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Combine the FMNL buzz with this sick DD I am all over and that dollar is an easy target...JMHO.
More on share info!!! Article 10 of the Company’s Articles of Continuance sets out the rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors’ authority with respect to any class of shares which may be issued in series. The Company’s common shares rank equally as to dividend rights, voting rights, rights to share in the Company’s profits and liquidation rights. The Company’s common shares are not, under the Company’s memorandum and articles, subject to redemption or sinking fund provisions, liability to further capital calls, nor any provisions discriminating against any existing or prospective holder of such shares as a result of such shareholder owning a substantial number of shares.
The Company’s Series “A” Convertible Preferred Shares without par value have no rights as to dividend rights, voting rights, rights to share in the Company’s profits and or liquidation rights. The Series “A” Convertible Preferred Shares are not, under the Company’s memorandum and articles, subject to redemption or sinking fund provisions, liability to further capital calls, nor any provisions discriminating against any existing or prospective holder of such shares as a result of such shareholder owning a substantial number of shares.
The Series ”A” Preferred shares are convertible, as a Series into common shares of the Company provided a majority of the Series “A” Preferred shareholders vote in favor of converting the entire Series. The Series will convert into a number of common shares that will represent 50% of the number of fully diluted common shares after conversion.
A majority of the shares of the Series “A” Preferred Shares outstanding must vote in favor of converting the entire Series “A” Preferred Shares outstanding into common shares before the shares of the Series “A” Preferred Shares may convert into Common Shares. On receipt of the requisite affirmative vote, the Series “A” Preferred Shares, in the aggregate shall be converted into that number of fully paid and non-assessable Common Shares that will represent 50% of the number of fully diluted common shares after conversion. Each Share of Series “A” Preferred Shares shall be convertible into Common Shares PRO RATA to its portion of the Series “A” Preferred Shares.
ITEM X. FMNL ADDITIONAL INFORMATION..Important Stuff here IMHO!!
A) SHARE CAPITAL
This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.
B) MEMORANDUM AND ARTICLES OF INCORPORATION
The information called for by this item is contained in an Exhibit to the Company’s Registration Statement on form 20-F filed with the Commission November 3, 1998 and Exhibits filed herewith. In particular:
1. The Company’s Memorandum and Articles are on file with the Office of the British Columbia Registrar of Companies under Certificate of Incorporation No. 504791. The Company was continued into the province of Ontario November 12, 1997. The Company’s Memorandum and Articles are on file with the Office of the Ontario Registrar of Companies under Articles of Continuance No. 1264549 (“Articles of Continuance”). Under the provisions of the Ontario Business Corporations Act, the Company has the power and capacity of a natural person, there are no restrictions in the Company’s Articles of Continuance, on the business that the Company can carry on nor on the powers the Company can exercise.
2. Article 4.19 of the Company’s Articles sets out the circumstances whereby a director must not vote on a proposal, arrangement or contract in which the director is materially interested, Article 4.20 sets out the directors’ powers to determine their compensation, Part 3 of the Company’s Articles outlines the Company’s borrowing powers exercisable by the directors and Article 4.2 sets out that no shares are required to be held for director’s qualification.
3. Article 9 of the Company’s Articles of Continuance sets out two class of shares: unlimited number of common shares without par value and unlimited number of preferred shares without par value. Two series of preferred shares have been designated Series “A Convertible Preferred Shares and Series “B” Convertible Preferred Shares.
ITEM VIII.FMNL FINANCIAL INFORMATION
A) CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
This Annual Report contains the consolidated financial statements for the Company for the fiscal year ended September 30, 2011, fiscal year ended September 30, 2010, and fiscal year ended September 30, 2009 which contain an Auditors' Report dated January XX, 2012 in connection with the fiscal year ended September 30, 2011, Consolidated Balance Sheets as at September 30, 2010 and September 30, 2009, Consolidated Statements of Operations, Comprehensive Income (Loss) and Deficit, and Consolidated Statements of Cash Flows for the fiscal year ended September 30, 2011 and year ended September 30, 2010 and fiscal year ended September 30, 2009, and Notes to Consolidated Financial Statements.
Indebtedness to Company of Directors and Senior Management
No directors or senior management of the Company are indebted to the Company or have been indebted to the Company since the beginning of the last completed financial year of the Company other than as noted in ITEM VII - Major Shareholders and Related Party Transactions.
Legal or Arbitration Proceedings
From time to time, the Company may become subject to claims and litigation generally associated with any business venture. In addition, the operations of the Company are subject to risks of accident and injury, possible violations of other regulations and some of which cannot be covered by insurance or other risk reduction strategies. Since the Company is a Canadian corporation and the officers, directors and certain of the persons involved with the Company as professional advisors are resident in Canada, it may be difficult to effect service within the United States upon such persons or to realize on any judgment by a court of the United States which is predicated on civil liabilities under the 1933 Act. The Company's Canadian counsel have advised that there is doubt as to the enforceability in Canada, either in original actions or through enforcement of United States judgments, of liabilities predicated solely upon violations of the 1933 Act or the rules and regulations promulgated there under.
Dividend Distribution Policy
The Company has not paid any cash dividends on its Common Stock and has no present intention of paying any dividends. The current policy of the Company is to retain earnings, if any, for use in operations and in the development of its business. The Board of Directors will determine the future dividend policy of the Company from time to time.
