UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
For the quarterly period ended May 31, 2008
¨ Transition Report Under Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER 333-146705
HOUSE FLY RENTALS INC.
(Exact name of registrant as specified in its charter)
NEVADA 01-0895182
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1252 Lake Huron Parkway, Sarnia, Ontario N7S 3S9
(Address of principal executive offices, including zip code)
519-542-2216
(Issuer’s telephone number, including area code)
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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 6,750,000 shares of common stock as of July 15, 2008
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated interim unaudited financial statements of House Fly Rentals Inc. (the “Company”) for the three month period ended May 31, 2008 are included with this Quarterly Report on Form 10-Q:
(a) | Consolidated Balance Sheets as of May 31, 2008 and August 31, 2007; |
(b) | Consolidated Statements of Operations for three months ended May 31, 2008 and for the three months ended May 31, 2007, for the nine months ended May 31, 2008 and for the nine months ended May 31, 2007, and for the period from April 19, 2007 (Inception) through May 31, 2008. |
(c) | Consolidated Statements of Cash Flows for the three months ended May 31, 2008 and for the three months ended May 31, 2007, for the nine months ended May 31, 2008 and for the nine months ended May 31, 2007, and for the period from April 19, 2007 (Inception) through May 31, 2008. |
(d) | Condensed Notes to Financial Statements. |
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HOUSE FLY RENTALS INC. | ||||||
(A Development Stage Company) | ||||||
BALANCE SHEET | ||||||
May 31, 2008 | August 31, 2007 | |||||
Unaudited | ||||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash | $ 19,984 | $ 50,400 | ||||
Total Current Assets | 19,984 | 50,400 | ||||
TOTAL ASSETS | $ 19,984 | $ 50,400 | ||||
=============== | =============== | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Accounts Payable | 409 | - | ||||
STOCKHOLDERS' EQUITY | ||||||
Common stock, 75,000,000 shares authorized, | ||||||
$0.001 par value; 6,750,000 were issued and | ||||||
outstanding | 6,750 | 6,750 | ||||
Additional paid-in capital | 45,750 | 45,750 | ||||
Accumulated deficit | (32,925) | (2,100) | ||||
Total Stockholder's Equity | 19,575 | 50,400 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 19,984 | $ 50,400 | ||||
=============== | =============== |
See accompanying condensed notes to interim financial statements.
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HOUSE FLY RENTALS INC. | ||||||||||
( A Developoment Stage Company) | ||||||||||
STATEMENT OF OPERATIONS | ||||||||||
Unaudited | ||||||||||
For the period | ||||||||||
of Inception, | ||||||||||
Apr.19, 2007 | ||||||||||
For the three months ended | For the nine months ended | through | ||||||||
May 31 | May 31 | May 31 | ||||||||
2008 | 2007 | 2008 | 2007 | 2008 | ||||||
SALES | $ - | $ - | $ - | $ - | $ - | |||||
EXPENSES | ||||||||||
Professional fees | 400 | - | 15,680 | - | 17,680 | |||||
General and administrative | 11,883 | - | 11,883 | - | 11,883 | |||||
Other General and administrative | 3,214 | - | 3,262 | - | 3,362 | |||||
15,497 | - | 30,825 | - | 32,925 | ||||||
LOSS FROM OPERATIONS | (15,497) | - | (30,825) | - | (32,925) | |||||
OTHER INCOME (EXPENSE) | - | - | - | - | - | |||||
LOSS BEFORE INCOME TAXES | (15,497) | - | (30,825) | - | (32,925) | |||||
INCOME TAXES | - | - | - | - | - | |||||
NET LOSS | $ (15,497) | $ (30,825) | $ (32,925) | |||||||
=========== | =========== | =========== | =========== | =========== | ||||||
NET LOSS PER COMMON SHARE, BASIC AND DILUTED | $ (0.002) | $ - | $ (0.005) | $ - | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARES OUTSTANDING, BASIC AND DILUTED | 6,750,000 | - | 6,750,000 | - | ||||||
=========== | =========== | =========== | =========== |
See accompanying condensed notes to interim financial statements.
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HOUSE FLY RENTALS INC. | |||||||||||
(A Development Stage Company) | |||||||||||
STATEMENT OF CASH FLOWS | |||||||||||
Unaudited | |||||||||||
From | |||||||||||
Inception | |||||||||||
April 19, 2007 | |||||||||||
For the three months ended | For the nine months ended | through | |||||||||
May 31 | May 31 | May 31, 2008 | |||||||||
2008 | 2007 | 2008 | 2007 | 2008 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net loss | $ (15,497) | $ - | $ (30,825) | $ - | $ (32,925) | ||||||
Adjustments to reconcile net loss to net cash | |||||||||||
provided (used) by operating activities: | |||||||||||
Increase in Accounts Payable | 409 | - | 409 | - | 409 | ||||||
Net cash provided (used) by operating activities | (15,088) | - | (30,416) | - | (32,516) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Net cash provided (used) by investing activities | - | - | - | - | - | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Proceeds from sale of common stock | - | - | - | - | 52,500 | ||||||
Net cash provided (used) by financing activities | - | - | - | - | 52,500 | ||||||
Change in cash | (15,088) | - | (30,416) | - | 19,984 | ||||||
Cash, beginning of period | 35,072 | - | 50,400 | - | - | ||||||
. | |||||||||||
Cash, end of period | $ 19,984 | $ - | $ 19,984 | $ - | $ 19,984 | ||||||
========== | ========== | ========== | ========== | =========== | |||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | |||||||||||
Interest paid | $ - | $ - | $ - | $ - | $ - | ||||||
========== | ========== | ========== | ========== | =========== | |||||||
Income taxes paid | $ - | $ - | $ - | $ - | $ - | ||||||
========== | ========== | ========== | ========== | =========== |
See accompanying condensed notes to interim financial statements.
