Alto Group Holdings Inc. Form 10-Q for May 31, 2009
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED MAY 31, 2009
   
OR
  
   
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-53592

ALTO GROUP HOLDINGS INC.
(Exact name of registrant as specified in its charter)

NEVADA
(State or other jurisdiction of incorporation or organization)

110 Wall Street
11th Floor
New York, New York 10005-3198
(Address of principal executive offices, including zip code.)

212-709-8036
(Registrant’s telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.  YES [X]   NO [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer  [   ]                 Accelerated filer                           [   ]
 
Non-accelerated filer     [   ]                 Smaller reporting company        [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [X]  NO [  ]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 9,960,000 as of July 3, 2009.
 
 

 

 
 
 

PART I – FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS


Alto Group Holdings Inc.
(An Exploration Stage Company)
May 31, 2009
 
                                                                                                                                                Index
 
FINANCIAL STATEMENTS
 
Balance Sheets.......................................................................................................................F–1
 
Statements of Operations.....................................................................................................F–2
 
Statements of Stockholders’ Equity (Deficit)....................................................................F–3
 
Statements of Cash Flows....................................................................................................F–4
 
NOTES TO THE FINANCIAL STATEMENTS.................................................................F–5


 
-2-
 


Alto Group Holdings Inc.
            
(An Exploration Stage Company)
            
Balance Sheets
            
(Expressed in US Dollars)
            
             
   
May 31,
    
November 30,
  
   
2009
    
2008
  
   
(Unaudited)
        
ASSETS
  
Current Assets
            
Cash and cash equivalents
   $ 648     $ 1,110  
Total current assets
     648       1,110  
Mineral property acquisition costs, less reserve
                
for impairment of $6,500
     -       -  
Total Assets
   $ 648     $ 1,110  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  
Current Liabilities
                
Accounts payable and accrued liabilities
   $ 7,527     $ 3,085  
Due to related party
     20,929       10,886  
Total current liabilities
     28,456       13,971  
                 
                 
Stockholders' Deficit
                
Preferred Stock, $0.00001 par value;
                
authorized 100,000,000 shares, none issued and outstanding
     -       -  
Common Stock, $0.00001 par value;
                
authorized 100,000,000 shares,
                
issued and outstanding 9,960,000 shares
     100       100  
Additional paid-in capital
     62,300       57,500  
Deficit accumulated during the exploration stage
     (90,208 )     (70,461 )
Total stockholders' equity (deficit)
     (27,808 )     (12,861 )
Total Liabilities and Stockholders' Equity (Deficit)
   $ 648     $ 1,110  


See notes to financial statements

F-1
 
 
-3-
 

 
Alto Group Holdings Inc.
              
(An Exploration Stage Company)
              
Statements of Operations
              
(Expressed in US Dollars)
              
(Unaudited)
                              
                               
                               
   
 
For the three months ended May 31, 2009
    
 
For the three months ended May 31, 2008
    
 
For the six months ended May 31, 2009
    
 
For the six months ended May 31, 2008
    
Accumulated from September 21, 2007 (Date of Inception) to May 31, 2009
  
                               
                               
                               
Revenue
   $ -     $ -     $ -     $ -     $ -  
                                         
Costs and expenses
                                        
Exploration and carrying costs
             -       -       2,500       2,625  
General and administrative
     4,376       15,273       14,947       34,912       64,283  
Donated services
     2,400       2,400       4,800       4,800       16,800  
Impairment of mineral property acquisition costs
     -       -       -       6,500       6,500  
Total costs and expenses
     6,776       17,673       19,747       48,712       90,208  
                                         
Net Loss
   $ (6,776 )   $ (17,673 )   $ (19,747 )   $ (48,712 )   $ (90,208 )
                                         
Net loss per share
                                        
Basic and diluted
   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )        
                                         
                                         
Weighted Average Shares Outstanding
                                        
Basic and Diluted
     9,960,000       9,960,000       9,960,000       9,960,000          


See notes to financial statements

F-2
 
 
-4-
 

 
Alto Group Holdings Inc.
                                    