Super low....FMNL excels here!! Indebtedness to Company of Directors and Senior Management
Amounts due to shareholders at the end of the fiscal period September 30, 2011 were $137,872 (2010 – 92,033). Directors of the Company are indebted to the Company in the amount of $nil and no director or senior management or have been indebted to the Company since the beginning of the last completed financial year of the Company other than as listed below. The Company reimburses Directors and Senior Management for expenses incurred in connection with Company’s ordinary course of business. To the extent these advances and expenses are offset, there exists an indebtedness to the Company of a net $nil as of September 30, 2011 (2010 - $ nil, 2009 - $nil).
Interests of Experts and Counsel
This Form 20-F is been filed as an annual report under the Exchange Act and, as such; there is no requirement to provide information under this item.
B) FMNL RELATED PARTY TRANSACTIONS
Except as set out below or otherwise disclosed in this report or in our audited financial statements attached hereto, no executive officer or senior management of the Company, nor any spouse, relative, associate or affiliate of the foregoing persons, has any interest in any material transactions which occurred during the Company's last full fiscal year and involved the Company or any of its subsidiaries; or any presently proposed transaction involving the Company or any of its subsidiaries.
Canadian GAAP requires that any assets or liabilities acquired in a non-arms length transaction be recorded in the Company records at the carrying value of the vendor.
During 2011, the Company paid $Nil (September 30, 2010 – $Nil and September 30, 2009 – $Nil) in consulting fees to directors or companies controlled by directors of the Company. The Company also reimbursed $146,118 ($216,683 –September 30, 2010, September 30, 2009 - $138,717) to directors for expenditures made on behalf of the Company.
From time to time during the year, the Company has made property and equipment, when not in use, available to management and employees for which management and employees reimburses the Company for all direct charges and sundry costs.
Except as disclosed in the preceding discussion, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $50,000, and in which, to our knowledge, any of our directors, officers, five percent beneficial security holder, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest.
ITEM VII. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8510051
A) MAJOR SHAREHOLDERS
The information as to shares beneficially owned, not being within the knowledge of the Company, has been furnished by the respective individuals. The Company’s major shareholders do not have different voting rights. There are no arrangements known to the Company which may, at a subsequent date, result in a change in control of the Company.
The following persons hold, of record or beneficially, directly or indirectly, or are known by the Company to own beneficially, directly or indirectly, more than 5% of the issued shares of the Company as at December 31, 2011:
FMNL Warrants - There are no warrants outstanding.
Other Dilutive Elements
All convertible debentures totaling $40,486 issued prior to 2003 are fully matured as of December 31, 2002. The debentures during their term carried a rate of interest of eight percent per annum payable semi-annually. The conversion feature of the debenture allowed for the debenture holders to convert his capital at a rate of $6.00 US to $12.50 US per share. The Company would have 4,622 shares issued if 100% of the debentures were to be converted. For the year ending September 30, 2011, $Nil, (December 31, 2006 $Nil, December 31, 2005 $Nil) of convertible debentures was repaid. There were no conversions during the year ended September 30, 2011, 2010, or 2009.
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During the year, the Company offered a secured convertible debenture with a face value of up to $9,000,000 USD, secured by a 100% interest in two US Irrevocable Life Insurance Trusts (ILIT) with death benefits totaling $9,000,000 USD, and are subject to an escrow agreement. The Company issued seven units for a total face value of $3,150,000 USD, for cash proceeds of $253,541 plus common shares of the company valued at $134,101.
The debenture holders have the right to convert at any time in whole or in part, any outstanding amount paid to date on the debenture, into Common Shares of the Company at a 20% discount to the market trading price immediately prior to conversion. The fair value of these conversion rights was calculated using the Black-Scholes method. At issuance assumptions included the stock price of $0.17 with a maturity date of 9.3 years and an interest rate of 1.76%. At September 30, 2011 assumptions included a stock price of $0.48 with a maturity date of 8.7 years and an interest rate of 1.76%.
The fair value of the $3,150,000 convertible debentures was estimated by discounting the payments due at the time of maturity of the two underlying ILIT’s. This debt discount will be amortized as interest expense over the life of the debt. During the year ended September 30, 2011, the company recognized $188,572 of accretion interest expense on the debt.
Ten years from the date of subscription, the debenture is redeemable and/or callable by the holder or the Company, at 75% of the total face value of the debenture. The Company, or debenture holder, can force the Company to convert the debt and take the option of either receiving payment in cash or a conversion to common shares of the Company, at the stated conversion rate. The option of receiving either common shares or cash is at the sole discretion of the debenture holder.
C) FMNL BOARD PRACTICES
The Board of Directors communicates formally approximately 4 to 6 times per year on an as needed basis to deal matters relating to the Company. Each Director serves for a term of one year or until the next annual meeting of the shareholders at which Directors are elected and qualified. The Company's last annual general meeting was held on March 25, 2010 and the next meeting will be held subject to Board approval as specified in the Company's Articles. The Company's executive officers are appointed by and serve at the pleasure of the Board of Directors.
