Form
10-Q/A
Revised
Amendment No. 1
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
(Mark
one)
x |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the
quarterly period ended November 30, 2006
o |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
For
the
transition period from__________to_________
Commission
file number: 000-52241
FROMEX
EQUITY CORP.
(Exact
name of small business issuer a specified in its charter)
Delaware
|
|
04-3826570
|
(State
or other jurisdiction of incorporation or organization)
|
|
(I.R.S.
Employer Identification No)
|
320
Manville Road
Pleasantville,
N. Y. 10570
(Address
of principal executive offices)
(Registrant’s
telephone number, including area code): (914) 632-6730
Check
whether the issuer: (1) filed all reports required to be filed by Section
13 or
15(d) of the Securities Exchange Act of 1934 during the 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 xNo
o
Registration
Statement (Form 10) filed September 28, 2006
Indicate
by check mark whether the registrant is an accelerated filer (as defined
in Rule
12b-2 of the Exchange Act).
Yes
o
No x
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule
12b-2 of the Exchange Act).
Yes
o
No
x
As
of the
close of business on November 30, 2006, there were 14,400,000 shares
of the
issuer’s common stock, par value $.001 per share outstanding.
Explanatory
Note
This
Amendment No. 1 on Form 10-Q/A is being filed with respect to the quarterly
report filed on Form 10-QSB for the quarterly period ended November
30, 2006.
This Amendment No. 1 reflects the restatement of the financial statements
for
the following reason:
“FRMO,
the Company’s parent held a 60% interest in Horizon Advisers, a fund management
firm. On December 1, 2005, FRMO transferred and assigned to Fromex
a 66 2/3%
interest in its share of fees earned by Horizon Advisers, as and when
received
by FRMO. The fair value of this revenue stream, estimated at $250,000,
was
initially recognized as a capital contribution by FRMO to Fromex, generating
an
intangible asset of $250,000. This asset was being amortized over an
estimated
useful economic life of 10 years.
“Upon
subsequent analysis, it was determined that, because no value had been
assigned
to the Horizon Advisers revenue stream as reported on the accounts
of FRMO, the
Company’s parent, no value should have been attributed to the 66 2/3% interest
upon transfer to Fromex. Accordingly, financial statements have been
restated to
attribute no value to the assigned interest, and the reversal of amortization
recorded on the initial valuation. This restatement did not result
in a change
to the reported earnings per share.”
The
above
two quoted paragraphs were included in a revised Form 10 filed with
the SEC on
May 14, 2007, which included restated financial statements for the
nine months
ended November 30, 2006.
Originally
the Company relied on paragraph 9 of SFAS No 142, Goodwill and Other
Intangibles, which requires intangibles to be valued at fair value,
and SAB
Topic 5G which notes that an asset’s ability to be objectively measurable is a
factor in accounting for an asset at fair value. The Company subsequently
determined that the guidance of those accounting statements do not
apply where
the transferor retains a substantial indirect interest in the assets
as a result
of stock ownership in the Company. Accordingly, the Company restated
its
financial statements as included in the Form 10 filed on May 14, 2007
and in
this Amendment No. 1.
The
results of the Restatement are noted pages 9 through 12. While the
intangible
asset has been restated at zero (page 11), the net income of the Company
increased by $9,891 and $280 in the nine months and three months ended
November
30, 2006 respectively (page 12).
The
officers of the Company have reconsidered the effectiveness of its
disclosure
controls and procedures as of November 30, 2006 in the light of the
restatement
described above and have concluded that the Company’s disclosure controls and
procedures were not effective as of November 30, 2006 but were when
the
financial statements were restated in Form 10 on May 14, 2007 and as
of the date
of the 10Q/A Amendment No. 1. The officers have addressed this reconsideration
and evaluation in their certifications in Exhibits 31.1 and 31.2 at
pages 23 and
24 of this Amendment.
Fromex
Equity Corp.
Notes
to Financial Statements
interest
in its share of fees earned by Horizon Advisers, as and when received
by FRMO.
The fair value of this revenue stream, estimated at $250,000, was initially
recognized as a capital contribution by FRMO to Fromex, generating
an intangible
asset of $250,000. This asset was being amortized over an estimated
useful
economic life of 10 years.
Upon
subsequent analysis, it was determined that, because no value had been
assigned
to the Horizon Advisers revenue stream as reported on the accounts
of FRMO, the
Company’s parent, no value should have been attributed to the 66 2/3% interest
upon transfer to Fromex. Accordingly, financial statements have been
restated to
attribute no value to the assigned interest, and the reversal of amortization
recorded on the initial valuation. This restatement did not result
in a change
to the reported earnings per share.
Originally
the Company relied on paragraph 9 of SFAS No 142, Goodwill and Other
Intangibles, which requires intangibles to be valued at fair value,
and SAB
Topic 5G which notes that an asset’s ability to be objectively measurable is a
factor in accounting for an asset at fair value. The Company subsequently
determined that the guidance of those accounting statements do not
apply where
the transferor retains a substantial indirect interest in the assets
as a result
of stock ownership in the Company. Accordingly, the Company restated
its
financial statements, as included in the Form 10 filed on May 14, 2007
and in
this Amendment No. 1.
The
results of the Restatement are noted pages at 11 and 12. While the
intangible
asset has been restated at zero (page 11), the net income of the Company
increased by $9,891 and $280 in the nine months and three months ended
November
30, 2006 respectively (page 12).
The
officers of the Company have reconsidered the effectiveness of its
disclosure
controls and procedures as of November 30, 2006 in the light of the
restatement
described above and have concluded that the Company’s disclosure controls and
procedures were not effective as of November 30, 2006 but were when
the
financial statements were restated in Form 10 on May 14, 2007 and as
of the date
of the 10-Q/A Amendment No. 1. The officers have addressed this reconsideration
and evaluation in their certifications in Exhibits 31.1 and 31.2 at
pages 23 and
24 of this Amendment.
Item
3.
CONTROLS
AND PROCEDURES
We
maintain disclosure controls and procedures that are designed to
ensure that
information required to be disclosed in the Company’s Securities Exchange Act
reports is recorded, processed, summarized and reported within the
time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including its chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely
decisions
regarding required disclosure. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls
and procedures,
no matter how well designed and operated, can provide only reasonable
assurance
of achieving the desired control objectives, as ours are designed
to do, and
management necessarily was required to apply its judgment in evaluating
the
cost-benefit relationship of possible controls and procedures.
Reference
is made to Note 2A of the Financial Statements at pages 9 & 10 with respect
to the Restatement of the Financial Statements. The officers of the
Company have
reconsidered the effectiveness of its disclosure controls and procedures
as of
November 30, 2006 in the light of that restatement and have concluded
that the
Company’s disclosure controls and procedures were not effective as of November
30, 2006 but were when the financial statements were restated in
Form 10 on May
14, 2007 and as of the date of the 10-Q/A Amendment No. 1.