SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ___________
Commission File Number 000-53127
FREIGHT MANAGEMENT CORP.
(Exact name of registrant as specified in its charter)
NEVADA 75-3254381
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, 8275 Eastern Ave Las Vegas, NV, 89123
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 938-0496
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 Par Value
(Title of class)
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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 [ ]
Aggregate market value of the voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold as of
February 12, 2009: $53,000.00
Number of common voting shares outstanding as of February 12, 2009: 5,060,000
TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business and Risk Factors 3
Item 2. Properties 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
PART II
Item 5. Market For Registrant's Common Equity and Related Stockholder
Matters 13
Item 7. Plan of Operation 15
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure 17
Item 9A. Controls and Procedures 17
Item 9B. Other Information 19
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons 19
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners and Management 23
Item 13. Certain Relationships, Related Transactions and Director
Independence 24
Item 14. Principal Accountant Fees and Services 24
Item 15. Exhibits and 8-K Filings 25
EXPLANATORY NOTE
This Amendment No. 1 to Form 10-K amends Freight Management Corp.'s Annual
Report on Form 10-K for the year ended December 31, 2008, which was filed with
the Securities and Exchange Commission on February 17, 2009 ("Original Filing").
We are filing this Amendment in response to a comment letter received from the
Securities and Exchange Commission dated August 4, 2009. We have made revisions
to:
* Item 9A. Controls and Procedures - amended to include managements'
assessment of Disclosure Controls and Procedures
* Our 2008 external audit report, which inadvertently omitted "as of and
for the period ended December 31, 2007" for the scope of the audit. A
revised report dated August 20, 2009 has been reissued by Seale and
Beers, CPA's, due to the retirement of our previous external auditor.
This event was reported previously under an 8-K filed on August 6,
2009.
* Note 2. "Website Costs" has been revised to discuss the treatment of
our website costs in accordance with Financial Accounting Standards
Board Emerging Issues Task Force ("EITF") 00-2, "Accounting for
Website Development Costs," which specifies the appropriate accounting
for costs incurred in connection with the development and maintenance
of websites.
* Exhibit 31.1 and 31.2 certifications have been amended to address
internal control over financial reporting as disclosed in 4 (b).
Except as described above, no other changes have been made to the Original 10-K.
The Original 10-K continues to speak as of the date of the Original Filing, and
Freight Management Corp. has not updated the disclosures contained therein to
reflect any events which occurred subsequent to the filing of the Original 10-K,
or to modify the disclosure contained in the Original 10-K other than to reflect
the changes described above.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Freight Management Corp. was incorporated on September 17, 2007, in the State of
Nevada. Our principal executive offices are located Suite 200, 8275 Eastern
Avenue, Las Vegas, NV, 89123. Our telephone number is (702) 938-0496. We are a
development stage company with no revenue and limited operations to date. Our
common stock is quoted on the OTC Bulletin Board under the symbol "FGGT".
Since incorporation, we have not made any significant purchases or sale of
assets, nor have we been involved in any mergers, acquisitions or
consolidations. Freight Management has never declared bankruptcy, has never been
in receivership, and has never been involved in any legal action or proceedings.
Subsequent to our incorporation, we focused our operations on the development of
an internet based, intelligent online system for business owners, freight
forwarders, junior employees in the shipping/freight industry and business
people in the export/import industry who require assistance with their freight
and shipping related queries. Any business owner who trades internationally, or
between countries, will readily recognize the challenges they face when
negotiating with shipping lines to transport their cargos between two different
countries, the lack of information from various shipping lines and alternatives,
and complicated terminology. Additionally, shippers/manufacturers new to the
business, those with new products, or those selling into new markets do not
completely understand the shipping/freight process and face difficulties finding
the best and most trusted shipping mode to move their goods. The learning
process creates frustration and consumes valuable time as they try to obtain a
clear picture of all shipping logistics. Junior shipping/freight industry
employees are typically overwhelmed with the vast terminology during their first
few months on the job, and lack a reliable unified source that can provide
trusted answers to address their queries. Employees also face the problem of
understanding the complicated documentation and physical processes involved in
the global shipping industry (eg: shipping declarations, custom procedures and
clearance, stevedoring, loading, and transportation).
We have named the system "FRINFO, or Freight Information". The system was
planned to utilize a comprehensive database to provide prospective customers
with customized, specific professional advice and solutions to their related
shipping queries and issues. When completed and tested, FRINFO would
successfully enable the generation of online real time solutions and advice to
questions submitted by the customers, and guide them to the most optimum
logistics solutions, which would potentially include lower freight rates, best
trade routes and the most ideal transportation means/mode. When completed, it
will also include tabular sections for frequently asked questions (FAQ's) and
their related answers, as well as industry related terms, abbreviations, and
widely used terminology. On completion, we are planning that the software will
ultimately be made available online to potential customers on our website at:
www.freightmanagementcorp.com
FRINFO is being developed to use Artificial Intelligence (AI). The customer will
be prompted to enter his/her question using an online form. FRINFO will then
recognize and detect certain keywords in the customers input and searches its
smart knowledge center for relevant answers related to the keywords generated.
After creating a list of results, FRINFO will combine keywords using a state of
the art matrix engineering system to eliminate non-related results. It will then
provide a solution that is most related to the customer's original query.
When developed, FRINFO will consist of the following major components:
* THE SMART KNOWLEDGE CENTER - this databank will act as the core of
FRINFO and will contain all of our shipping related data, articles,
link and information related to the shipping/freight sector. This
databank will be updated on regular basis.
* THE KEYWORD RECOGNITION SOFTWARE - this module will be based on AI
architecture. FRINFO will recognize the MAJOR keywords in the user
inputs and search the smart knowledge center for the recognized
keywords. The software will split the user input into keywords, and
will recognize the major keywords and eliminate un-related text from
the user input.
* THE MATRIX ENGINEERING SYSTEM - this will be the engineering logic
that FRINFO utilizes to combine keywords and to eliminate any
un-desired results from the search results, listing only the most
accurate and related answers to the users.
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We currently have no revenues or customers for our services. We plan on earning
revenues through customer subscriptions to our service and we will target
freight forwarders, exporters and importers operating in the USA and the Middle
East, which will serve as our initial target market. Customers will subscribe to
our online service by paying a monthly, quarterly, semi-annual, or annual fees.
During their subscription periods, customers can post unlimited number of
questions and achieve specific responses. We have not yet fixed our pricing
structure and will need to determine our charges initially as the software
develops, and revise them regularly to attract a wider base of customers in our
targeted markets.
At this stage in our development, there can be no assurance that we will be
successful in generating revenues from our subscription based online system or
that prospective customers seeking shipping advise will be receptive to using
our service.
As of the date hereof, we have not been successful in raising the additional
funding necessary to continue with our business plan for our business.
Historically, we have been able to raise a limited amount of capital through
private placements of our equity stock, but we are uncertain about our continued
ability to raise funds privately. The recent credit crisis has only made our
situation more difficult, because investors who were historically receptive to
startup situations have become nonexistent in this environment. Without further
loans from our directors, we only have sufficient funds to continue with our
business in a maintenance mode for the next 1-2 months, and anticipate that
final commercial version of FRINFO will not be ready for commercial use for at
least 3-6 months from the date hereof. We still need to complete development of
a second tier intelligence discipline for FRINFO to ensure that client driven
queries are answered correctly. We also need to design and build database
enhancement tools, and software for predictive modeling and statistical analysis
of queries prior to actual release.
As a result of this difficult envioronment and our lack of cash to continue, our
directors have been analyzing the various alternatives available to our company
to ensure our survival and to preserve our shareholder's investment in our
common shares. This analysis has included sourcing additional forms of financing
to continue our business as is, or mergers and/or acquisitions which would
likely involve a change of business. Our preference is to raise additional,
suitable financing to continue with business, but at this stage in our
operations, we believe either course is acceptable, as our operations have not
been profitable and our future prospects for our business are not good without
further significant financing.
POTENTIAL MERGERS AND ACQUISITIONS
Concurrent with efforts to find suitable financing for our business, we are also
focusing on analyzing potential business opportunities with more established
business entities for merger or acquisition with our company. In certain
instances, a target business may wish to become a subsidiary of our company or
may wish to contribute assets to our company rather than merge. We anticipate
that any new acquisition or business opportunities by our company will require
additional financing. There can be no assurance, however, that we will be able
to acquire the financing necessary to enable us to pursue our plan of operation.
If our company requires additional financing and we are unable to acquire such
funds, our business may fail.
In implementing a structure for a particular business acquisition or
opportunity, we may become a party to a merger, consolidation, reorganization,
joint venture, or licensing agreement with another corporation or entity. We may
also acquire stock or assets of an existing business. Upon the consummation of a
transaction, it is likely that our present management will no longer be in
control of our company and our existing business will close down. In addition,
it is likely that our officers and directors will, as part of the terms of the
acquisition transaction, resign and be replaced by one or more new officers and
directors.
We anticipate that the selection of a business opportunity in which to
participate will be complex and without certainty of success. Management
believes that there are numerous firms in various industries seeking the
perceived benefits of being a publicly registered corporation. Business
opportunities may be available in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
We may seek a business opportunity with entities who have recently commenced
operations, or entities who wish to utilize the public marketplace in order to
raise additional capital in order to expand business development activities, to
develop a new product or service, or for other corporate purposes. We may
4
acquire assets and establish wholly-owned subsidiaries in various businesses or
acquire existing businesses as subsidiaries.
Mr. Abotaleb is undertaking the search for and analysis of new business
opportunities. He is not a professional business analyst. In seeking or
analyzing prospective business opportunities, Mr. Abotaleb may utilize the
services of outside consultants or advisors. At this stage, we can provide no
assurance that we will be able to locate compatible business opportunities, what
additional financing we will require to complete a combination or merger with
another business opportunity, or whether the opportunity's operations will be
profitable. Further, we believe that our company may have more difficulties
raising capital for our existing business than for a new business opportunity.