Audit Committee
The Company's Audit Committee is composed of three individuals all present directors. The Audit Committee members of the Company as at December 31, 2011 are Mr. Mike Barrett, Mr. Chris Yergensen, and Mr. Kazunari Kohno. Messrs. Barrett, Yergensen, and Kohno during fiscal year 2011 and currently:
are considered an "independent" director as defined in Section 803A(2) of the American Stock Exchange Company Guide;
meets the criteria for independence as defined by Rule 10A-3 adopted by the SEC;
have not participated in the preparation of our financial statements or the financial statements of any of our current subsidiaries at any time during the past three years; and
is able to read and understand fundamental financial statements.
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Our Board of Directors has determined that the audit committee has at least one member, Mr. Barrett who qualifies as an Audit Committee Financial Expert, as defined by relevant SEC rules. As previously stated, Mr. Barrett is an independent director. The Audit Committee is responsible for reviewing the Company's financial reporting procedures, internal controls, and the performance of the Company's external auditors. The functions of the Audit Committee also includes selecting, appointing, retaining, compensating and overseeing our independent auditors, deciding upon and approving in advance the scope of audit and non-audit assignments and related fees, reviewing accounting principles we use in financial reporting, and reviewing the adequacy of our internal control procedures, including the internal audit function. The committee is also responsible for reviewing the annual financial statements prior to their approval by the Board of Directors. The Board has adopted a charter for the Audit Committee in the fall of 2007.
Remuneration Committee
The Company does not have a Compensation Committee.
Service Contracts
The Company and its subsidiaries do not have any service agreements with any of the directors of the Company providing for benefits upon termination of employment
B) COMPENSATION- Executive Compensation and Compensation of Directors
During 2011, the Company paid $nil (September 30, 2010 $nil and September 30, 2009 $nil) in consulting fees to directors or companies controlled by directors of the Company. The Company also reimbursed $146,118 ($216,683 –September 30, 2010, September 30, 2009 - $138,717) to directors for expenditures made on behalf of the Company.
The Company has an employee extended medical / dental plan acquired with the purchase of Family Vacation Centers on October 18 th 2007. No directors or officers are participating in the plan. The Company has no pension, retirement, or other similar benefits for directors or officers pursuant to any existing plan provided by, or contributed to by, the Company or its subsidiaries.
Directors and senior management are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with corporate matters pertaining to the Company. The Board of Directors may award special remuneration to any director or senior management undertaking any special services on behalf of the Company other than services ordinarily required of a director or senior management.
Stock Options
The information on stock options required by this item is set forth in Item 6.E of this annual report.
FMNL Arrangements
Messrs. Teeny and McManus were appointed to the Board of Directors concurrent with private placements raising an aggregate total of US$ 9,000,000 completed in July 2007 with companies related to Messrs. Teeny and McManus. Other than the foregoing, there are no arrangements or understandings between of our directors or executive officers, and with our major shareholders, customers, suppliers or others pursuant to which any director or officer was or is to be selected as a director or officer. In addition, there are no agreements or understandings for the officers or directors to resign at the request of another person and the above-named officers and directors are not acting on behalf of nor acting at the direction of any other person.
NO NEPOTISM at FMNL!! http://en.wikipedia.org/wiki/Nepotism
Family Relationships
There are no family relationships between any directors or executive officers and any other director or executive officer. Each Director serves for a term of one year or until the next annual meeting of the shareholders at which Directors are elected and qualified.
A) DIRECTORS AND SENIOR MANAGEMENT
The names and municipality of residence of each of the directors and officers of the Company, the principal occupations in which each has been engaged during the immediately preceding five years, and their respective ownership of the Company's common shares as at the date herein, are as follows:
Name and City of Residence Date of Birth Principal Occupation For the Past Five Years Position Held
Daniel Clozza
Vancouver, B.C.
Canada Feb. 9, 1960 Since September 1995, employed full-time by the Company. President, CEO and Director since September 1995
Martin Tutschek
Vancouver, B.C.
Canada May 24, 1960 Since August 2001, employed full-time by the Company. CFO and Director since August 2001
Jeff Teeny
Portland, Oregon.
USA April 30, 1967 Property and Real Estate developer for various projects including the 400 acre Villages at Cascade Head located on the Pacific Coast of Oregon, USA Director since July 2007
Scott McManus
Las Vegas, Nevada,
USA June 21,1962 CEO, Chairman: Ganix Biotechnologies, Inc. 2002 – present, an Ecological Science Company. Financier, Net Branch: North American Funding August 2004 – present, a Commercial Finance Company. Various resort property real estate developments. Director since July 2007
Chris Yergensen Esq
Las Vegas, Nevada,
USA March 13, 1967 President and General Counsel, Panorama Towers Group, Las Vegas Nevada 2002 to present. President of Show Media LLC Las Vegas Nevada 2001 to present Director since June 2008
Mike Barrett
Portland, Oregon,
USA November 13, 1963 President of Pounce Consulting, an IT consulting company based in Orange County. Vice President of Sales and Marketing for Xavient Information Systems, Simi Valley, California and Noida, India.2006-2008 Sr. Business Development Manager, Tata Consultancy Services, Mumbai, India 2004- 2006. Executive VP, Sales & Marketing, Centerlogic, Portland Oregon 2002-2004. Director since June 2008
Kazunari Kohno
Tokyo, Japan December 19, 1963 Member of the Board of Directors for Aegis Capital Co., Ltd 2007 to present. Associate Professor Graduate School of Media and Governance, Keio University 2002 to present.
