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GVRS.OB > SEC Filings for GVRS.OB > Form 10KSB on 13-Sep-2006All Recent SEC Filings

Show all filings for REVELSTOKE INDUSTRIES, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10KSB for REVELSTOKE INDUSTRIES, INC.


13-Sep-2006

Annual Report


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The summarized financial data set forth in the table below is derived from and should be read in conjunction with our audited financial statements for the period from inception (April 5, 2004) to May 31, 2006 and fiscal year ended May 31, 2006, including the notes to those financial statements which are included in this Annual Report.

       ______________________________________________________________________
                                                    For the Period from
                                                    Inception (April 5, 2004)
                                                    to May 31, 2006
       ______________________________________________________________________

       Revenues                                              $ 46,974
       ______________________________________________________________________
       Net Loss                                             ($136,754)
       ______________________________________________________________________
                                                    For the Year Ended May
                                                    31, 2006 (audited)
       ______________________________________________________________________

       Revenue                                               $    -0-
       ______________________________________________________________________
       Direct Costs                                               -0-
       ______________________________________________________________________
       Gross Profit                                               -0-
       ______________________________________________________________________
       Office and general expenses                             14,244
       ______________________________________________________________________

       Consulting Fees                                          8,161
       ______________________________________________________________________
       Professional Fees                                       42,676
       ______________________________________________________________________
       Net Loss for the Year                                ($ 65,081)
       ______________________________________________________________________
                                                    As of May 31, 2006
                                                    (audited)
       ______________________________________________________________________

       Working Capital                                       $ 37,413
       ______________________________________________________________________
       Total Assets                                            73,383
       ______________________________________________________________________
       Total Number of Shares of Common Stock
       Outstanding                                         16,800,000
       ______________________________________________________________________
       Deficit                                               (136,754)
       ______________________________________________________________________
       Total Stockholders Equity                             $ 37,413
       ______________________________________________________________________

MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATION

FOR FISCAL YEAR ENDED MAY 31, 2006 COMPARED TO FISCAL YEAR ENDED MAY
31, 2005

Our net loss during fiscal year ended May 31, 2006 was approximately ($65,081) compared to ($66,246) for fiscal year ended May 31, 2005 (a decrease of $1,165).

During fiscal year ended May 31, 2006, we did not generate any revenue compared to $46,974 in revenue generated during fiscal year ended May 31, 2005. We are in the development stage and, therefore, have not commenced producing significant consistent revenue. During fiscal year ended May 31, 2005, we earned $46,974 of revenue from site reclamation and incurred $56,481 of costs directly relating to that revenue resulting in a gross loss of ($9,507). As we begin to implement our business plan, we expect the number of site reclamation jobs and revenue to increase and direct costs as a percentage of that revenue to fall over the next twelve months.

During fiscal year ended May 31, 2006, we incurred general and administrative expenses of approximately $65,081 compared to general and administrative expenses of $56,739 during fiscal year ended May 31, 2005 (an increase of $8,342). The general and administrative expenses incurred during fiscal year ended May 31, 2006 consisted of: (i) $42,676 (2005: $20,574) in professional fees; (ii) $14,244 (2005: $18,533) as office and general expenses; and (iii) $8,161 (2005: $17,632) as consulting fees. The slight increase in general and administrative expenses incurred during fiscal year ended May 31, 2006 compared to fiscal year ended May 31, 2005 resulted primarily from the increase in professional fees relating to investigating the opportunities in the construction site reclamation and stabilization business in the United States and to legal fees associated with preparation of the Registration Statement. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.

As discussed above, the slight decrease in net loss during fiscal year ended May 31, 2006 compared to fiscal year ended May 31, 2005 is attributable primarily to the operating gross loss realized during fiscal year ended May 31, 2005. Our net loss during fiscal year ended May 31, 2006 was ($65,081) or ($0.00) per share compared to a net loss of ($66,246) or ($0.00) per share for fiscal year ended May 31, 2005. The weighted average number of shares

outstanding was 14,590,685 at May 31, 2006 compared to 9,178,134 at May 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

As at fiscal year ended May 31, 2006, our current assets were $73,383 and our current liabilities were $35,970, resulting in a working capital surplus of $37,413. As at fiscal year ended May 31, 2006, our total assets were comprised of current assets of $73,383 in cash. As at fiscal year ended May 31, 2006, our total liabilities were comprised of current liabilities of: (i) $19,171 in accounts payable and accrued liabilities; and (ii) $16,799 in amounts due to related parties. See " - Material Commitments."

Stockholders' equity increased from $2,494 at May 31, 2005 to $37,413 at May 31, 2006.

We have not generated positive cash flows from operating activities. For fiscal year ended May 31, 2006, net cash flow used in operating activities was ($90,248) compared to net cash flow from operating activities of $591 for fiscal year ended May 31, 2005. Net cash flow used in operating activities during fiscal year ended May 31, 2006 consisted primarily of a net loss of ($65,081) adjusted by ($40,827) to reconcile accounts payable and accrued liabilities.

During fiscal year ended May 31, 2006, net cash flow provided by financing activities was $99,927 compared to net cash flow from financing activities of $19,000 for fiscal year ended May 31, 2005. Net cash flow from financing activities during fiscal year ended May 31, 2006 pertained primarily to $100,000 received as proceeds from the sale of our shares of common stock.

We expect that working capital requirements will continue to be funded through a combination of our existing funds, cash flow from operations and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. We believe the residential and commercial real estate market in the United States is presently active so we expect the demand for our services will remain stable or increase in the foreseeable future.

PLAN OF OPERATION AND FUNDING

On December 8, 2005, we closed our private placement offering pursuant to which we issued an aggregate of 4,200,000 pre-Forward Stock Split shares of common stock at $0.238 per share for gross proceeds of $100,000. Existing working capital, further advances and possible debt instruments, anticipated warrant exercises, further private placements, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt securities. In connection with our business plan, management anticipates that administrative expenses will decrease as a percentage of revenue as our revenue increases over the next twelve months.

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

The reports of the independent registered public accounting firms that accompanies our May 31, 2006 and May 31, 2005 financial statements contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

MATERIAL COMMITMENTS

As of the date of this Annual Report, we do not have any significant material commitments for fiscal year 2006/2007.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on our future reported financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on our future reported financial position or results of operations.

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