We have held preliminary negotiations with prospective business entities but
have not entered into any formal written agreements for a business combination
or opportunity. If any such agreement is reached, we intend to disclose such an
agreement by filing a current report on Form 8-K with the Securities and
Exchange Commission.
If we are unable to secure adequate capital to continue our business or
alternatively, complete a merger or acquisition, our shareholders will lose some
or all of their investment and our business will likely fail.
FACILITIES
We rent executive office facilities located at Suite 200, 8275 Eastern Avenue,
Las Vegas, NV, 89123. This is a shared office facility, which offers office
space and secretarial and administrative services for $150 monthly. We may
cancel upon 30 days written notice. This location will serve as our primary
executive offices for the foreseeable future. Mr. Abotaleb and Mr. Lewis also
work from their residence in Egypt and Canada respectively at no charge to our
company.
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained herein as well as the information included in this Annual
Report in evaluating our business and prospects. The risks and uncertainties
described below are not the only ones we face. Additional unknown risks and
uncertainties, or that we currently believe are immaterial, may also impair our
business operations. If any of the following risks occur, our business and
financial results could be harmed. You should refer to the other information
contained in this Annual Report, including our financial statements and the
related notes.
Much of the information included in this Annual Report includes or is based upon
estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution readers of this
quarterly report that important factors in some cases have affected and, in the
future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward-looking statements". In evaluating us, our business and any
investment in our business, readers should carefully consider the following
factors.
RISKS ASSOCIATED WITH OUR EXISTING BUSINESS
WE HAVE NO OPERATING HISTORY AND HAVE MAINTAINED LOSSES SINCE INCEPTION, WHICH
WE EXPECT TO CONTINUE INTO THE FUTURE.
We were incorporated on September 17, 2007, and have very limited operations. We
have not realized any revenues to date. We have no operating history at all upon
which an evaluation of our future success or failure can be made. Our net loss
from inception to December 31, 2008 is $(58,716). We expect to incur operating
losses in future periods. This will happen because there are substantial costs
and expenses associated with the marketing and distribution of our services. We
may fail to generate revenues in the future. If we cannot attract a significant
5
number of customers, we will not be able to generate any significant revenues or
income. Failure to generate revenues will cause us to go out of business because
we will not have the money to pay our ongoing expenses.
In particular, additional capital will also be required in the event that:
- we incur delays and additional expenses related to the development of
a commercial market for our services;
- we are unable to create a substantial market for our services; or
- we incur any significant unanticipated expenses.
The occurrence of any of the aforementioned events could adversely affect our
ability to meet our business plans and achieve a profitable level of operations.
IF WE ARE UNABLE TO OBTAIN THE NECESSARY REVENUES AND FINANCING FOR OUR
OPERATIONS WE WILL NOT HAVE THE MONEY TO PAY OUR ONGOING EXPENSES AND WE MAY GO
OUT OF BUSINESS.
At December 31, 2008 we had a small working capital deficiency and at present,
we are entirely dependent on loans from our Director and President. Our existing
cash balances are only sufficient for the next 30-60 days. How long Freight
Management will be able to satisfy its cash requirements depends on how quickly
our company can identify suitable financing, or generate revenue and how much
revenue can be generated. If we are unable to obtain financing and generate
sufficient revenue from our business, we may be forced to delay, scale back, or
eliminate our sales activities. If we are unable to obtain financing to cover
shortfalls resulting from reduced revenues or a lack of revenues, we may not be
able to continue to operate our business and our business would fail.
Our ability to successfully produce and sell our services to generate operating
revenues also depends on our ability to obtain the necessary financing. Given
that we have no operating history, no revenues and only losses to date, we may
not be able to achieve this goal, and if this occurs we will not be able to pay
our operating and marketing costs and we may go out of business. We may need to
issue additional equity securities in the future to raise the necessary funds.
We do not currently have any arrangements for additional financing and we can
provide no assurance to investors we will be able to find such financing if
further funding is required. Obtaining additional financing would be subject to
a number of factors, including investor acceptance of our services and our
business model. The issuance of additional equity securities by us would result
in a significant dilution in the equity interests of our current stockholders.
The resale of shares by our existing shareholders pursuant to this prospectus
may result in significant downward pressure on the price of our common stock and
cause negative impact on our ability to sell additional equity securities.
Obtaining loans will increase our liabilities and future cash commitments, and
there can be no assurance that we will even have sufficient funds to repay our
future indebtedness or that we will not default on our future debts if we were
able to even obtain loans.
There can be no assurance that capital will continue to be available if
necessary to meet future funding needs or, if the capital is available, that it
will be on terms acceptable to us. If we are unable to obtain financing in the
amounts and on terms deemed acceptable to us, we may be forced to scale back or
cease operations, which might result in the loss of some or all of your
investment in our common stock.
OUR BUSINESS MODEL MAY NOT BE SUFFICIENT TO ENSURE OUR SUCCESS IN OUR INTENDED
MARKET
Our survival is currently dependent upon the success of our efforts to gain
market acceptance in our targeted industry. Should our services be too narrowly
focused or should the target market not be as responsive as we anticipate, we
may not have in place alternate products or services that we can offer to ensure
our survival.
IF WE ARE UNABLE TO COMPLETE THE PRODUCTION OF OUR FRINFO, WE WILL NOT BE ABLE
TO GENERATE REVENUES AND YOU WILL LOSE YOUR INVESTMENT.
We have not completed development of FRINFO. The success of our proposed
business will depend on its completion and the acceptance of our product by end
use customers in our target market. Achieving such acceptance will require
6
significant marketing investment and perceived value in our product by
consumers. Our online service, once developed and tested, may not be accepted by
our customers at sufficient levels to support our operations and build our
business. If it is not accepted at sufficient levels, our business will likely
fail.
WE CURRENTLY HAVE NO PROTECTION BY ANY TRADEMARKS, PATENTS AND/OR OTHER
INTELLECTUAL PROPERTY REGISTRATIONS. IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS, OUR PROPOSED BUSINESS WILL FAIL.
We have not applied for any trademark, patent or other intellectual property
registration with any governmental agency for our name or for our proposed
services. At present we are planning to enter into non-disclosure agreements
with any future contactors or employees to protect our technology. Despite any
precautions taken to protect our product and brand name, unauthorized parties
may attempt to copy or obtain and use our online service and related software.
If they are successful they could develop similar programs, which could create
more competition for us and even cause our proposed business operations to fail.
WE DEPEND TO A SIGNIFICANT EXTENT ON CERTAIN KEY PERSONNEL, THE LOSS OF ANY OF
WHOM MAY MATERIALLY AND ADVERSELY AFFECT OUR COMPANY.
Currently, we have only two employees and they are also our officers and
directors. We depend entirely on Mr. Abotaleb and Mr. Lewis for all of our
operations. The loss of either person will have a substantial negative effect on
our company and may cause our business to fail. Neither of our officers and
directors has been compensated for their services since our incorporation, and
it is highly unlikely that they will receive any compensation unless and until
we generate substantial revenues. There is intense competition for skilled
personnel and there can be no assurance that we will be able to attract and
retain qualified personnel on acceptable terms. The loss of either Mr. Abotaleb
or Mr. Lewis's services could prevent us from completing the development of our
product and developing revenues. In the event of the loss of services of such
personnel, no assurance can be given that we will be able to obtain the services
of adequate replacement personnel.
We do not have any employment agreements or maintain key person life insurance
policies on our officers and directors. We do not anticipate entering into
employment agreements with them or acquiring key man insurance in the
foreseeable future.
WE HAVE LIMITED BUSINESS, SALES AND MARKETING EXPERIENCE IN OUR INDUSTRY.
We have not completed the development of our online services and have yet to
enter into any subscriptions with customers. While Mr. Abotaleb possesses
significant experience in the shipping planning and logistics industry, he can
only devote limited time to our operations and Mr. Lewis has no experience.
Subsequent to completing development, we will need to test it commercially. In
order to do so, we must develop and implement a marketing campaign to drive
Internet traffic to our site. While we have plans for marketing and sales, there
can be no assurance that such efforts will be successful. Our future success
will depend, among other factors, upon whether our services can be sold at a
profitable price and the extent to which customers acquire, adopt, and continue
to use it. There can be no assurance that our product will gain wide acceptance
in its targeted markets or that we will be able to effectively market our
product.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST OUR COMPETITORS.
The shipping and transportation services industry is highly competitive. We
believe competition is based primarily on cost to ship, integration of various
modes of transport over various terrain, customer service and marketing support.
Our direct and indirect competition is made up of many publicly and privately
owned companies, many of which are fragmented in terms of both geographical
market coverage and service categories. Many companies within the industry are
privately-held. Therefore, we are unable to assess the size of all of our
competitors, but we would presently be classified as one of the smallest with
only a concept and no revenues at present. We believe end manufacturers,
distributors and retailers either rely on in house expertise or are aligning
themselves with shipping service companies that are financially stable, offer
expertise in a broad array of markets with all modes of transport and offer
superior customer service.
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Our competition includes many logistics and forwarding freight forwarding
companies that offer freight planning, sourcing, transportation timing and mode
management and cost management. These companies vary in size from single
proprietors to large integrated, multinational firms. Many of these companies
also offer customs brokerage services to assist their customers with cross
border clearance export/import issues between sovereign countries. They
generally have the ability to provide seamless, cost effective and trouble free
transportation services for their customers.
Large integrated shipping lines, airlines and land based transportation
companies also offer services similar to what we are planning, either on a value
added basis similar to logistics and forwarders, or free of charge for larger
customers. These companies have significantly broader expertise and larger sales
volumes than us, have greater financial and other resources available to them,
and possess extensive marketing capabilities. Many of these companies also have
well known and established reputations with manufacturers, distributors and
export/import businesses for providing quality service on a cost effective
basis. They have many brokers representing their businesses and large sales
forces throughout the world.