D) FMNL TREND INFORMATION
The Company’s historical business was providing travel services for the members of its travel clubs. Subsequent to year end, the Company disposed if its travel club marketing and service operations.
The operating costs of the company decreased $1,024,648 for the year ended September 30, 2011 to $3,490,396, compared to the $4,515,044 for the year ended September 30, 2010, and $5,582,370 for the year ended September 30, 2009. The decrease in operating costs has been a direct result of managements’ cost savings measures and the disposal of the Company’s wholly-owned subsidiary International Fitness Vacations Ltd during the year.
The Company has entered the Life Settlement market. The Company believes successful development and capture of market share in this capital intensive emerging industry will dominate the future Company direction and the allocation of resources.
The Company is currently sourcing Life Settlement policies through “Business to Business” (B2B) Channels and expects to launch a “Business to Consumer” (B2C) Channel subject to funding. To operate the “Business to Consumer” (B2C) Channel, the Company formed “American Life Settlement Society LLC” duly formed under the laws of the state of Delaware on the 15 th day of November 2007.
FMNL Capital Resources
The Company's capital resources are comprised primarily of financial institutions and private investors (including members of management) who are either existing contacts of the Company's management, or who came to the attention of the Company through brokers, financial institutions and other intermediaries.
For the year ended September 30, 2011, cash flow used in operations decreased $774,973 or 97% to $22,561 due to an corporate restructurings, dispositions of assets, and cost cutting measures, compared to cash flows used in operating activities of $797,534 for the year ended September 30, 2010 and cash flows used in operating activities of $672,440 for the year ended September 30, 2009.
Financing the work on the vessel to date had been from operations, a credit facility from Caterpillar Financial Services, and funds raised. The credit facility with Caterpillar Financial Services Corporation was created in September of 2005 for $3.0 million USD. This credit facility was subsequently increased to a total of $4.3 million USD in spring of 2007. The construction loan has been converted to a 5 year term loan facility of $5 million USD
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with an interest rate of 7%. The Company incurred additional capital expenditures of $410,872 in the fiscal year ending September 30, 2010, and $Nil in fiscal year ending September 30, 2011. The Company does not currently hedge against foreign exchange or interest rate fluctuations.
The Company estimates that its cash and cash equivalents will not be sufficient to meet its capital requirements given its current business structure in the next year. However, its forecast of the period of time through which its financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. If the Company is unable to raise additional capital when required or on acceptable terms, it may have to liquidate, delay, and or scale back on some planned initiatives.
The Company's access to capital is always dependent upon general financial market conditions. Because of the nature of the Company's business, there are no trends in the nature of its capital resources that could be considered predictable. To date, the Company's capital resources have consisted of the private issuance of common shares, convertible securities and a credit facility from Caterpillar Financial Services Corporation.
B) FMNL LIQUIDITY AND CAPITAL RESOURCES-
Liquidity
As of December 31, 2011 the Company had in excess of $90,873 cash on deposit.
In 2011 the working capital deficiency decreased to $3,722,506 primarily due to the reduction of current deferred revenue during the year, which decreased $200,903 to $876,165 as at September 30, 2011.
In 2010 the working capital surplus decrease to a deficiency of $3,366,191 primarily due to the sales the company’s marketable securities portfolio, which decreased $2,240,324 to $51 as at September 30, 2010.
For continuation and long-term growth specifically the development of the Life Settlement operations additional capital is required. The Company’s 120-foot motor vessel is completed and the vessel contributed some revenue in fiscal 2011.
Financing the work on the vessel to date had been from operations, a credit facility from Caterpillar Financial Services, and funds raised. The credit facility with Caterpillar Financial Services Corporation was created in September of 2005 for $3.0 million USD. This credit facility was subsequently increased to a total of $4.3 million USD in spring of 2007. The construction loan has been converted to a 5 year term loan facility of $5 million USD with an interest rate of 7%. The Company incurred additional capital expenditures of $410,872 in the fiscal year ending September 30, 2010, and $2,025 in fiscal year ending September 30, 2011. The Company does not currently hedge against foreign exchange or interest rate fluctuations.
The Company’s total Revenues for the year ended September 30, 2011 decreased by $560,606 to $3,380,691 (2010 - $3,941,297, 2009 - $3,516,417). The decrease was the result of the disposal of the Company’s wholly-owned subsidiary International Fitness Vacations Ltd. during the year. Fair value changes on the investment in life settlements was recorded under “Other Income (expenses)”, totaling $(369,132) (2010 - $(1,582,464), 2009 - $775,207).
More on FMNL Share Structure - The Series “A” preference convertible shares and the Series “B” preference convertible shares are not included in the calculation of basic earnings per share, because management considers these shares to have barriers to conversion, excluding them from the calculation of basic earnings per share.
For the year ended September 30, 2011, the weighted average number of shares outstanding was 29,990,231. The fully diluted weighted average number of shares outstanding, which assumes the conversion of all Series “A” preference convertible shares and Series “B” preference convertible shares was 89,880,427. However, in a loss year, common shares equivalents are excluded from the calculation of diluted earnings (loss) per share as the effect would be anti-dilutive.