(An Exploration Stage Company)
                    
Statements of Stockholders' Equity (Deficit)
        
For the Period September 21, 2007 (Inception) to May 31, 2009
  
(Expressed in US Dollars)
                                    
                                     
                               
   
 
Common Stock, $0.00001
    
 
Additional
          
Deficit Accumulated During the
        
   
par value
    
Paid-in
    
Subscriptions
    
Exploration
        
   
Shares
    
Amount
    
Capital
    
Receivable
    
Stage
    
Total
  
                                     
Common shares sold for cash at $0.001 per share
     6,000,000     $ 60     $ 5,940     $ -     $ -     $ 6,000  
Common shares sold for cash at $0.01 per share
     3,960,000       40        39,560       (4,500 )      -       35,100  
Donated services and expenses
     -       -       2,400       -       -       2,400  
Net Loss
     -       -       -       -       (5,772 )     (5,772 )
Balance - November 30, 2007
     9,960,000     $ 100     $ 47,900     $ (4,500 )   $ (5,772 )   $ 37,728  
                                                 
Common stock subscriptions collected
     -       -       -       4,500       -       4,500  
Donated services and expenses
     -       -       9,600       -       -       9,600  
Net Loss
     -       -       -       -       (64,689 )     (64,689 )
Balance - November 30, 2008
     9,960,000     $ 100     $ 57,500     $ -     $ (70,461 )   $ (12,861 )
                                                 
Unaudited:
                                                
Donated services and expenses
     -       -       4,800       -       -       4,800  
Net Loss
     -       -       -       -       (19,747 )     (19,747 )
Balance - May 31, 2009
     9,960,000     $ 100     $ 62,300     $ -     $ (90,208 )   $ (27,808 )


See notes to financial statements

F-3
 
 
-5-
 

 
Alto Group Holdings Inc.
                  
(An Exploration Stage Company)
                  
Statements of Cash Flows
                  
(Expressed in US Dollars)
                  
(Unaudited)
                  
                   
   
 
For the six months ended May 31, 2009
    
 
For the six months ended May 31, 2008
    
Accumulated from September 21, 2007 (Date of Inception) to May 31, 2009
  
Cash Flows from Operating Activities
                  
Net loss
   $ (19,747 )   $ (48,712 )   $ (90,208 )
Adjustments to reconcile net loss
                        
to net cash provided by (used for) operating activities
                        
Donated services and expenses
     4,800       4,800       16,800  
Impairment of mineral property acquisition costs
     -       6,500       6,500  
Change in operating assets and liabilities:
                        
Accounts payable and accrued liabilities
     4,442       (780 )     7,527  
Net cash used for operating activities
     (10,505 )     (38,192 )     (59,381 )
                         
Investing Activities
                        
Mineral property acquisition costs
     -       (6,500 )     (6,500 )
Net cash provided by investing activities
     -       (6,500 )     (6,500 )
                         
Cash Flows from Financing Activities
                        
Increase in due to related party
     10,043       2,397       20,929  
Proceeds from sale of common stock
     -       4,500       45,600  
Net cash provided by financing activities
     10,043       6,897       66,529  
                         
(Decrease) increase in cash
     (462 )     (37,795 )     648  
                         
Cash - beginning of period
     1,110       40,025       -  
                         
Cash - end of period
   $ 648     $ 2,230     $ 648  
                         
Supplemental disclosures of cash flow information:
                        
Interest paid
   $ -     $ -     $ -  
Income taxes paid
   $ -     $ -     $ -  
 
See notes to financial statements

F-4
 
-6-
 
 
Alto Group Holdings Inc.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
(Unaudited)

1.  
Nature of Operations
 
Alto Group Holdings Inc. (the “Company”) was incorporated in the State of Nevada on September 21, 2007. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standards (“SFAS”) No.7 “Accounting and Reporting for Development Stage Enterprises”. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.
 
On March 21, 2008, the Company filed a Registration Statement on Form S-1 with the United States Securities and Exchange Commission (“SEC”) to register 3,960,000 shares of common stock for resale by existing stockholders of the Company at $0.01 per share until the shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices. On April 9, 2008, the Registration Statement was declared effective by the SEC. The Company will not receive any proceeds from the resale of shares of common stock by the shareholders.
 