We also face competition from companies offering various forms of shipping and
freight related information answers by email or online. These include: Freight
Gate (www.freightgate.com), Dynamar (www.dynamar.com), Lloyd's List
(www.lloydslist.com), and Shipping Freight (www.shippingfreight.com).
WWW.OCEANWIDE.COM also offers on-demand applications for international trade
management to streamline the import and export processes for insurance,
compliance and logistics between business partners.
There can be no assurance that we will be able to effectively compete with our
competitors or that their present and future offerings would render our product
obsolete or noncompetitive. This intense competition may have a material adverse
effect on our results of operations and financial condition and prevent us from
achieving profitable sales levels of our product.
OUR OFFICERS AND DIRECTORS ARE ENGAGED IN OTHER ACTIVITIES AND MAY NOT DEVOTE
SUFFICIENT TIME TO OUR AFFAIRS, WHICH MAY AFFECT OUR ABILITY TO CONDUCT
OPERATIONS AND GENERATE REVENUES.
The persons serving as our officers and directors have existing responsibilities
and have additional responsibilities to provide management and services to other
entities. Mr. Abotaleb, our President and director, is also the Commercial
Manager for Medlevant Shipping Co. in Alexandria, Egypt. We expect Mr. Abotaleb
to spend approximately 25-30 hours a week on the business of our company. Mr.
Lewis, our Secretary Treasurer and a director is currently retired, but we
expect Mr. Lewis to spend approximately 25 hours or more a week on the business
of our company. As a result, demands for the time and attention from our
directors and officers from our company and other entities may conflict from
time to time. Because we rely primarily on our directors and officers to
maintain our business contacts and to promote our product, their limited
devotion of time and attention to our business may hurt the operation of our
business.
OUR INDEPENDENT AUDITORS' REPORT STATES THAT THERE IS A SUBSTANTIAL DOUBT THAT
WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
Our independent auditors, Seale and Beers, CPAs state in their audit report,
dated August 20, 2009, that since we are a development stage company, have no
established source of revenue and are dependent on our ability to raise capital
from shareholders or other sources to sustain operations, there is a substantial
doubt that we will be able to continue as a going concern.
This qualification clearly highlights that we will, in all likelihood, continue
to incur expenses without significant revenues into the foreseeable future until
our product gains significant popularity. Our only source of funds to date has
been the sale of our common stock. Because we cannot assure anyone at this stage
that we will be able to generate enough interest in our product or that we will
be able to generate any significant revenues or income, the identification of
new sources equity financing is significantly more difficult, and if we are
successful in closing on any new financing, existing investors will experience
substantially more dilution. The ability to obtain debt financing is also
severely impacted, and likely not even feasible, given that we do not have
revenues or profits to pay interest or repay principal.
As a result, if we are unable to obtain additional financing at this stage in
our operations, our business will fail and you may lose some or all of your
investment in our common stock.
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INVESTORS WILL HAVE LITTLE VOICE REGARDING THE MANAGEMENT OF FREIGHT MANAGEMENT
DUE TO THE LARGE OWNERSHIP POSITION HELD BY OUR EXISTING MANAGEMENT AND THUS IT
WOULD BE DIFFICULT FOR NEW INVESTORS TO MAKE CHANGES IN OUR OPERATIONS OR
MANAGEMENT, AND THEREFORE, SHAREHOLDERS WOULD BE SUBJECT TO DECISIONS MADE BY
MANAGEMENT AND THE MAJORITY SHAREHOLDERS, INCLUDING THE ELECTION OF DIRECTORS.
Officers and directors directly own 4,000,000 shares of the total of 5,060,000
issued and outstanding shares of Freight Management's common stock and are in a
position to continue to control Freight Management. Of these 4,000,000 shares,
Mr. Abotaleb, our President, owns 2,000,000 shares and Mr. Lewis, our Secretary
Treasurer and CFO owns 2,000,000 shares. Collectively they own 79.05% of our
total outstanding common shares. Such control may be risky to the investor
because our company's operations are dependent on a very few people who could
lack ability, or interest in pursuing our operations. In such event, our
business may fail and you may lose your entire investment. Moreover, investors
will not be able to effect a change in the company's board of directors,
business or management.
FUTURE REGULATION OF THE INTERNET COULD RESTRICT OUR BUSINESS, PREVENT US FROM
OFFERING SERVICE OR INCREASE OUR COST OF DOING BUSINESS.
At present there are few laws, regulations or rulings that specifically address
access to or commerce on the Internet. We are unable to predict the impact, if
any, that future legislation, legal decisions or regulations concerning the
Internet may have on our business, financial condition, and results of
operations. Regulation may be targeted towards, among other things, assessing
access or settlement charges, imposing taxes related to internet communications,
restricting content, imposing tariffs or regulations based on encryption
concerns or the characteristics and quality of products and services, any of
which could restrict our business or increase our cost of doing business. The
increasing growth and popularity of the Internet and related services heighten
the risk that governments or other legislative bodies will seek to regulate the
service, which could have a material adverse effect on our business, financial
condition and operating results.
RISKS ASSOCIATED WITH MERGING WITH OR ACQUIRING A NEW BUSINESS OPPORTUNITY
WE WILL REQUIRE ADDITIONAL FINANCING. INADEQUATE FINANCING MAY IMPAIR OUR
ABILITY TO COMPETE IN THE MARKETPLACE WHICH MAY RESULT IN THE DISSOLUTION OF OUR
COMPANY.
We require additional financing to complete a suitable merger or combination
with a business opportunity. Further, we anticipate that we will not have
sufficient capital to fund our ongoing operations for the next twelve months. We
may be required to raise additional financing for a particular business
combination or business opportunity. We would likely secure any additional
financing necessary through a private placement of our common shares.
There can be no assurance that, if required, any such financing will be
available upon terms and conditions acceptable to us, if at all. Our inability
to obtain additional financing in a sufficient amount when needed and upon terms
and conditions acceptable to us could have a materially adverse effect upon our
company. There can be no assurance that such funds will be available or
available on terms satisfactory to us. If additional funds are raised by issuing
equity securities, further dilution to existing or future shareholders is likely
to result. If adequate funds are not available on acceptable terms when needed,
we may be required to delay, scale back or eliminate the development of any
business opportunity that we acquire. Inadequate funding could also impair our
ability to compete in the marketplace, which may result in the dissolution of
our company.
WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING
TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING
BUSINESS OPERATIONS.
We have a limited operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by companies
seeking to acquire or establish a new business opportunity. Some of these risks
and uncertainties relate to our ability to identify, secure and complete an
acquisition of a suitable business opportunity.
We cannot be sure that we will be successful in addressing these risks and
uncertainties and our failure to do so could have a materially adverse effect on
our financial condition. In addition, our operating results are dependent to a
9
large degree upon factors outside of our control. There are no assurances that
we will be successful in addressing these risks, and failure to do so may
adversely affect our business.
It is unlikely that we will generate any or significant revenues while we seek a
suitable business opportunity. Our short and long-term prospects depend upon our
ability to select and secure a suitable business opportunity. In order for us to
make a profit, we will need to successfully acquire a new business opportunity
in order to generate revenues in an amount sufficient to cover any and all
future costs and expenses in connection with any such business opportunity. Even
if we become profitable, we may not sustain or increase our profits on a
quarterly or annual basis in the future.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS, PLACE
OUR COMPANY AT A COMPETITIVE DISADVANTAGE IN IDENTIFYING POSSIBLE BUSINESS
OPPORTUNITIES AND SUCCESSFULLY COMPLETING A BUSINESS COMBINATION.
We are, and will continue to be, an insignificant participant amongst numerous
other companies seeking a suitable business opportunity or business combination.
A large number of established and well-financed entities, including venture
capital firms, are actively seeking suitable business opportunities or business
combinations, which may also be desirable target candidates for us. Virtually
all such entities have significantly greater financial resources, technical
expertise and managerial capabilities than we do. We are, consequently, at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. We will also compete with
numerous other small public companies seeking suitable business opportunities or
business combinations.
THE SUCCESS OF A POTENTIAL MERGER OR COMBINATION WILL DEPEND TO A GREAT EXTENT
ON THE OPERATIONS, FINANCIAL CONDITION AND MANAGEMENT OF ANY IDENTIFIED BUSINESS
OPPORTUNITY.
The success of a potential merger or combination will depend to a great extent
on the operations, financial condition and management of any identified business
opportunity. While management intends to seek business opportunities and/or
business combinations with entities which have established operating histories,
there is no assurance that we will successfully locate business opportunities
meeting such criteria. In the event that we complete a business combination or
otherwise acquire a business opportunity, the success of our operations may be
dependent upon management of the successor firm or venture partner firm,
together with a number of other factors beyond our control.
We have no arrangement, agreement, or understanding with respect to acquiring a
business opportunity or engaging in a business combination with any private
entity. Accordingly, we may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth or other negative
characteristics.
Although we have entered into preliminary negotiations with prospective business
entities, we have not entered into any formal written agreements for a business
combination or opportunity. There can be no assurance that we will successfully
identify and evaluate suitable business opportunities or conclude a business
combination. There is no assurance that we will be able to negotiate the
acquisition of a business opportunity or a business combination on terms
favorable to us. We have not established a specific length of operating history
or a specified level of earnings, assets, net worth or other criteria which we
will require a target business opportunity to have achieved, and without which
we would not consider a business combination in any form with such business
opportunity. Accordingly, we may enter into a business combination with a
business opportunity having no significant operating history, losses, limited or
no potential for earnings, limited assets, negative net worth or other negative
characteristics.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT MAY REDUCE OR ELIMINATE THE
PARTICIPATION OF OUR PRESENT OFFICERS AND DIRECTORS IN THE FUTURE AFFAIRS OF OUR
COMPANY.