For the year ended September 30, 2011 expenses decreased by 28% or $1,024,648 due to corporate cost cutting measures. The largest expense decrease was general and administration of $489,055 (2010 - $420,428) due to corporate restructuring and cost cutting measures.
For the year ended September 30, 2011, the second largest decrease in expenses of $427,752 occurred in wages expense to $1,070,953, (2010 - $1,498,705, 2009 - $1,689,385). The decrease was a direct result of streamlining the company’s staffing levels and disposing of the Company’s wholly-owned subsidiary, International Fitness Vacations Ltd. during the year.
For the year ended September 30, 2011, the third largest decrease in operating expenses of $72,341 occurred in bad debts expense to $8,954, (2010 - $81,295, 2009 – $212,364). The decrease was the result of recoveries of previous provisions for the allowance for doubtful accounts. The Company recognized an impairment of $500,000 on the motor vessel during the year ended September 30, 2011 ($825,000 – 2010, $2,348,595 – 2009).
For the year ended September 30, 2010 expenses decreased by 19% or $1,067,326 due to corporate cost cutting measures. The largest expense increase was amortization of property and equipment to $649,508 (2009 - $337,256) due to the full year of amortization of the 120 foot Motor Vessel .
FMNL Revenues and Share Structure Info from Annual Report! The Company recorded revenues from membership dues and travel club membership sold of $ 3,110,511 for the year ended September 30, 2011 compared to $3,821,772 for the year ended September 30, 2010 and $3,294,162 for the year ended September 30, 2009. Subsequent to fiscal year end, the Company sold the marketing sales and service operations as the membership faced natural attrition.
For the year ended September 30, 2011 a total of Nil travel club memberships were sold or acquired, (nil for year ended September 30, 2010, 123 for year ended September 30, 2009). For the year ended September 30, 2011 the mean average non-refundable travel club membership purchase price remained at $Nil ($Nil for year ended September 30, 2010, and $Nil for year ended September 30, 2009).
A net loss of $946,072 was recorded for the year ended September 30, 2011, as compared to the net loss of $3,464,951 for the year ended September 30, 2010, and a net loss of $5,344,283 for year ended September 30, 2009. The net loss of $946,072 was due largely as result of an impairment on the motor vessel recognized as at years’ end of $500,000. Basic loss-per-share was $0.03 for the year ended September 30, 2011 compared to a loss per share of $0. 12 for the year ended September 30, 2010; loss per share of $0.19 – for the year ended September 30, 2009.
There were 32,515,984 shares issued as of September 30, 2011 and 29,140,984 issued as of September 30, 2010 and 28,856,984 at September 30, 2009. In April 2007 the company completed a 3-for-1 forward split increasing the outstanding shares by 9,240,578 to 13,860,867. On June 29, 2007, the Company completed a private placement and issued 11,000,000 common shares of the Company at US $0.50 per share for gross proceeds of $5,773,918 (US $5,500,000). On July 4, 2007, the Company completed a private placement and issued 3,500,000 common shares at US $1.00 per share for gross proceeds of $3,650,396 (US $3,500,000) increasing the issued and outstanding shares to 28,409,611 at September 30, 2007. On July 13, 2011, the Company completed a private placement issuing 2,000,000 common shares at $0.05 per share for gross proceeds of $100,000. Basic earnings-per-share is calculated using the weighted average number of common shares outstanding during the year.
FMNL Impairments of Long Lived Assets
Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the carrying value of a long-lived asset intended for use exceeds the sum of the undiscounted cash flows is expected from its use and eventual disposition. The impairment loss is measured as the excess of the carrying value of the asset over its fair value.
Accounts Receivable
The Company generates a portion of revenue and related accounts receivable from travel memberships. Management evaluates the collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer's inability to meet its financial obligations, a specific reserve for bad debts against amounts due is recorded to reduce the recognized receivable to the net amount we reasonably believe will be collected. For all other customers, reserves are recognized for bad debts based on past write-off history and the length of time the receivables are past due.
Financial Instruments
Financial instruments are initially recognized at fair value. The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm’s-length transaction between knowledgeable, willing parties who are under no compulsion to act. Fair values of financial instruments are based on independent prices quoted in active markets. In the absence of an active market, fair values are determined based on valuation models such as discounted cash flows, which require the use of assumptions concerning the amount of timing of estimated future cash flows and discount rates. Subsequent measurement depends on management’s classification of the financial assets as held-for-trading, available –for-sale, held-to-maturity or loans and receivables, and financial liabilities as held-for-trading or other liabilities. The classification of financial instruments depends on the nature of and the purpose of the financial instruments, management’s choice and in some circumstances, management’s intentions.
A) FMNL OPERATING RESULTS
Critical Accounting Policies
The preparation of our financial statements requires that we adopt and follow certain accounting policies. Amounts presented in the financial statements have been determined in accordance with such policies, certain of which incorporate estimates and assumptions. Although management believes that the estimates and assumptions are reasonable, actual results may differ.
The detailed accounting policies are listed in Note 2 to the Financial Statements for the year ended September 30, 2011. Included below is a discussion of the accounting policies that are affected by the most significant judgments and estimates used in the preparation of the financial statements, how such policies are applied and how results differing from the estimates and assumptions would affect the amounts presented in the financial statements. Other accounting policies also have a significant effect on our financial statements, and some of these policies also require the use of estimates and assumptions.