2.  
Interim Financial Information
 
The unaudited financial statements as of May 31, 2009 and for the six months then ended and for the period September 21, 2007 (inception) to May 31, 2009 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of May 31, 2009 and the results of operations and cash flows for the periods then ended. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the six month period ended May 31, 2009 is not necessarily indicative of the results to be expected for any subsequent quarter or the entire year ending November 30, 2009. The balance sheet at November 30, 2008 has been derived from the audited financial statements at that date.
 
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended November 30, 2008 as included in our Form 10-K filed with the Securities and Exchange Commission on March 2, 2009.
 
3.  
Related Party Balances/Transactions
 
a)  
During the six-month period ended May 31, 2009, the Company recognized a total of $4,800 (May 31, 2008 - $4,800) for donated management services at $800 per month provided by the sole Director of the Company.
 
b)  
At May 31, 2009, the Company is indebted to the sole director of the Company for $20,929 (November 30, 2008 - $10,886) representing advances and expenditures paid on behalf of the Company. This amount is unsecured, non-interest bearing, due on demand and has no specific terms of repayment.


F-5

 
-7-
 

Alto Group Holdings Inc.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
(Unaudited)

4.  
Mineral Property
 
On December 14, 2007, the Company paid $6,500 for a 100% interest in a Mineral Claim located in Clark County, Nevada and $2,500 for a geological report conducted on the respective mining claim. In August 2008, an annual fee of $125 was paid for the claim. The cost of the mineral property was initially capitalized. At February 28, 2008, the Company recognized an impairment loss of $6,500, as it had not yet been determined whether there are proven or probable reserves on the property.
 
5.  
Common Stock
 
a)  
On September 21, 2007, the Company issued 6,000,000 shares of common stock at $0.001 per share to the sole Director of the Company for cash proceeds of $6,000.
 
b)  
During the period ended November 30, 2007, the Company accepted stock subscriptions for 3,960,000 shares of common stock at $0.01 per share or $39,600 total. $35,100 was collected by November 30, 2007 and $4,500 was collected in December 2007.
 
6.  
Income Taxes
 
A reconciliation of the expected income tax recovery computed by applying the statutory United States federal income tax rate of 34% to income (loss) before taxes follows:

 

 
   
For the six
months ended
May 31,
2009
    
For the six
Months ended
May 31,
2008
    
September 21,
2007 (Date of
Inception) to
May 31,
2009
  
                   
Income tax recovery at statutory rate
   $ 6,714     $ 16,562     $ 30,671  
                         
Non-deductible donated services
     (1,632 )     (1,632 )     (5,712 )
                         
Valuation allowance change
     (5,082 )     (14,930 )     (24,959 )
                         
Provision for income taxes
   $ –     $ –     $ –  




 


F-6

 
-8-
 

Alto Group Holdings Inc.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
(Unaudited)

6.      Income Tax (continued)
 
The components of the net deferred tax asset at May 31, 2009 and November 30, 2008 consist of:
 
   
May 31,
2009
    
November 30,
2008
  
             
Net operating loss carry-forward
   $ 24,959     $ 19,877  
                 
Valuation allowance
     (24,959 )     (19,877 )
                 
Net deferred income tax asset
   $ –     $ –  
 
Potential benefits of income taxes are not recognized in the accounts until realization is more likely than not. At May 31, 2009, the Company has a net operating loss carry-forward of $73,408 which expires $3,372 in 2027, $55,089 in 2028 and $14,947 in 2029. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
 
 
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.


 




 

F-7
 
 
-9-
 
ITEM 2.                 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Plan of Operation

We are a start-up, exploration stage corporation and have not yet generated or realized any revenues from our business activities.

Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. Our success or failure will be determined by what we find under the ground.

To meet our need for cash we must raise money in order to operate. If we find mineralized material and it is economically feasible to remove the mineralized material, we will have to raise additional money through a subsequent private placement, public offering or through loans. We do not have enough money to conduct exploration activities on the property. Currently we have to find alternative sources of capital, like a second public offering, a private placement of securities, or loans from our sole officer or others.

At the present time, we have not made any arrangements to raise additional cash. If we can't raise additional money, we will cease activities entirely.

We have the right to conduct exploration activities on one property. Even if we complete our current exploration program and it is successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit, a reserve.

We will be conducting research in the form of exploration of the property subject to receipt of additional capital. Our exploration program is explained in as much detail as possible in the business section of this report. We are not going to buy or sell any plant or significant equipment during the next twelve months. We will not buy any equipment until we have located a reserve and we have determined it is economical to extract the minerals from the land.