A business combination or acquisition of a business opportunity involving the
issuance of our common shares may result in new or incoming shareholders
obtaining a controlling interest in our company. Any such business combination
or acquisition of a business opportunity may require management of our company
to sell or transfer all or a portion of the common shares in the capital of our
company that they hold or resign as members of our Board of Directors. The
resulting change in our control could result in removal of one or more of our
present officers and directors, and a corresponding reduction in, or elimination
of, their participation in the future affairs of our company.
10
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY A BUSINESS
OPPORTUNITY.
Management believes that any potential business opportunity or target company
must provide audited financial statements for review and for the protection of
all parties to the business acquisition or combination. One or more attractive
business opportunities may forego a business combination with us rather than
incur the expenses associated with preparing audited financial statements.
A FAILURE TO MANAGE GROWTH EFFECTIVELY COULD HAVE A MATERIALLY ADVERSE EFFECT ON
OUR BUSINESS.
Our ability to achieve any growth upon the acquisition of a suitable business
opportunity or business combination will be dependent upon a number of factors
including, but not limited to, our ability to hire, train and assimilate
management and other employees and the adequacy of our financial resources. In
addition, there can be no assurance that we will be able to manage successfully
any business opportunity or business combination. Failure to manage anticipated
growth effectively and efficiently could have a materially adverse effect on our
business.
RISKS ASSOCIATED WITH OUR COMMON STOCK
DIFFICULTY FOR FREIGHT MANAGEMENT STOCKHOLDERS TO RESELL THEIR STOCK DUE TO A
LIMITED PUBLIC TRADING MARKET
There is a very limited public trading market for our common stock, and it is
unlikely that an active public trading market can be established or sustained in
the foreseeable future. Until there is an established trading market, holders of
our common stock may find it difficult to sell their stock or to obtain accurate
quotations for the price of the common stock. If a market for our common stock
does develop, our stock price may be volatile.
BROKER-DEALERS MAY BE DISCOURAGED FROM EFFECTING TRANSACTIONS IN OUR SHARES
BECAUSE THEY ARE CONSIDERED PENNY STOCKS AND ARE SUBJECT TO THE PENNY STOCK
RULES.
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934
impose sales practice and disclosure requirements on FINRA broker-dealers who
make a market in "penny stocks". A penny stock generally includes any non-Nasdaq
equity security that has a market price of less than $5.00 per share. Purchases
and sales of our shares will be generally facilitated by FINRA broker-dealers
who act as market makers for our shares. The additional sales practice and
disclosure requirements imposed upon broker-dealers may discourage
broker-dealers from effecting transactions in our shares, which could severely
limit the market liquidity of the shares and impede the sale of our shares in
the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an established customer or "accredited investor" (generally, an
individual with net worth in excess of $1,000,000 or an annual income exceeding
$200,000, or $300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to sale, unless the broker-dealer or
the transaction is otherwise exempt.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the Commission relating to the penny stock market, unless the broker-dealer
or the transaction is otherwise exempt. A broker-dealer is also required to
disclose commissions payable to the broker-dealer and the registered
representative and current quotations for the securities. Finally, a
broker-dealer is required to send monthly statements disclosing recent price
information with respect to the penny stock held in a customer's account and
information with respect to the limited market in penny stocks.
WE ARE SUBJECT TO THE PERIODIC REPORTING REQUIREMENTS OF THE SECURITIES EXCHANGE
ACT OF 1934, WHICH REQUIRES US TO INCUR AUDIT FEES AND LEGAL FEES IN CONNECTION
WITH THE PREPARATION OF SUCH REPORTS. THESE ADDITIONAL COSTS NEGATIVELY AFFECT
OUR ABILITY TO EARN A PROFIT.
In order to comply with these requirements, our independent registered auditors
have to review our financial statements on a quarterly basis and audit our
financial statements on an annual basis. Moreover, our legal counsel has to
review and assist in the preparation of such reports. The incurrence of these
11
costs is an expense to our operations and they have a negative effect on our
ability to meet our overhead requirements and earn a profit.
INVESTORS THAT NEED TO RELY ON DIVIDEND INCOME OR LIQUIDITY SHOULD NOT PURCHASE
SHARES OF OUR COMMON STOCK.
We have not declared or paid any dividends on our common stock since our
inception, and we do not anticipate paying any such dividends for the
foreseeable future. Investors that need to rely on dividend income should not
invest in our common stock, as any income would only come from any rise in the
market price of our common stock, which is uncertain and unpredictable.
Investors that require liquidity should also not invest in our common stock.
There is no established trading market and should one develop, it will likely be
volatile and subject to minimal trading volumes.
BECAUSE WE CAN ISSUE ADDITIONAL SHARES OF COMMON STOCK, PURCHASERS OF OUR COMMON
STOCK MAY INCUR IMMEDIATE DILUTION AND MAY EXPERIENCE FURTHER DILUTION.
We are authorized to issue up to 75,000,000 shares of common stock. At present,
there are 5,060,000 common shares issued and outstanding. Our Board of Directors
has the authority to cause us to issue additional shares of common stock without
consent of any of our stockholders. Consequently, the stockholders may
experience more dilution in their ownership of Freight Management in the future.
SINCE OUR OFFICERS AND DIRECTORS OWN A SIGNIFICANT PERCENTAGE OF OUR ISSUED AND
OUTSTANDING COMMON STOCK, ANY FUTURE SALES OF THEIR SHARES MAY RESULT IN A
DECREASE IN THE PRICE OF OUR COMMON STOCK AND THE VALUE OF OUR STOCKHOLDER'S
INVESTMENT
Our officer and director owns 4,000,000 shares of the total of 5,060,000 issued
and outstanding shares of our common stock. This represents 79.05% of our total
outstanding common shares. These shares are currently restricted from trading
and under Rule 144, and are only available for resale to the public if:
* We are no longer a shell company as defined under section 12b-2 of the
Exchange Act. A "shell company" is defined as a company with no or
nominal operations, and with no or nominal assets or assets consisting
solely of cash and cash equivalents.
* We have filed all Exchange Act reports required for the past 12
months; and
* If applicable, at least one year has elapsed from the time that we
file current Form 10 information on Form 8-K changing our status from
a shell company to an entity that is not a shell company.
At present we are considered to be a shell company under the Exchange Act. If we
meet the requirements at any date subsequent to the date hereof in the future,
our officers and directors would be entitled to sell within any three month
period a number of shares that does not exceed the greater of: 1% of the number
of shares of our common stock then outstanding which, in this case, will
currently equate to approximately 50,600 shares; or the average weekly trading
volume of Freight Management common stock during the four calendar weeks,
preceding the filing of a notice on Form 144 with respect to the sale for sales
exceeding 5,000 shares or an aggregate sale price in excess of $50,000. If fewer
shares at lesser value are sold, no Form 144 is required.
The possibility of future sales of significant amounts of shares held by them
could decrease the market price of our common stock if the marketplace does not
orderly adjust to the increase in shares in the market. In such case, the value
of your investment in us will decrease.
OTHER RISKS
ALL OF OUR ASSETS AND OUR OFFICERS AND DIRECTORS ARE LOCATED IN EGYPT AND
CANADA. THIS MAY CAUSE ANY ATTEMPTS TO ENFORCE LIABILITIES UNDER THE U.S.
SECURITIES AND BANKRUPTCY LAWS TO BE VERY DIFFICULT.
Currently, all of our assets and our officers and directors are located in Egypt
and Canada. Our planned for operations will also be conducted these countries as
well as any additional assets that we acquire hereafter. Therefore, any investor
that attempts to enforce against the company or against any of our officers and
directors liabilities that accrue under U.S. securities laws or bankruptcy laws
will face the difficulty of complying with local laws in Egypt and Canada, with
regards to enforcement of foreign judgments. This could make it impracticable or
uneconomic to enforce such liabilities.
12
ITEM 2. DESCRIPTION OF PROPERTY.
We do not own any property, real or otherwise. We rent executive office
facilities located at Suite 200, 8275 Eastern Avenue, Las Vegas, NV, 89123. This
is a shared office facility, which offers office space and secretarial and
administrative services for $150 monthly. We may cancel upon 30 days written
notice. This location will serve as our primary executive offices for the
foreseeable future. Mr. Abotaleb and Mr. Lewis also work from their residences
in Egypt and Canada respectively at no charge to our company.
We believe our current premises are adequate for our current operations and we
do not anticipate that we will require any additional premises in the
foreseeable future, unless we merge with or acquire a new business operation.
We do not have any investments or interests in any real estate. Our company does
not invest in real estate mortgages, nor does it invest in securities of, or
interests in, persons primarily engaged in real estate activities.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any legal proceedings, nor are we aware of any
contemplated or pending legal proceedings against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
In the United States, our common shares are traded on the National Association
of Securities Dealers Inc. OTC Bulletin Board under the symbol "FGGT".
Of the 5,060,000 shares of common stock outstanding as of February 12, 2009,
4,000,000 shares were owned by our officers, directors and affiliates, and may
only be resold in compliance with Rule 144 of the Securities Act of 1933 and are
also subject to the volume and trading limitations of Rule 144 of the Act.
We have no outstanding options or warrants, or other securities convertible into
common stock.
At February 12, 2009 there were 41 holders of record.
Routh Stock Transfer, Suite 200, 6860 N. Dallas Parkway, Plano, Texas, USA 75024
is the registrar and transfer agent for our common shares. Their phone number is
(972) 381-2782 and their fax number is (972) 381-2783.
