Friday, December 02, 2011 8:51:11 AM
21-Nov-2011
Quarterly Report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the Risk Factors section included in this Report on Form 10-Q.
Plan of Operation
Prior to July 31, 2009, we were a development stage company named "Cancer Detection Corporation" which sought to provide research and development to potential cancer and related pathogen vaccines. This business was discontinued in July 2009, when the Company reorganized under the name of "Tremont Fair, Inc." and operated as a real estate services company. In May 2011, the Company was further reorganized when we acquired all of the outstanding shares of Vican Trading, Inc., a Delaware corporation (hereafter, "Vican-Delaware"). Vican-Delaware is a purchaser and seller of metals, ores, and other commodities throughout North America. In connection with the acquisition of Vican Delaware, we changed our name from "Tremont Fair, Inc." to "Vican Resources, Inc." and appointed Lorne Kalisky, Chene Gardner, and Corey Safran as our Chief Executive Officer, Chief Financial Officer, and Secretary, respectively. We expect that the business of Vican Delaware will predominate within the consolidated group in the future.
Liquidity and Capital Resources
As of September 30, 2011, the Company's primary source of liquidity consisted of $70,437 in cash and cash equivalents. The Company holds most of its cash reserves in local sweep accounts with local financial institutions. Since inception, the Company has financed its operations through a combination of short and long-term loans, and through the private placement of its common stock.
The Company has sustained significant net losses which have resulted in a total stockholders' deficit at September 30, 2011 of $3,822,224 and is currently experiencing a substantial shortfall in operating capital which raises doubt about the Company's ability to continue as a going concern. The Company anticipates a net loss for the year ended December 31, 2011 and with the expected cash requirements for the coming months, without additional cash inflows from an increase in revenues combined with continued cost-cutting or a receipt of cash from capital investment, there is substantial doubt as to the Company's ability to continue operations.
There is presently no agreement in place with any source of financing for the Company and there can be no assurance that the Company will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds will materially affect the Company and its business, and may cause the Company to cease operations. Consequently, shareholders could incur a loss of their entire investment in the Company.
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Results of Operations
Until the reorganization of the Company in July 2009, we were considered a development stage company for accounting purposes, since we had not yet received any revenues from operations. Effective September 1, 2009, Tremont Fair Holdings, Inc. acquired two property management agreements from Creekstone Equity Management, a company controlled by Cyrus Boga (the "Management Agreements").
Revenues. For the three months ended September 30, 2011, net revenues were $11,049,129 compared to $38,325for the three months ended September 30, 2010. For the nine months ended September 30, 2011, net revenues were $16,852,874 compared to $120,221 for the nine months ended September 30, 2010. The increase is due to the acquisition Vican Trading, Inc. during the second quarter of 2011. The Company expects that revenues will continue to remain at these levels in the future.
Cost of Sales. Cost of sales for the three and nine months ended September 30, 2011 were $10,735,826 and $16,211,895, respectively, compared to $-0- for the three and nine months ended September 30, 2010. Cost of sales correlates with the volume of revenues for the periods.
Selling General and Administrative Expenses ("SG&A"). Our SG&A expenses for the three months ended September 30, 2011was $352,335 compared to $111,458 for the three months ended September 30, 2010. For the nine months ended September 30, 2011, SG&A expenses were $1,502,541 compared to $476,900 for the nine months ended September 30, 2010.
Other Expense.The Company had net other expenses of $4,218,211 for the nine months ended September 30, 2011. The largest item in this category was the write off of goodwill associated with the acquisition of Vican Trading Inc. which amounted to $3,837,934.
Net Loss. We had a net loss for the nine months ended September 30, 2011 of $5,054,093 compared to a net loss of $360,810 for the nine months ended September 30, 2010.
Off-Balance Sheet Arrangements
We do not have any 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.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. On an on-going basis, we evaluate our estimates. Actual results may differ from these estimates if our assumptions do not materialize or conditions affecting those assumptions change.
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We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:
Revenue Recognition
Revenue from management services is recognized when service is completed.
Stock-Based Compensation
The Company sometimes grants shares of stock for services. These grants are accounted for based on the grant date fair values.
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