
We will focus on projects that have a capacity of under 10 megawatts as they are
felt to be of less environmental impact and therefore have shorter approval
processes. We intend to have evaluated and selected a property in southwestern
British Columbia by December 2006.
In addition to the above costs, we anticipate spending an additional $25,000 per
year on administrative costs, including management fees payable to our
president, professional fees and general business expenses. Total expenditures
over the next 12 months are therefore expected to be $45,000.
Our cash on hand is sufficient to cover the anticipated initial assessment
studies and a portion of administrative expenses. We will require additional
funding in order to continue to develop a property and to construct a run of
river project on the property, if warranted.
We estimate that the cost to complete an initial hydroelectric project is
approximately $3,695,000 consisting of:
1. $20,000 to conduct the hydrology, environmental and fisheries assessments;
2. $25,000 for administrative costs, including management fees
payable to our president, professional fees and general business
expenses;
3. $250,000 to purchase or pay the development fees for a water resource; and
4. $2,400,000 million in debt financing will be required for the
construction of the project. Up to $1,000,000 in equity
financing will also be required.
We anticipate that this additional funding will be in the form of the sale of
equity and director loans. We also anticipate that up to 75% of the construction
costs of a run of river project will be funded through debt financing. We do not
currently have any arrangement for any equity or debt financing or director
loans.
We believe that we will be more successful in raising the required funding for
our business plan if there is a public trading market for our securities.
However, we do not have any such financing arranged and there is no guarantee
that we will be successful in raising the required financing.
Going Concern Opinion
We have not attained profitable operations and are dependent upon obtaining
financing to complete our business plan. Our independent accountants have
expressed doubt about our ability to continue as a going concern because we have
incurred losses since our inception. Further losses are anticipated in the
development of our business. Our ability to continue as a going concern is
dependent upon our ability to generate profitable operations in the future
and/or to obtain the necessary financing to meet our obligations and repay our
liabilities arising from normal business operations when they come due. If we
cannot raise financing to meet our obligations, we will be insolvent and will
cease business operations.
Results Of Operations For The Period Ended April 30, 2006
We did not earn any revenue during the six month period ended April 30, 2006. We
do not anticipate earning revenues until we establish a hydro project on a site,
secure an energy purchase agreement and erect turbines on the site, of which
there is no guarantee.
We incurred operating expenses in the amount of $15,692 for the six month period
ended April 30, 2006. These operating expenses were comprised of audit and
accounting fees of $8,204, legal fees of $3,000, donated rent of $2,700, filing
fees of $1,697 and office and sundry expenses of $91.
We have not attained profitable operations and are dependent upon obtaining
financing to complete our business plan.
ITEM 3: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
Our management evaluated the effectiveness of our disclosure controls and
procedures as of the end of our fiscal quarter on April 30, 2006. This
evaluation was conducted by our chief executive officer and principal accounting
officer, Bruce Velestuk.
Disclosure controls are controls and other procedures that are designed to
ensure that information that we are required to disclose in the reports we file
pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported.
Limitations on the Effective of Controls
Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but no absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of a control. A design
of a control system is also based upon certain assumptions about potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.
Conclusions
Based upon his evaluation of our controls, our chief executive officer and
principal accounting officer has concluded that, subject to the limitations
noted above, the disclosure controls are effective providing reasonable
assurance that material information relating to us is made known to management
on a timely basis during the period when our reports are being prepared. There
were no changes in our internal controls that occurred during the quarter
covered by this report that have materially affected, or are reasonably likely
to materially affect our internal controls.
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceeding. Management is not aware of
any threatened litigation, claims or assessments.
Item 2. Changes in Securities
The Company did not issue any securities during the quarter ended April 30,
2006.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
31.1 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
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In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATED: June 13, 2006
Fairview Energy Corporation, Inc.
/s/ Bruce Velestuk
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Bruce Velestuk, President