RULES GOVERNING LOW-PRICE STOCKS THAT MAY AFFECT OUR SHAREHOLDERS' ABILITY TO
RESELL SHARES OF OUR COMMON STOCK
Quotations on the OTCBB reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not reflect actual transactions. Our common stock
is subject to certain rules adopted by the SEC that regulate broker-dealer
practices in connection with transactions in "penny stocks". Penny stocks
generally are securities with a price of less than $5.00, other than securities
registered on certain national exchanges or quoted on the Nasdaq system,
provided that the exchange or system provides current price and volume
information with respect to transaction in such securities. The additional sales
practice and disclosure requirements imposed upon broker-dealers are may
discourage broker-dealers from effecting transactions in our shares which could
severely limit the market liquidity of the shares and impede the sale of our
shares in the secondary market.
13
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special suitability
determination for the purchaser to receive the purchaser's written consent to
the transaction prior to sale, to deliver standardized risk disclosure documents
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer must also
provide the customer with current bid and offer quotations for the penny stock.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.
DIVIDENDS
We have not declared any cash dividends, nor do we intend to do so. We are not
subject to any legal restrictions respecting the payment of dividends, except
that they may not be paid to render us insolvent. Dividend policy will be based
on our cash resources and needs and it is anticipated that all available cash
will be needed for our operations in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
We have sold securities within the past three years without registering the
securities under the Securities Act of 1933 on two separate occasions.
On September 17, 2007 Mr. Ibrahim Abotaleb, our President and Director,
purchased 2,000,000 shares of our common stock for $0.002 per share or an
aggregate of $4,000. On September 17, 2007 Mr. Gerald Lewis, our Secretary
Treasurer and Director, purchased 2,000,000 shares of our common stock for
$0.002 per share or an aggregate of $4,000. No underwriters were used, and no
commissions or other remuneration was paid except to Freight Management. The
securities were sold in an offshore transaction relying on Rule 903 of
Regulation S of the Securities Act of 1933. Mr. Abotaleb and Mr. Lewis are not
U.S. persons as that term is defined in Regulation S. No directed selling
efforts were made in the United States by Freight Management, any distributor,
any of their respective affiliates or any person acting on behalf of any of the
foregoing. We are subject to Category 3 of Rule 903 of Regulation S and
accordingly we implemented the offering restrictions required by Category 3 of
Rule 903 of Regulation S by including a legend on all offering materials and
documents which stated that the shares have not been registered under the
Securities Act of 1933 and may not be offered or sold in the United States or to
US persons unless the shares are registered under the Securities Act of 1933, or
an exemption from the registration requirements of the Securities Act of 1933 is
available. The offering materials and documents also contained a statement that
hedging transactions involving the shares may not be conducted unless in
compliance with the Securities Act of 1933. The shares continue to be subject to
Rule 144 of the Securities Act of 1933.
On December 31, 2007 we accepted subscription agreements that sold 1,060,000
common shares to the following 39 subscribers at an offering price of $0.05 per
share for gross offering proceeds of $53,000. This was an offshore transaction
pursuant to Regulation S of the Securities Act. The offering price for the
offshore transactions was established on an arbitrary basis. All of the
following persons are not U.S. persons, as the term is defined under Regulation
S and the sales of our common stock to the following person are made in offshore
transactions as the term is defined under Regulation S. No direct selling
efforts were made in the United States by Freight Management, any distributor,
any of our respective affiliates, or any person acting on behalf of any of the
foregoing. We are subject to Category 3 of Rule 903 of Regulation S and
accordingly we implemented the offering restrictions required by Category 3 of
Rule 903 of Regulation S by including a legend on all offering materials and
documents which stated that the shares have not been registered under the
SECURITIES ACT OF 1933 and may not be offered or sold in the United States or to
U.S. persons unless the shares are registered under the SECURITIES ACT OF 1933,
if an exemption from registration requirements of the SECURITIES ACT OF 1933 is
available. The offering materials and documents also contained a statement that
hedging transactions involving the shares may not be conducted unless in
compliance with the SECURITIES ACT OF 1933. These 1,060,000 common shares were
subsequently registered under our S-1A/2 Registration Statement made effective
on March 6, 2008.
14
No underwriters were used, and no commissions or other remuneration was paid
except to the company for any of the above noted.
SALE OF REGISTERED SECURITIES AND USE OF PROCEEDS
None.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue 75,000,000 shares of common stock with a par value of
$0.001. We are not authorized to issue shares of preferred stock. At February
12, 2009 there were 5,060,000 common shares outstanding. There are no warrants,
options or convertible securities outstanding. Upon liquidation, dissolution or
winding up of the corporation, the holders of common stock are entitled to share
ratably in all net assets available for distribution to stockholders after
payment to creditors. The common stock is not convertible or redeemable and has
no preemptive, subscription or conversion rights. There are no conversion,
redemption, sinking fund or similar provisions regarding the common stock. Each
outstanding share of common stock is entitled to one vote on all matters
submitted to a vote of stockholders. There are no cumulative voting rights.
Each stockholder is entitled to receive the dividends as may be declared by our
board of directors out of funds legally available for dividends and, in the
event of liquidation, to share pro rata in any distribution of our assets after
payment of liabilities. Our board of directors is not obligated to declare a
dividend. Any future dividends will be subject to the discretion of our board of
directors and will depend upon, among other things, future earnings, the
operating and financial condition of our company, its capital requirements,
general business conditions and other pertinent factors. It is not anticipated
that dividends will be paid in the foreseeable future.
There are no provisions in our articles of incorporation or our bylaws that
would delay, defer or prevent a change in control of our company.
ITEM 7. MANAGEMENT'S PLAN OF OPERATION.
The following discussion of the plan of operation, financial condition, results
of operations, cash flows and changes in financial position of our Company
should be read in conjunction with our most recent financial statements and
notes appearing elsewhere in this Form 10-K.
Our immediate priority is to either secure suitable financing to continue with
our existing business or change our business and conclude a merger, acquisition
or combination with a business prospect. This is critical to to ensure our
survival and to preserve our shareholder's investment in our common shares. At
this stage in our operations, we believe either course is acceptable, as our
operations have not been profitable and our company will fail without further
significant financing. We currently have a small working capital deficiency
including what we owe to our director. Our director has indicated that he is
willing to lend our company minimum funds to enable us meet our statutory
corporate and reporting obligations for the next 12 months through unsecured, no
interest loans.
We believe we require a minimum of $70,000 in additional financing to continue
and commercially develop our existing business over the next 12 months, which
would be expended as follows:
General and administrative $15,000
Legal and accounting 20,000
Additional website development 8,000
Website integration of software 3,000
Marketing programs, shipping forums and search optimization 20,000
-------
$66,000
=======
15
Concurrent with our search for additional financing for our existing business,
we are also actively seeking business opportunities with established business
entities for the merger of a target business with our company. In certain
instances, a target business may wish to become a subsidiary of our company or
may wish to contribute assets to our company rather than merge. We anticipate
that any new acquisition or business opportunities by our company will require
additional financing and that we will close our existing business. There can be
no assurance, however, that we will be able to acquire the financing necessary
to enable us to pursue this new plan. If our company requires additional
financing and we are unable to acquire such funds, our business may fail.
We may seek a business opportunity with entities who have recently commenced
operations, or entities who wish to utilize the public marketplace in order to
raise additional capital in order to expand business development activities, to
develop a new product or service, or for other corporate purposes. We may
acquire assets and establish wholly-owned subsidiaries in various businesses or
acquire existing businesses as subsidiaries.
At this stage, we cannot quantify what additional financing we will require to
complete a combination or merger with another business opportunity, or whether
the opportunity's operations will be profitable.
RESULTS OF OPERATIONS
Our company posted losses of $57,140 for the year ended December 31, 2008
compared to $1,576 from inception to December 31, 2007. From inception to
December 31, 2008 we have incurred losses of $58,716. The principal components
of our losses for fiscal 2008 included general and administrative costs of
$25,558, FRINFO software and database development of $30,250 and amortization of
our website of $1,332. Our 2008 general & administrative expense totals include
$16,100 for the preparation and filing of our registration statement.
LIQUIDITY AND CASH RESOURCES
At December 31, 2008 we had working capital of $3,047, not including $3,320 owed
to our director, who has indicated that the amount is repayable within the next
12 months provided we have sufficient resources to do so. This compares to
$56,355 at December 31, 2007. At December 31, 2008 we had $2,905 in cash.
Because no remaining cash and not generated any revenue from our business we
need to raise additional funds for the future development of our business and to
respond to unanticipated requirements or expenses, or to fund the
identification, evaluation and combination or merger with a suitable business
opportunity.
Other than limited loans from our director to continue with our statutory
requirements for the next 12 months, we do not currently have any arrangements
for financing and we can provide no assurance to investors we will be able to
find such financing. There can be no assurance that additional financing will be
available to us, or on terms that are acceptable. Consequently, we may not be
able to proceed with our intended business plans and our business will then
likely fail.
PRODUCT RESEARCH AND DEVELOPMENT
Unless we acquire a new business, we do not anticipate that we will expend any
significant monies on research and development over the twelve months ending
December 31, 2009.
PURCHASE OF SIGNIFICANT EQUIPMENT
Unless we acquire a new business, we do not intend to purchase any significant
equipment over the twelve months ending December 31, 2009.
EMPLOYEES
Currently our only employees are our directors and officers and will likely
remain so until December 31, 2009 unless we acquire a new business.
GOING CONCERN
We have historically incurred losses. Because of these historical losses, we
will require additional working capital to develop our business operations. We
do not anticipate that we will derive any revenues from operations unless and
until we obtain additional financing to continue with our business or we acquire
a new business opportunity. There can be no assurance that we can do so or that,
even if we are successful in doing so, we will be able to operate profitably.