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House Fly Rentals Inc.
(A Developmental Stage Company)
Notes to Financial Statements
May 31, 2008
Unaudited
1. Organization
House Fly Rentals, Inc. (the “Company”) was incorporated under the laws of the State of Nevada April 19, 2007. The Company was organized for the purpose of engaging in any activity or business not in conflict with the laws of the State of Nevada or of the United States of America. The company plans to create a web-based service that lists properties across multiple market areas that are available for rental.
2. Current Business of the Company
The Company raised capital in the fiscal year ended August 31, 2007 through subscription to common stock. The Company has a web site under construction preparatory to offering its services to the public.
3. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Company have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles in the United States. 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.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates made by management are, among others, realizability of long-lived assets, deferred taxes and stock option valuation.
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The financial statements have, in management’s opinion, been properly prepared within the reasonable limits of materiality and within the framework of the significant accounting.
Income Taxes
The Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company generated a deferred tax credit through net operating loss carryforward. However, a valuation allowance of 100% has been established, as the realization of the deferred tax credits is not reasonably certain, based on going concern considerations outlined as follows.
Going Concern
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plans to establish a web based service that lists properties across multiple market areas that are available for rental, in order to attain profitable operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classifications or liabilities or other adjustments that might be necessary should the Company be unable to continue as a going concern.
Development-Stage Company
The Company is considered a development-stage company, with limited operating revenues during the periods presented, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7. SFAS. No. 7 requires companies to report their operations, shareholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations, among
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other things. Management has defined inception as April 19, 2007. Since inception, the Company has incurred an operating loss of $32,925. The Company’s working capital has been generated through the sales of common stock. Management has provided financial data since April 19, 2007, “Inception”, in the financial statements, as a means to provide readers of the Company’s financial information to make informed investment decisions.
Basic and Diluted Net Loss Per Share
Net loss per share is calculated in accordance with SFAS 128, Earnings Per Share for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby we used to purchase common stock at the average market price during the period.
The Company has no potentially dilutive securities outstanding as of May 31, 2008.
The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the nine months ended May 31, 2008 and 2007:
2008 2007Numerator: Basic and diluted net loss per share: Net Loss $ (30.825) $ ( 2,100) Denominator Basic and diluted weighted average
number of shares outstanding6,750,000 3,375,00 Basic and Diluted Net Loss Per Share $ (0.005) $ (0.001)
4. Capital Structure
During the period from inception through February 29, 2008 the Company entered into the following equity transactions:
May 1, 2007: Sold 3,000,000 shares of common stock at $.005 per share for $15,000.
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During July, 2007: Sold 2,850,000 shares of common stock at $.01 per share for $28,500. During August, 2007: Sold 900,000 shares of common stock at $0.01 per share, realizing $9,000
On February 13, 2008 the Company’s common stock commenced trading on the Over the Counter Bulletin Board (OTCBB).
As at March 31, 2008, the Company is authorized to issue 75,000,000 shares of $0.001 par common stock, of which 6,750,000 shares were issued and outstanding.
5. Legal Proceedings
There were no legal proceedings against the Company with respect to matters arising in the ordinary course of business. Neither the Company nor any of its officers or directors is involved in any other litigation either as plaintiffs or defendants, and have no knowledge of any threatened or pending litigation against them or any of the officers or directors.
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Item 2. Management’s Discussion and Analysis of Financial condition and Results of Operations
THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of our report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and predictions. We are a development stage company and have not yet generated or realized any revenues.
Background
House Fly Rentals Inc. was incorporated in Nevada on April 19, 2007, as a development stage company to create a web-based service that lists properties across multiple market areas that are available for rental. The focus of www.houseflyrentals.com is on three distinct groups / customers, the property owner / property manager advertisers, and prospective renters. The website will cover apartments, houses and vacation homes.
The mission of House Fly is to make listing and searching for rental properties the easiest, most accessible and cost-effective method available through its website, www.houseflyrentals.com.
Given that rental markets are regional in nature, the Company will pursue a strategy of constructing multiple websites to cater to many of these local markets, in time aggregating these sites into a national “portal” site.
The Company intends to develop its initial website in one area, and expand later through creating additional, complementary “sister” sites in this geography, thereafter refining its business strategy based on its experience and duplicate this strategy in additional market areas.