Revenue Recognition
The Company historically generated revenues from yacht charter operations and the sale of memberships and dues. In accordance with CICA HB 3400, Revenue, the portion of revenue received from members, which entitles members to use the Company’s vacation and travel club privileges at a future date, is deferred and recognized in income evenly over the term of the member’s entitlements. For lifetime memberships, revenue is recognized over a period of five years, which is management’s best estimate of the period over which performance will be required. Gains from matured life insurance policies and revaluation of life settlement investments are recorded as Other Income and are excluded from Operating Income.
During the year ended September 30, 2008, the Company entered into the life settlement industry. The Company records investments in the life settlement contracts at fair value on each balance sheet date. Any changes to fair value will be recognized in the Other Income in the period in which the changes occur. Gains from matured life insurance policies and revaluation of life settlement investments are recorded as Other Income and are excluded from Operating Income.
Real brick and mortar address...no BS here...C) ORGANIZATIONAL STRUCTURE
As of December 31, 2011, the following is a list of all the Company’s subsidiaries, all of which are wholly owned and over which the Company holds 100% voting control:
Incorporating Date of Acquisition
Subsidiaries Ownership Jurisdiction or Incorporation
American Life Settlement Society LLC 100% State of Delaware, USA November 15, 2007
Spirit Yacht Charters Ltd. 100% British Columbia, Canada August 7, 2008
Properties
Office Leases
The Company is headquartered at Suite 180, 13040, No 2 Road, Richmond, B.C. Canada V7E 2G1where it rents approximately 1000 sq. ft. office space housing its principal corporate, accounting, and yacht charter operations.
The Company believes that its current facilities are adequate for its current administrative operations for the Spirit Yacht Charters and Life Settlement operations.
Motor Vessels
The Company owns a 120-foot Tri Level motor vessel called the MV Spirit of Two Thousand and Ten.
Item Qty Description
Spirit of Two Thousand and Ten 1 Type: 120 ft. motor vessel Overnight Accommodation: 12 passengers
Dinner cruise - 100 passengers
The Company owns and a 120 foot passenger carrying motor vessel MV Spirit of Two-Thousand-and-Ten. The vessel is for charter cruises to the Pacific Northwest, and Baja Mexico in addition to day and evening dinner cruises from its summer home port in Vancouver, B.C., and winter home port of Cabo San Lucas, Mexico.
FMNL...lots of SEC and Gov't regulation....Government Regulations
In the 1990’s with the growth of the Life Settlement industry various states introduced legislation. The state legislative actions were designed to introduce consumer protection type regulations for policy holders and purchasers while the federal government with the Securities and Exchange Commission seeks to regulate the market for the protection of a purchaser. Most states require the licensing of life settlement brokers and providers, mandate disclosures to sellers or purchasers or both, require periodic reporting requirements, and set forth prohibited business practices. It is anticipated within the next 3 years that all states will have some form of regulation governing commerce in the Life Settlement industry.
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The United States Securities and Exchange Commission treat Life Settlements as securities under state and federal securities law when viewed as a structured product. No state federal or regulatory body or private litigant has successfully asserted that our settlements transactions are under state or federal law. As the purchaser or possible seller of policies we represent that we are a sophisticated individual and have diminutive needs for protection afforded by securities laws. We have utilized some exceptions and exemptions in conducting our life settlement transactions.
The insurance industry is highly regulated. The Company is not required to be licensed as an insurance company or insurance broker as the Company does not issue policies. Regulations that cover policy terms, premium payment, transferability, and receipt of policy benefits could adversely affect the secondary market for life settlements in which the company operates.
There can be no assurance that unforeseen developments or introduction of legislation, laws, and other factors in Consumer, Securities or Insurance regulations at Federal or State level will not alter the Company’s ability to achieve it growth targets for marketing and selling Travel Club programs or entering and operating in the Life Settlement market.
This is the detail that actuarials live on...Life Settlement Industry Overview
Following the theme of older adults and the growth of the group as a percentage of the population, the Company is entering the Life Settlement market. The exact size of the market is difficult to accurately quantify. In 2005, Sanford C. Bernstein & Co., LLC, a research unit of Alliance Bernstein L.P. estimated the market to be approximately $13 billion in face value of policies purchased from 1998 through 2005. Data from the American Council of Life Insurers shows that the voluntary termination rates for individual policies has dropped steadily from 6.6% in 2002 to 5.1% in 2007. Because the decline in the lapse rate coincides with the increasing number of reported life settlement transactions, we believe this indicates that more policyholders are choosing to sell their policies in life settlement transactions rather than voluntarily terminating these policies. We also believe this corroborates predictions that the life settlement market will continue to grow in size as these transactions become more familiar to policyholders.
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The growth is expected to continue in the next few decades with the increase in the number of older Americans. American seniors consider selling their policies in the secondary Life Settlement market for a variety of reasons including:
Living Longer… Seniors must have more liquid capital during retirement to support themselves. Additionally, parents of seniors are also living longer which some will have to financially support.
Income… Many companies have encountered financial trouble and therefore pensions have been reduced or wiped out. In 2003, 1,197 companies eliminated their pensions reported the American Federation of Labor jeopardizing the retirement of thousands who presumed these funds were guaranteed.