16
Due to the uncertainty of our ability to meet our current operating expenses and
the capital expenses noted above, in their report on the annual financial
statements for the year ended December 31, 2008, our independent auditors
included an explanatory paragraph regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
There are no assurances that we will be able to either (1) achieve a level of
revenues adequate to generate sufficient cash flow from operations; or (2)
obtain additional financing through private placements, public offerings and/or
bank financings necessary to support our working capital requirements. As noted
herein, we are pursuing various financing alternatives to meet our immediate and
long-term financial requirements. There can be no assurance that additional
financing will be available to us when needed or, if available, that it can be
obtained on commercially reasonable terms. If we are not able to obtain the
additional financing on a timely basis, we will be unable to conduct our
operations as planned, and we will not be able to meet our other obligations as
they become due. In such event, we will be forced to scale down or perhaps even
cease our operations.
We intend to raise additional working capital as and when we need it through
private placements, public offerings and/or bank financing. We have historically
raised working capital through the sale of equity securities and small loans
from our Director, but there can be no assurance that we will be able to
continue to do so.
OFF-BALANCE SHEET ARRANGEMENTS
There are no 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 investors.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We believe our market risk exposures arise primarily from exposures to
fluctuations in interest rates and exchange rates. We presently only transact
business in US Dollars. We believe that the exchange rate risk surrounding the
future transactions of the Company will not materially or adversely affect our
future earnings, unless we aquire or merge with a business that is significantly
dependent on foreign exchange transactions, floating interest rate debt or some
other factor. We do not use derivative financial instruments to manage risks or
for speculative or trading purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required by this Item begin on Page F-1 of this Form
10-K, and include:
* the report of independent accountants
* balance sheet as of December 31, 2008
* statements of operations, cash flows and stockholders' equity from the
incorporation date to December 31, 2008
* notes to the financial statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We are required to maintain disclosure controls and procedures, as such term is
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, that are
designed to ensure that information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC rules and forms, and that such information is accumulated
and communicated to our management, including our CEO and CFO, to allow timely
17
decisions regarding required disclosure. As of December 31, 2008 we conducted an
evaluation, under the supervision, and with the participation of our CEO and
CFO, of the effectiveness of the design and operation of our disclosure controls
and procedures. Based on this evaluation, our CEO and CFO concluded that our
disclosure controls and procedures were not effective as described below under
"Material Weaknesses".
Management does not expect that our Disclosure Controls and internal controls
will prevent all errors and all 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. Further, 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 the 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 a 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 or board override of the
control.
The design of any system 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; 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 not be detected.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934
as a process designed by, or under the supervision of, ourCEO and CFO and
effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
* Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
* Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
* Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of December 31, 2008 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
18
inappropriate application of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
IDENTIFIED WEAKNESSES
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board was the lack of a functioning audit committee due to
a lack of a majority of independent members and a lack of a majority of outside
directors on our board of directors, resulting in ineffective oversight in the
establishment and monitoring of required internal controls and procedures. This
material weakness was identified by our management in connection with the review
of our financial statements as of December 31, 2008.
Management also believes that the lack of a functioning audit committee and the
lack of a majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures, which could result in a material misstatement in our
financial statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated a plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board. While we are actively seeking outside members, including
candidates with accounting experience, we cannot provide any assurance that we
will be successful. Given the size of our company, lack of revenues and current
lack of financing to continue with our business, it is unlikely that anyone will
agree to join our Board until general economic conditions and our own business
prospects improve significantly.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only the management's report in this annual
report.
ITEM 9B. OTHER INFORMATION.
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
All directors of our company hold office until the next annual meeting of the
stockholders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
19
Date First Elected
Name Position Held with the Company Age or Appointed
---- ------------------------------ --- ------------
Ibrahim Abotaleb President, CEO and Director 34 September 17, 2007
Gerald Lewis Secretary Treasurer, CFO and Director 60 September 17, 2007
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience of
each director and executive officer during at least the past five years,
indicating each person's business experience, principal occupation during the
period, and the name and principal business of the organization by which he was
employed.
MR. IBRAHIM ABOTALEB, PRESIDENT, CEO, MEMBER OF THE BOARD OF DIRECTORS
Mr. Ibrahim Abotaleb has been serving as our President and a member of our Board
of Directors since September 17, 2007. The term of his office is for one year
and is renewable on an annual basis.
From September 2006 until the date hereof, Mr. Abotaleb is employed as the
Commercial and Marketing Manager for Medlevant Shipping Co. in Alexandria.
Medlevant is the exclusive representative for Hapag-Lloyd AG in Egypt.
Hapag-Lloyd is ranked as one of the 5 largest shipping lines in the world and
specializes in containerized transport. He is responsible for new business
development, customer relations and the annual sales budget, marketing plan and
sales team performance for the sales & marketing department. He supervises 7
sales persons in Alexandria office, 3 sales persons in the Cairo office and 5
marketing officers.
From January 2006 to August 2006 he was employed as the Sales & Marketing
Manager for the Arabian Gulf Marine Trading Co., which was the representative
for Hatsu Marine Limited. Hatsu is a member of the Evergreen Group, which is the
fourth largest container line in the world. He was responsible for business
development, the sales and marketing budget and department personnel. He also
acted as the division liaison with overseas offices for the coordination of
shipping logistics. From July 2001 to December 2005 he was employed with the
Arabian Gulf Marine Co. where he first served as the Marketing and Business
Deputy manager and was promoted to Business Export Manager in January 2003. He
was responsible for the export sales team, business development and overall the
marketing plan for the department. He also was responsible for maintaining
shipping route and links logistics for the company. From October 1998 to June
2001 he was employed with Finmar Shipping Co., an agency representative of the
Yang Ming Line. He started as a Sales Executive and was promoted to Sales
Supervisor in January 2000. He was responsible for direct sales activities,
business development and pricing and route coordination. From July 1997 to
September 1998 he was employed with Naggar Shipping Co. as a Customer Service
and Indoor Sales Representative, where he booked and documented various
shipments.
Mr. Abotaleb is also highly experienced with computer based shipping logistics
programs, possesses extensive knowledge of middle eastern shipping alternatives
and routes, USA/Canada business routes and Far East trade routes as well and
competitor strengths and weaknesses in the markets in which he operates. He
received a Master's degree in Shipping and International Transport from the Arab
Academy of Science and Technology, in Alexandria, Egypt in 2004. He also
received a Batchelor degree in Accounting from the University of Alexandria,
Egypt in 1997.
He is currently devoting approximately 25 hours a week of his time to our
company, and is planning to devote 30 hours per week if necessary during the
next 12 months of operation.
He is not an officer or director of any reporting company that files annual,
quarterly, or periodic reports with the United States Securities and Exchange
Commission.
MR. GERALD LEWIS, SECRETARY TREASURER, CFO, MEMBER OF THE BOARD OF DIRECTORS
Mr. Lewis has been serving as our Secretary, CFO and a member of our Board of
Directors since September 17, 2007. The term of his office is for one year and
is renewable on an annual basis.
20
Prior to his retirement in 2005, Mr. Lewis was self employed in the apartment
rental business, which he started in 1979. He owned various buildings, and up to
135 rental suites, in Edmonton, Alberta Canada, which he managed and operated
himself. He received a degree in mechanical engineering from the University of
Alberta in 1972 and his P.Eng (professional engineering certification) in 1975.
Mr. Lewis is currently devoting approximately 25 hours a week of his time to
Freight Management, and is planning to continue to do so during the next 12
months of operation.
He is not an officer or director of any reporting company that files annual,
quarterly, or periodic reports with the United States Securities and Exchange
Commission.
COMMITTEES OF THE BOARD
We do not have an audit or compensation committee at this time.
AUDIT COMMITTEE FINANCIAL EXPERT
We currenly do not have an audit committee financial expert, or an independent
audit committee expert on our Board of Directors.
FAMILY RELATIONSHIPS
There are no family relationships.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Our directors, executive officers and control persons have not been involved in
any of the following events during the past five years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
CONFLICT OF INTEREST
None of our officers or directors are subject to a conflict of interest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of our common
stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by the
Securities and Exchange Commission regulations to furnish us with copies of all
Section 16(a) reports they file.
To the best of our knowledge, our executive officers and directors filed their
Form 3 and Form 4 reports on a timely basis.
21
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information with respect to compensation paid by
us to our officers from our date of incorporation on September 17, 2007 to
December 31, 2008.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value &
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Totals($)
- ------------ ---- --------- -------- --------- --------- --------- ----------- --------- ---------
Ibrahim Abotaleb 2008 0 0 0 0 0 0 0 0
President & CEO 2007 0 0 0 0 0 0 0 0
Gerald Lewis 2008 0 0 0 0 0 0 0 0
Secretary, Treasurer, CFO 2007 0 0 0 0 0 0 0 0
Since our date of incorporation to the date hereof, our executive officers have
not received and are not accruing any compensation. The officers anticipate that
they will not receive, accrue, earn, be paid or awarded any compensation during
the first year of operations. We have not entered into any employment agreement
or consulting agreement with our directors and executive officers.
The following table sets forth information with respect to compensation paid by
us to our directors from our date of incorporation on September 17, 2007 to
December 31, 2008.
DIRECTOR COMPENSATION TABLE
Change in
Pension
Fees Value and
Earned Non-Equity Nonqualified All
or Incentive Deferred Other
Paid in Stock Option Plan Compensation Compen-
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) sation($) Total($)
---- ------- --------- --------- --------------- ----------- --------- --------
Ibrahim Abotaleb 0 0 0 0 0 0 0
Gerald Lewis 0 0 0 0 0 0 0
All compensation received by the officers and directors has been disclosed.
22
OPTION/SAR GRANTS
There are no stock option, retirement, pension, or profit sharing plans for the
benefit of our officers and directors.
LONG-TERM INCENTIVE PLAN AWARDS
We do not have any long-term incentive plans.
DIRECTORS COMPENSATION
We have no formal plan for compensating our directors for their services in
their capacity as directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of our board of directors. The board of directors may
award special remuneration to any director undertaking any special services on
behalf of our company other than services ordinarily required of a director.