We intend to generate revenues primarily from listings on our website. As our site becomes established, we intend to create additional revenue streams, including advertising, fees and premium placement on our site.
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Since the inception of House Fly Rentals, Inc. we have worked toward the introduction of our website that we will use to generate revenues. To meet this objective we have reserved the domain name www.houseflyrentals.com we have commenced work on the branding and are working on the development of the website.
Financings
Our operations to date have been funded by equity investment. All of our equity funding has come from a private placement of our securities. We issued 3,000,000 shares of common stock on May 1, 2007 to Robert McCall our president, chief financial officer and director. Mr. McCall acquired these shares at a price of $0.005 per share. We received $15,000 from this offering. These shares were issued pursuant to Section 4(2) of the Securities Act of 1933 and are restricted shares as defined in the Securities Act.
We completed an offering of 3,750,000 shares of our common stock at a price of $0.01 per share to a total of thirty eight (38) purchasers on August 31, 2007. The total amount we received from this offering was $37,500. We completed the offering pursuant to Regulation S of the Securities Act. Each purchaser represented to us that he/she was a non-US person as defined in Regulation S.
The following discussion provides information that management believes is relevant to an assessment and understanding of our operations and the consolidated financial condition and results of operations.
Our Operations
Our plan of operations is a three stage program as follows:
Phase I – Initial Launch
- Design and construct the initial House Fly website for the initial targeted market (geographically based),
- Complete development of particular marketing strategies.
- Development of lists for the two key markets (i.e. property owners / managers and potential advertisers),
- Development of marketing materials geared to these two markets,
The initial budget for phase one is estimated at $20,000. Mr. McCall is currently working with website development companies and designers towards the construction of the website and expects the website to be fully operational in summer of 2008. Work has progressed towards the completion of the beta test site, definition of the service package offerings and associated pricing and site advertising revenue opportunities. The company currently has sufficient cash reserves to proceed with this stage of the business plan.
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Phase II – Buildout of Initial Market Area
- Begin to create “sister” websites for the same market with a different look and feel to establish a “dual” presence in the same market, along with similar / different search strategies to maximize market penetration for the consumer “search” market.
- As the site gains traction, attempt to develop relationships with other independent rental websites and establish “sharing” and marketing of listings to maximize the “mass” of both websites.
- Complete the build out of websites in the initial market area.
The second phase of the operating plan is expected to be devoted to establishing a full presence in the market initially selected for development. Management will be particularly attuned to monitoring all marketing activities in order to refine its business strategy and present a case for securing funding for its most productive activities, as well to lay the basis for a future strategy in additional market areas.
Mr. McCall will lead this effort. Due to the nature of the costs involved and the fact that Mr. McCall will not be receiving a salary at this time, expenses related to phase two are expected to be less than $25,000.
Phase III – Establish Presence in Additional Market Areas
If House Fly is successful in Phase I / II, Management will pursue a strategy of duplicating its websites and strategies in additional market areas. This may include:
- Hiring one or more additional staff to develop websites in multiple geographies / regions,
- Begin to develop a national portal or portals: 1) specifically for property owners / managers, and 2) a national website that directs consumers to particular regional websites, as well as signs consumers up to
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive business activities. For these reasons our auditors stated in their report on our audited financial statements that they have substantial doubt we will be able to continue as a going concern.
We did not earn any revenues from inception through the period ending May 31, 2008. We do not anticipate earning revenues until such time as we are able to accept postings on our website. We are presently in the development stage of our business and we can provide no assurance that we will generate any revenue or attain profitability.
We incurred operating expenses in the amount of $32,925 from inception on April 19, 2007 through the period ended May 31, 2008. These operating expenses were composed of website construction, professional fees, and other administrative expenses.
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Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
N/A
Item 4. Controls and Procedures.
As of the end of the period covered by this Report, the Company’s President, and principal financial officer (the “Certifying Officer”), evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the officer concluded that, as of the date of the evaluation, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed in the Company’s periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to management to allow timely decisions regarding required disclosure.
The Certifying Officer has also indicated that there were no significant changes in our internal controls or other factors that could significantly affect such controls subsequent to the date of their evaluation and there were no corrective actions with regard to significant deficiencies and material weaknesses.
Our management, including the Certifying Officer, does not expect that our disclosure controls or our internal controls will prevent all errors and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations 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 the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Item 4(t). Controls and Procedures.
The information required pursuant to item 4(t) has been provided in Item 4.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1(a). Risk Factors
There have been no changes to our risk factors from those disclosed in our Registration Statement filed on Form SB-2 on October 15, 2007.
Item 2. Unregistered Sales of Equity Securities
We did not issue any securities without registration pursuant to the Securities Act of 1933 during the three months ended May 31, 2008.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securities Holders
No matters were submitted to our security holders for a vote during the quarter of our fiscal year ending May 31, 2008.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit | Description of Exhibit |
31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOUSE FLY RENTALS INC.
By: /s/ Robert McCall .
Robert McCall, President,
Chief Executive Officer and
Chief Financial Officer Director
Date: July 15, 2008
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