Debt Crisis… Many seniors do not adequately save or plan financially for retirement. USA Today, Jan/07 “seniors are becoming the face of the indebted and the fastest population group seeking bankruptcy , many are having extreme difficulty paying mortgage, food and medical costs… we are just seeing the tip of the iceberg”.
Social Security in Trouble… A looming large risk for seniors is government social security -- a critical source of income – which could go bankrupt and not be able to support the growing seniors market. At a minimum, social security benefit payments are estimated to be reduced.
Skyrocketing Medical Costs… As reported in Business Week “Seniors Pushing Medicaid to Breaking Point” (Feb/05) “as 70 million baby boomers age, their demand for care threatens to crush Medicaid”. In 2004 alone, medical insurance payments, co-pays and deductibles increased 40%. Medical costs are estimated to continue to rise and fixed income seniors will have to find some way to pay for this large, unbudgeted but essential cost of retirement.
The Company recognizes that it needs to be innovative and pioneer new avenues for business development. New opportunities have encouraged the Company to expand and position itself for entry into the Life Settlement market.
LOL.wait there's more!..FMNL....Life Settlements
In 2005, Forum began to investigate the business opportunities in the secondary Life Insurance market also known as “Life Settlements” . The Company began researching the strategy of purchasing life insurance policies from consumers actively interested in selling their policies. Forum has invested by purchasing a beneficial interest in Life Insurance policies issued in the Unites States sold by the policy holders with life expectancies of 6 to 15 years. The Company has becomes the irrevocable beneficiary of these policies.
Although relatively new, the Life Settlement market is the fastest growing segment of the financial services industry. The life insurance industry is a “double digit” trillion dollar industry and the Life Settlement market is projected to grow significantly within the next few years. The senior and the baby boomer markets are the fastest growing segments of the population, resulting in billions of dollars in policies rolling into the Life Settlement policy industry annually.
Expected growth of the Life Settlement market will parallel the aging population boom. The significant, additional money that many policy holders receive from life settlement companies in the secondary market represents “found money”; turning otherwise illiquid assets into cash. In general, this windfall significantly improves the lifestyle of the policy holder when most seniors need it, i.e. -- allowing them to afford long-term health care or maintain their current standard of living for many more additional years. Legitimate Life Settlement companies have been described as providing a “socially responsible” service.
The Company began to research the Life Settlement and has completed a substantial amount of due-diligence and invested capital to create large channels of Life Settlement “policy flow”. The Company believes successful entrance and capture of market share in this emerging industry will dominate the future Company direction and the allocation of resources. The Company is currently sourcing Life Settlement policies through “Business to Business” (B2B) Channels and anticipates launching a “Business to Consumer” (B2C) Channel subject to additional financing.
The Company uses an industry standard Milliman Report (consultants for the health care insurance industry) along with recent purchases and sales of similar life insurance policies, financial standing of the insurer, changes in general economic conditions, standard, actuarially developed mortality tables and industry life expectancy reports to determine an acceptable purchase price. In fiscal 2008, the Company entered the Life Settlement industry with the initial purchase of $30,930 thousand USD face value of Life Insurance policies. The Company paid $1,788,567 ($1,742,817 USD) which was funded by the recent Private Placements completed by the Company in July of 2007. During the third quarter of 2008 a $5 Million USD policy matured resulting in a portfolio face value of $25,930 thousand USD at a cost of $1,548,070 ($1,506,473 USD) at the end of the financial year 2009.
FMNL...Charter Cruises
The Company owns and a 120 foot passenger carrying motor vessel MV Spirit of Two-Thousand-and-Ten. The vessel is for charter cruises to the Pacific Northwest, and Baja Mexico in addition to day and evening dinner cruises from its summer home port in Vancouver, B.C., and winter home port of Cabo San Lucas, Mexico. Approximately 40% of the custom yacht cruise market are full yacht charters by a single entity for a corporate retreat, corporate awards program and family retreats etc.. The Company is marketing and promoting to many tourism based organizations the cruise experience in Seat of Cortez for Winter season and the Pacific Northwest for Summer Season and has a web site www.spirityachtcharters.com to present the vessel and provide an overview of the yacht offering.
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The Company had established an initial construction credit facility with Caterpillar Financial Services for up to $3 million USD which had provided funding for the project. The Company subsequently had the credit facility increased to $4.3 million USD in spring of 2007. The construction loan has been converted to a 5 year term loan facility of $5 million USD with an interest rate of 7%. The Company incurred additional capital expenditures of $410,872 in the fiscal year ending September 30, 2010, and $2,025 in fiscal year ending September 30, 2011.
FMNL...B) BUSINESS OVERVIEW
The Company operates in the hospitality and tourism business segment. Under this segment, the company operates a charter cruise vessels.
The Company owns a passenger carrying yacht the 120’ MV Spirit of 2010, an 18 foot tender, two jet skis, and ocean going kayaks. The equipment is for charter cruises to the Pacific Northwest, and Baja Mexico.