Since inception to the date hereof, no director received and/or accrued any
compensation for his or her services as a director, including committee
participation and/or special assignments.
The Executive Officers have not received any compensation since the date of
incorporation of our Company, and we did not accrue any compensation. There are
no securities authorized for issuance under any equity compensation plan, or any
options, warrants, or rights to purchase our common stock.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information, as of February 12, 2009 with
respect to any person (including any "group", as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) who is known to the Company to be the beneficial owner of more than five
percent of any class of the Company's voting securities, and as to those shares
of the Company's equity securities beneficially owned by each its director, the
executive officers of the company and all of its directors and executive
officers of the Company and all of its directors and executive officers as a
group. Unless otherwise specified in the table below, such information, other
than information with respect to the directors and officers of the Company, is
based on a review of statements filed, with the Securities and Exchange
commission (the "Commission") pursuant to Sections 13 (d), 13 (f), and 13 (g) of
the Exchange Act with respect to the Company's Common Stock. As of February 12,
2009, there were 5,060,000 shares of Common Stock outstanding.
The number of shares of Common Stock beneficially owned by each person is
determined under the rules of the Commission and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which such person has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after the date hereof,
through the exercise of any stock option, warrant or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares
such power with his or her spouse) with respect to the shares set forth in the
following table. The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
The table also shows the number of shares beneficially owned as of February 12,
2009 by each of the individual directors and executive officers and by all
directors and executive officers as a group.
23
Amount and
Nature of Percent
Title of Name and Address Beneficial of
Class of Beneficial Owner Ownership (1) Class (2)
----- ------------------- ------------- ---------
Common Ibrahim Abotaleb 2,000,000 39.53%
24 El Gammal St, Cleopatra Hammat
Alexandria, 21311, Egypt
Common Gerald Lewis 2,000,000 39.53%
104, 10115 - 108 Ave.
Edmonton, Alberta, Canada T5H 1A7
Common Directors and officers as 4,000,000 79.06%
a group of two (1)
- ----------
1. Represents beneficial ownership
2. Based on the total of 5,060,000 outstanding common shares as of the date
hereof
Percent of Ownership is calculated in accordance with the Securities and
Exchange Commission's Rule 13(d) - 13(d)(1)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than the stock transactions disclosed below, we have not entered into any
transactions in which any of our directors, executive officers, or affiliates of
our Company, including any member of an immediate family, had or is to have a
direct or indirect material interest.
On September 17, 2007 Mr. Ibrahim Abotaleb and Mr. Gerald Lewis each purchased
2,000,000 shares of our common stock for $0.002 per share, or $4,000.00 each,
for an aggregate of $8,000.00.
The shares continue to be subject to Rule 144 of the Securities Act of 1933.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES.
The aggregate fees billed by our auditors, for professional services rendered
for the audit of our annual financial statements for the year ended December 31,
2008 and 2007, and for the reviews of the financial statements included in our
Quarterly Reports on Form 10-Q during that fiscal year were $6,050 and $1,000
respectively.
AUDIT RELATED FEES.
We incurred nil fees to auditors for audit related fees during the fiscal year
ended December 31, 2008 and 2007.
TAX FEES.
We incurred nil fees to auditors for tax compliance, tax advice or tax
compliance services during the fiscal year ended December 31, 2008 and 2007.
24
ALL OTHER FEES.
We did not incur any other fees billed by auditors for services rendered to our
Company, other than the services covered in "Audit Fees" for the fiscal year
ended December 31, 2008 and 2007.
The Board of Directors has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
ITEM 15. EXHIBITS.
EXHIBIT INDEX
3.1 Articles of Incorporation*
3.2 By-laws*
31.1 Section 302 Certification - Chief Executive Officer
31.2 Section 302 Certification - Chief Financial Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
Executive Officer.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
Financial Officer.
- ----------
* Incorporated by reference to our SB2 Registration Statement filed on
January 29, 2008, SEC File Number 333-148920.
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 21st day of
August 2009.
FREIGHT MANAGEMENT CORP.
Date: August 21, 2009 By: /s/ Ibrahim Abotaleb
------------------------------------
Name: Ibrahim Abotaleb
Title: President, CEO, and Director
(Principal Executive Officer)
Date: August 21, 2009 By: /s/ Gerald Lewis
------------------------------------
Name: Gerald Lewis
Title: Secretary Treasurer and Director
(Principal Accounting and
Financial Officer)
26
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Freight Management Corporation
(A Development Stage Company)
We have audited the accompanying balance sheets of Freight Management
Corporation (A Development Stage Company) as of December 31, 2008 and 2007, and
the related statements of operations, stockholders' equity (deficit) and cash
flows for the year ended December 31, 2008 and the period from inception on
September 17, 2007 through December 31, 2007 and 2008. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conduct our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Freight Management Corporation
(A Development Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders' equity and cash flows for the year ended
December 31, 2008 and the period from inception on September 17, 2007 through
December 31, 2007 and 2008, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has an accumulated deficit of $58,716, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Seale and Beers, CPAs
- -----------------------------------
Seale and Beers, CPAs
Las Vegas, Nevada
August 20, 2009
6490 West Desert Inn Rd, Las Vegas, NV 89146 (702) 253-7492 Fax (702) 253-7501
F-1
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
BALANCE SHEETS
December 31, December 31,
2008 2007
-------- --------
ASSETS
Current assets
Cash and bank accounts $ 2,905 $ 60,208
Deposit 150 150
-------- --------
Total current assets 3,055 60,358
Website, net of accumulated amortization (Note 7) 2,557 3,889
-------- --------
Total assets $ 5,612 $ 64,247
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 8 $ 4,003
Due to director (Note 5) 3,320 820
-------- --------
Total current liabilities 3,328 4,823
-------- --------
Stockholders' equity (Note 4,5)
Authorized:
75,000,000 common shares
Par value $0.001
Issued and outstanding:
5,060,000 common shares 5,060 5,060
Additional paid-in capital 55,940 55,940
Deficit accumulated during the development stage (58,716) (1,576)
-------- --------
Total stockholders' equity 2,284 59,424
-------- --------
Total liabilities and stockholders' equity $ 5,612 $ 64,247
======== ========
The accompanying notes are an integral part of these financial statements.
F-2
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Date of Date of
Incorporation on Incorporation on
Year Ended September 17, 2007 to September 17, 2007 to
December 31, December 31, December 31,
2008 2007 2008
---------- ---------- ----------
REVENUE $ -- $ -- $ --
---------- ---------- ----------
OPERATING EXPENSES
Amortization 1,332 111 1,443
Database development costs 30,250 -- 30,250
General & administrative 25,558 645 26,203
Organization -- 820 820
---------- ---------- ----------
Loss before income taxes (57,140) (1,576) (58,716)
Provision for income taxes -- -- --
---------- ---------- ----------
Net loss $ (57,140) $ (1,576) $ (58,716)
========== ========== ==========
Basic and diluted loss per
Common share $ (0.01) $ --
========== ==========
Weighted average number of common
shares outstanding (Note 4) 5,060,000 4,010,095
========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During the Total
------------------ Paid in Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Inception, September 17, 2007 -- $ -- $ -- $ -- $ --
Initial capitalization, sale of
common stock to Directors on
September 17, 2007 4,000,000 4,000 4,000 8,000
Private placement closed
December 31, 2007 1,060,000 1,060 51,940 53,000
Net loss for the period -- -- -- (1,576) (1,576)
--------- ------- ------- -------- --------
Balance December 31, 2007 5,060,000 5,060 55,940 (1,576) 59,424
Net loss for the year -- -- -- (57,140) (57,140)
--------- ------- ------- -------- --------
Balance December 31, 2008 5,060,000 $ 5,060 $55,940 $(58,716) $ 2,284
========= ======= ======= ======== ========
The accompanying notes are an integral part of these financial statements.
F-4
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Date of Date of
Incorporation on Incorporation on
Year Ended September 17, 2007 to September 17, 2007 to
December 31, December 31, December 31,
2008 2007 2008
-------- -------- --------
OPERATING ACTIVITIES
Net loss for the period $(57,140) $ (1,576) $(58,716)
Adjustments To Reconcile Net Loss To Net
Cash Used In Operating Activities
Amortization expense 1,332 111 1,443
Changes in operating assets and liabilities:
Deposit -- (150) (150)
Accounts payable and accrued liabilities (3,995) 4,003 8
Due to director 2,500 820 3,320
-------- -------- --------
Net cash (used in) provided by operating activities (57,303) 3,208 (54,095)
-------- -------- --------
INVESTING ACTIVITIES
Website -- (4,000) (4,000)
-------- -------- --------
Net cash used in investing activities -- (4,000) (4,000)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock -- 61,000 61,000
-------- -------- --------
Net cash provided by financing activities -- 61,000 61,000
-------- -------- --------
(Decrease) Increase in cash during the period (57,303) 60,208 2,905
Cash, beginning of the period 60,208 -- --
-------- -------- --------
Cash, end of the period $ 2,905 $ 60,208 $ 2,905
======== ======== ========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ -- $ --
Cash paid for interest $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements.
F-5
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
The Company was originally incorporated under the laws of the state of Nevada on
September 17, 2007. The Company has limited operations and in accordance with
SFAS #7, is considered a development stage company, and has had no revenues from
operations to date.
Initial operations have included organization, capital formation, target market
identification, new product development and marketing plans. Management is
planning to complete development and then market an integrated website for
planning and analyzing shipping logistics to prospective clients. See Note 5.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The relevant accounting policies and procedures are listed below. The company
has adopted a December 31 year end.
ACCOUNTING BASIS
The basis is generally accepted accounting principles.
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective its inception.
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted as of the first of the year for any potentially
dilutive debt or equity.