 
-10-
 

We do not intend to interest other companies in the property if we find mineralized materials. We intend to try to develop the reserves ourselves.

We do not intend to hire additional employees at this time. All of the work on the property will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.

We intend to seek alternative opportunities in order to potentially enhance shareholder value.  Management intends to review other potential assets for acquisition.

Results of Operations

We completed our private placement and raised $39,600.  Since then, we have not conducted any operations and have exhausted all of our money.

Milestones

The milestones are as follows:

1. Raise additional capital.

2. Retain our consultant to manage the exploration of the property. - Maximum cost of $5,000. Time of retention 0-90 days.

3. Trenching. Trenching will cost approximately $14,000 and will be conducted by unrelated subcontractors.  Trenching includes grid installation, metal detection, sample collecting and shipping the samples for testing.

4. Have an independent third party analyze the samples.  We estimate that it will cost $2,000 to analyze the samples and will take 30 days.

We have no money at the present time and cannot operate until we raise additional capital.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from activities. We cannot guarantee we will be successful in our business activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.


 
-11-
 

To become profitable and competitive, we have to conduct research and exploration of the property before we start production of any minerals we may find. We are seeking additional equity financing to provide for the capital required to implement our research and exploration phases.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

Liquidity and Capital Resources

Since inception, we have issued 9,960,000 shares of our common stock and received $45,600.

As of the date of this report, we do not have capital to operate, but our president will be injecting more funds to keep us operational.

In September 2007, we issued 6,000,000 shares of common stock to our sole officer and director, Tareq Hinawy, pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933.  The purchase price of the shares was $6,000.  This was accounted for as an acquisition of shares.  Tareq Hinawy covered some of our initial expenses for incorporation documents, administrative costs, and courier costs.  The amount owed to Mr. Hinawy  is non-interest bearing, unsecured and due on demand.  Further the agreement with Mr. Hinawy is oral and there is no written document evidencing the agreement.

In December 2007, we issued 3,960,000 shares of common stock to 44 individuals in consideration of $39,600.

As of May 31, 2009, our total assets were $648 and our total liabilities were $28,456.

Recent accounting pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - An amendment of ARB No. 51”.SFAS 160 requires companies with noncontrolling interests to disclose such interests clearly as a portion of equity but separate from the parent’s equity.  The noncontrolling interest’s portion of net income must also be clearly presented on the Income Statement.  SFAS 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of this statement is not expected to have a material effect on the Company's future financial position or results of operations.


 
-12-
 

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141,(revised 2007), “Business Combinations”.  SFAS 141 (R) applies the acquisition method of accounting for business combinations established in SFAS 141 to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged.  Consistent with SFAS 141, SFAS 141 (R) requires the acquirer to fair value the assets and liabilities of the acquiree and record goodwill on bargain purchases, with main difference the application to all acquisitions where control is achieved.  SFAS 141 (R) is effective for financial statements issued for fiscal years beginning after December 15, 2008.  The adoption of this statement is not expected to have a material effect on the Company's future financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company has not yet determined whether it will elect the fair value option for any of its financial instruments.

In March 2008, the FASB issued FASB Statement No. 161 ("SFAS 161"), "Disclosures about Derivative Instruments and Hedging Activities". SFAS 161 requires companies with derivative instruments to disclose information that should enable financial-statement users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" and how derivative instruments and related hedged items affect a company's financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of this statement is not expected to have a material effect on the Company's future financial position or results of operations.


ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.



 
-13-
 

ITEM 4.
CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal  Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended May 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION

ITEM 6.
EXHIBITS.

The following documents are included herein:

Exhibit No.
Document Description
   
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.


 
 

 

 
-14-
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 8th day of July, 2009.

 
ALTO GROUP HOLDINGS INC.
     
 
BY:
TAREQ HINAWY
   
Tareq Hinawy
President, Principal Executive Officer, Secretary, Treasurer, Principal Financial Officer, Principal Accounting Officer and sole member of the Board of Directors.


 
 
 
 
 
 
 
 

 

 
-15-
 

EXHIBIT INDEX

Exhibit No.
Document Description
   
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

 
 
 
 
 
 
 
 
 
 
 

 

 
-16-