Excess funds on-hand, either from equity financing, borrowings, sales of assets or generated from operations, may from time-to-time be reinvested in marketable securities and/or life settlement contracts. Currently, the Company has paid $1,788,567 ($1,742,817 USD) to invest in life settlement contracts, which was funded by the recent Private Placements completed in July of 2007. During the third quarter of 2008 a $5 Million USD policy matured resulting in a portfolio face value of $25,930 thousand USD at a cost of $1,548,070 ($1,506,473 USD).
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Real risks exist in investing in life settlement contracts. These risks may have a material adverse effect on the Company's investment in the Life Settlement marketplace. (See Item 3 Risk factors, The Markets in Which the Company Competes is Highly Competitive. If the Company Cannot Successfully Compete, its Growth Rate May Stagnate or Revenues May Decline).
Travel Club
The Company’s historical business is providing travel services for the members of its travel clubs. Subsequent to year end the Company sold its travel club and supporting operations.
Even more history....this is good stuff IMHO...The Company has completed the launch of the 120 foot motor vessel MV Spirit of Two Thousand and Ten in 2009. The Company had established an initial construction credit facility with Caterpillar Financial Services for up to $3 million USD which had provided funding for the project. The Company subsequently had the credit facility increased to $4.3 million USD in spring of 2007. The construction loan has been converted to a 5 year term loan facility of $5 million USD with an interest rate of 7%. The Company incurred additional capital expenditures of $410,872 in the fiscal year ending September 30, 2010, and $2,025 in fiscal year ending September 30, 2011.
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The Company formed a wholly owned subsidiary in August 2008 called Spirit Yacht Charters Ltd. Limited chartering operations began in summer of 2009 facilitated through the Spirit Yacht Charters subsidiary.
In2005, Forum began to investigate the business opportunities in the secondary Life Insurance market also known as “Life Settlements” . The Company began researching the strategy of purchasing life insurance policies from consumers actively interested in selling their policies. Forum has invested in the purchasing of Life Insurance policies issued in the Unites States sold by the policy holders with life expectancies of 6 to 15 years. The Company then becomes the irrevocable beneficiary of these policies.
Since the Company began to research the Life Settlement industry it has completed a substantial amount of due-diligence and invested capital to create large channels of Life Settlement “policy flow”. The Company is currently sources Life Settlement policies through “Business to Business” (B2B) Channels and anticipates launching a “Business to Consumer” (B2C) model upon securing sufficient capital commitments
More FMNL history...The Company’s principal office is Suite 180, 13040 No 2 Road, Richmond, B.C. Canada V7E 2G1, the telephone number is (604) 778-588-7780 and fax number is (604) 275-8745. The Company’s agent in Canada is KMS Corporate Services Inc, 1100 One Bentall Center, 505 Burrard Street, Box 11, Vancouver, B.C., V7X 1M5. The Company has the following web addresses: www.foruminvestments.com , www.SpiritOfTwoThousandTen.com , www.spirityachtcharters.com , www.americanlifesettlementsociety.com , and www.thealss.com ,
Forum National Investments Ltd. maintains a fiscal year ending September 30. The Company's financial statements are stated in Canadian Dollars and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for periods presented with U.S. GAAP except as noted in the notes to the Company's financial statements. See "Item XVII Financial Statements".
The Company's historical core growth had depended, in significant part, upon the continuing sales and marketing of its Travel Club products which it has sold subsequent to fiscal year end. (See Item 3 Risk factors, Ability to Attract and retain Successful Licensees or Operators).
FMNL....A) HISTORY AND DEVELOPMENT OF THE COMPANY
The Company was incorporated in British Columbia, Canada on September 22, 1995, under the name of Snowbird Vacations International Inc., and was continued to the Province of Ontario on November 12, 1997. The name of the Company was changed to Intravelnet.com Inc. on February 26, 1999. Further to shareholder approval on April 17, 2002, the Company’s name was changed to Forum National Investments Ltd., with a consolidation of the share capital on a ten old for a one new basis, effective July 5, 2002. On April 16 of 2007 the share capital of the Company was forward split on a 3 new for 1 old basis.
FMNL Annual Report filed March 2012..link here!!
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8510051
Talk about transparent. This is going to be so easy to get in and make me some $$..... http://www.otcmarkets.com/stock/FMNL/news/Revocation-of-BCSC-Cease-Trade-Order?id=45012&b=y
FMNL...company information....silly low floater...read on...I cannot wait to catch shares under $.70 tomorrow!
http://www.otcmarkets.com/stock/FMNL/company-info
FMNL...OTCQB...Here is more information...from OTC markets
http://www.otcmarkets.com/stock/FMNL/quote
This one is so new, it is not even carried by StockCharts...Barcharts has it though...
http://www.barchart.com/quotes/stocks/FMNL
LOL...I knew the pimp would be here following the smart money. I just dug up this nugget during my DD....
http://thewallstreetbulls.com/
Hey Clay, this just hit my radar for volume and PPS spike. What the heck is cooking here. I see volume and PPS almost double in a few trading sessions and I wonder what the heck is happening. Tons of stuff hitting my Twitter box.
Hey Chris,I am short or have puts on a lot of big boards. Looks like we are nowhere near out of the woods yet. GLTY, talk to ya later.
Money is gone bro. RARS ate that powder.....DEEEEEEEEEEEEEEEEEEZ NUUUUUUUUUUUUUUUUUUUUTZ!! LMAO
What's cooking? Anything happening here?