The Company has not issued any options or warrants or similar securities since
inception.
F-6
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 2. (continued)
DIVIDENDS
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
CASH AND BANK ACCOUNTS
The Company's bank account is not FDIC insured.
FOREIGN CURRENCY TRANSLATION
The Company has adopted the US dollar as its functional and reporting currency
because all of its transactions are denominated in US currency
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
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
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
F-7
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 2. (continued)
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
WEBSITE COSTS
The Company adopted the Financial Accounting Standards Board Emerging Issues
Task Force ("EITF") 00-2, "Accounting for Website Development Costs," which
specifies the appropriate accounting for costs incurred in connection with the
development and maintenance of websites. Capitalized costs represent domain name
registration, third party creation of website graphics, page design and layout
and a user interface which retrieves and captures information and queries from
future clients through the website, for use with the Company's proposed real
time freight information query software. Website costs are being amortized to
expense over their estimated useful life of three years using the straight-line
method.
Ongoing website post-implementation costs of operation, including training,
application maintenance and creation of database content, will be charged to
expense as incurred. See Note 7.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. The Company has net losses for the period from inception to
December 31, 2008 of $58,716. The Company intends to fund operations through
sales and equity financing arrangements, which may be insufficient to fund its
capital expenditures, working capital and other cash requirements through the
next fiscal year ending December 31, 2009.
The ability of the Company to emerge from the development stage is dependent
upon the Company's successful efforts to raise sufficient capital and then
attaining profitable operations. In response to these problems, management has
planned the following actions:
* The Company has cleared a Registration Statement with the SEC and
obtained a trading symbol to trade its common shares on the OTCBB.
* Management intends to raise additional funds through public or private
placement offerings.
* Management is currently completing development of its proposed
internet/web based product to generate sales. There can be no
assurances, however, that management's expectations of future sales
will be realized.
F-8
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 3. (continued)
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 4. STOCKHOLDERS' EQUITY
AUTHORIZED
The Company is authorized to issue 75,000,000 shares of $0.001 par value common
stock. All common stock shares have equal voting rights, are non-assessable and
have one vote per share. Voting rights are not cumulative and, therefore, the
holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.
ISSUED AND OUTSTANDING
On September 17, 2007 (inception), the Company issued 4,000,000 shares of its
common stock to its Directors for cash of $8,000. See Note 5.
On December 31, 2007, the Company closed a private placement for 1,060,000
common shares at a price of $0.05 per share, or an aggregate of $53,000. The
Company accepted subscriptions from 39 offshore non-affiliated investors.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company's neither owns nor leases any real or personal property. The
Company's Directors provides office space free of charge. The officers and
directors of the Company are involved in other business activities and may, in
the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
The amount due to a director of $3,320 has no repayment terms, is unsecured
without interest and is for reimbursement of company incorporation and general
operating expenses. The company plans to pay the amount within the next 12
months, if it has sufficient cash to do so.
On September 17, 2007 (inception), the Company issued 4,000,000 shares of its
common stock to its Directors for cash of $8,000. See Note 4.
F-9
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 6. INCOME TAXES
Net deferred tax assets are $nil. Realization of deferred tax assets is
dependent upon sufficient future taxable income during the period that
deductible temporary differences and carry-forwards are expected to be available
to reduce taxable income. As the achievement of required future taxable income
is uncertain, the Company recorded a 100% valuation allowance. Management
believes it is likely that any deferred tax assets will not be realized.
As of December 31, 2008, the Company has a net operating loss carry forward of
approximately $58,716, of which $1,576 will expire by December 31, 2027 and the
balance of $57,140 by December 31, 2028.
The Company has not filed its federal tax returns since inception.
NOTE 7. WEBSITE
Accumulated Net book
Cost amortization value
---- ------------ -----
Website costs $4,000 $1,443 $2,557
====== ====== ======
Website costs are amortized on a straight line basis over 3 years, its estimated
useful life.
NOTE 8. OPERATING LEASES AND OTHER COMMITMENTS:
The Company currently has no operating lease commitments or any other
commitments.
NOTE 9. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share under the two-class method as described in
FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share."
FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and earlier adoption is prohibited. We
are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF
03-6-1 would have material effect on our financial position and results of
operations if adopted.
F-10
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 9. (continued)
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation
of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 currently has no
effect on the Company's financial position, statements of operations, or cash
flows.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 currently has no
effect on the Company's financial position, statements of operations, or cash
flows.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities--an
amendment of FASB Statement No. 133. This standard requires companies 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 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. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. SFAS No. 161, currently
has no effect on the Company's financial position, statements of operations, or
cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
F-11
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 9. (continued)
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the Staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The Staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the Staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. This does not currently have an
impact on the Company's financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. SFAS No. 160 currently has no effect on the Company's
financial position, statements of operations, or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations'. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
F-12
FREIGHT MANAGEMENT CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
NOTE 9. (continued)
applies 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. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. SFAS No. 141 currently has no effect on the Company's financial
position, statements of operations, or cash flows.
F-13
EXHIBIT 31.1
CERTIFICATION PURSUANT TO 18 U.S.C. SS. 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ibrahim Abotaleb certify that:
1. I have reviewed this annual report on Form 10-K of Freight Management
Corp.("the Company");
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 Company as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the Company 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 material information relating to the
Company, including its consolidated subsidiaries, is 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 preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the Company'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 Company's internal control
over financial reporting that occurred during the Company's most
recent fiscal quarter (the Company's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over
financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the small business issuer's auditors and the
Company'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 Company's ability to record,
process, summarize 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 Company's internal
control over financial reporting.
Date: August 21, 2009
By: /s/ Ibrahim Abotaleb
----------------------------------
Ibrahim Abotaleb
President, CEO and Director
(Principal Executive Officer)
EXHIBIT 31.2
CERTIFICATION PURSUANT TO 18 U.S.C. SS. 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gerald Lewis certify that:
1. I have reviewed this annual report on Form 10 K of Freight Management
Corp.("the Company");
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 Company as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the Company 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 material information relating to the
Company, including its consolidated subsidiaries, is 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 preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the Company'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 Company's internal control
over financial reporting that occurred during the Company's most
recent fiscal quarter (the Company's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over
financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Company's auditors and the Company'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 Company's ability to record,
process, summarize 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 Company's internal
control over financial reporting.
Date: August 21, 2009
By: /s/ Gerald Lewis
--------------------------------------------
Gerald Lewis
Secretary Treasurer and Director
(Principal Accounting and Financial Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of FREIGHT MANAGEMENT CORP. (the "Company")
on Form 10-K for the period ended December 31, 2008, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Ibrahim
Abotaleb, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Ibrahim Abotaleb
-------------------------------------------
Date: August 21, 2009 Ibrahim Abotaleb
President, CEO and Director
(Principal Executive Officer)
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of FREIGHT MANAGEMENT CORP. (the "Company")
on Form 10-K for the period ended December 31, 2008, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Gerald
Lewis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Gerald Lewis
--------------------------------------------
Date: August 21, 2009 Gerald Lewis
Secretary Treasurer and Director
(Principal Financial and Accounting Officer)
Freight Management Corp.
Suite 200
8275 Eastern Ave
Las Vegas, NV, 89123
August 21, 2009
Mr. David R. Humphrey
Branch Chief
Securities and Exchange Commission
Division of Corporate Finance
Mail Stop 3561
Washington D.C. 20549
Re: Freight Management Corp.
Form 10-K for the year ended December 31, 2008
File No. 000-53127
Dear Sir:
We are writing in response to your comment letter dated August 4, 2009, in
connection with the above-referenced filing
Item 9A. Controls and Procedures
1. Please revise this section to include not only your assessment of Internal
Control over Financial Reporting, but also your assessment of Disclosure
Controls and Procedures, as required by Item 307 of Regulation S-K.
* We have revised this section to include our assessment of Disclosure
Controls and Procedures.
Report of Independent Registered Public Accounting Firm, page F-2
2. Please file an amended Form 10-K to include an accounting report as of and
for the period ended December 31, 2007. The report currently included does
not reference such date.
* Our 10-K/A1 includes an accounting report issued by Seale and Beers
CPA's as of and for the period ended December 31, 2007.
Please note that Seale and Beers replaced Moore and Associates as our auditor
due to the retirement of Moore. We filed an 8-k regarding the replacement on
August 6, 2009.
Note 2 -- Summary of Significant Accounting Practices
Website Costs, page F-8
3. Please tell us how your treatment of website costs is in accordance with
EITF 00-2. Include in your response a break down of the particular
components of the $4,000 gross balance and provide us with detailed support
for your conclusion that these costs should not have been expensed as
incurred.
* We have revised Note 2 "Website Costs" to discuss the treatment of our
website costs in accordance with EITF 00-2.
Our capitalized website costs of $4,000 consist of the following paid to third
party developers:
* Domain name registration - $ 300
* Design of website graphics, page design and layout,
and installation of the website 1,200
* User interface for name registration, password
generation for website use, and website user
query capture and retrieval interface (for
future use with our future online freight
logistics query system) 2,500
------
$4,000
======
We reviewed EITF 00-2 and SOP 98-1 previously when these costs were incurred and
believe that capitalization of these costs is the appropriate treatment.
Certifications
4. Your certifications should be expanded to also address internal control
over financial reporting. Refer to Item 4 of the certification and to
section (b) thereunder for guidance.
* Exhibit 31.1 and 31.2 certifications have been expanded to address
internal control over financial reporting.
Please also note that we have added a detailed "Explanatory Note" immediately
after the Table of Contents in our 10-K/A1 which provides a detailed explanation
of the above noted changes for our readers.
We also acknowledge that:
1. the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
2. staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to
the filing; and
3. the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Sincerely;
/s/ Gerald Lewis
- ------------------------------------------
Gerald Lewis
Principal Accounting and Financial Officer