UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2009 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission File Number: 000-53127 FREIGHT MANAGEMENT CORP. (Exact name of registrant as specified in its charter) Nevada 75-3254381 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite 200, 8275 Eastern Ave Las Vegas, NV, 89123 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 702-938-0496 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [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" 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 [ ] Number of shares outstanding of the registrant's class of common stock as of July 23, 2009: 5,060,000 Authorized share capital of the registrant: 75,000,000 common shares, par value of $0.001 The Company recorded $nil sales revenue for the six months ended June 30, 2009.
FORWARD-LOOKING STATEMENTS THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS PREDICTIONS, PROJECTIONS AND OTHER STATEMENTS ABOUT THE FUTURE THAT ARE INTENDED TO BE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (COLLECTIVELY, "FORWARD-LOOKING STATEMENTS"). FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. A NUMBER OF IMPORTANT FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. IN ASSESSING FORWARD-LOOKING STATEMENTS CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-Q, READERS ARE URGED TO READ CAREFULLY ALL CAUTIONARY STATEMENTS - INCLUDING THOSE CONTAINED IN OTHER SECTIONS OF THIS QUARTERLY REPORT ON FORM 10-Q. AMONG SAID RISKS AND UNCERTAINTIES IS THE RISK THAT THE COMPANY WILL NOT SUCCESSFULLY EXECUTE ITS BUSINESS PLAN, THAT ITS MANAGEMENT IS ADEQUATE TO CARRY OUT ITS BUSINESS PLAN AND THAT THERE WILL BE ADEQUATE CAPITAL OR THEY MAY BE UNSUCCESSUFL FOR TECHNICAL, ECONOMIC OR OTHER REASONS. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Page Number ----------- Balance Sheets................................................. 3 Statements of Operations....................................... 4 Statements of Stockholders' Deficit............................ 5 Statements of Cash Flows....................................... 6 Notes to the Financial Statements.............................. 7 2
FREIGHT MANAGEMENT CORP. (A Development Stage Company) BALANCE SHEETS <TABLE> <CAPTION> June 30, December 31, 2009 2008 -------- -------- (unaudited) <S> <C> <C> ASSETS Current assets Cash and bank accounts $ 1,154 $ 2,905 Prepaid expense and deposit 302 150 -------- -------- Total current assets 1,456 3,055 Website, net of accumulated amortization (Note 7) 1,891 2,557 -------- -------- Total assets $ 3,347 $ 5,612 ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 3,800 $ 8 Due to director (Note 5) 7,220 3,320 -------- -------- Total current liabilities 11,020 3,328 -------- -------- Stockholders' deficit (Note 4,5) Authorized: 75,000,000 common shares Par value $0.001 Issued and outstanding: 5,060,000 common shares 5,060 5,060 Additional paid-in capital 55,940 55,940 Deficit accumulated during the development stage (68,673) (58,716) -------- -------- Total stockholders' deficit (7,673) 2,284 -------- -------- Total liabilities and stockholders' deficit $ 3,347 $ 5,612 ======== ======== </TABLE> The accompanying notes are an integral part of these financial statements. 3
FREIGHT MANAGEMENT CORP. (A Development Stage Company) STATEMENTS OF OPERATIONS (unaudited) <TABLE> <CAPTION> Date of Incorporation on 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended September 17, 2007 to June 30, June 30, June 30, June 30, June 30, 2009 2008 2009 2008 2009 ---------- ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> <C> REVENUE $ -- $ -- $ -- $ -- $ -- ---------- ---------- ---------- ---------- ---------- OPERATING EXPENSES Amortization 333 333 666 666 2,109 Database development costs -- 11,000 -- 18,550 30,250 General & administrative 3,012 3,702 9,291 21,115 35,494 Organization -- -- -- -- 820 ---------- ---------- ---------- ---------- ---------- Loss before income taxes (3,345) (15,035) (9,957) (40,331) (68,673) Provision for income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net loss $ (3,345) $ (15,035) $ (9,957) $ (40,331) $ (68,673) ========== ========== ========== ========== ========== Basic and diluted loss per common share (1) $ -- $ -- $ -- $ -- ========== ========== ========== ========== Weighted average number of common shares outstanding (Note 4) 5,060,000 5,060,000 5,060,000 5,060,000 ========== ========== ========== ========== </TABLE> - ---------- (1) less than $0.01 The accompanying notes are an integral part of these financial statements. 4
FREIGHT MANAGEMENT CORP. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' DEFICIT (unaudited) <TABLE> <CAPTION> Deficit Accumulated Common Stock Additional During the Total ------------------ Paid in Development Stockholders' Shares Amount Capital Stage Equity ------ ------ ------- ----- ------ <S> <C> <C> <C> <C> <C> Inception, September 17, 2007 -- $ -- $ -- $ -- $ -- Initial capitalization, sale of common stock to Directors on September 17, 2007 4,000,000 4,000 4,000 8,000 Private placement closed December 31, 2007 1,060,000 1,060 51,940 53,000 Net loss for the period -- -- -- (1,576) (1,576) --------- ------- ------- -------- -------- Balance December 31, 2007 5,060,000 5,060 55,940 (1,576) 59,424 Net loss for the year -- -- -- (57,140) (57,140) --------- ------- ------- -------- -------- Balance December 31, 2008 5,060,000 5,060 55,940 (58,716) 2,284 Net loss for the period -- -- -- (9,957) (9,957) --------- ------- ------- -------- -------- Balance June 30, 2009 5,060,000 $ 5,060 $55,940 $(68,673) $ (7,673) ========= ======= ======= ======== ======== </TABLE> The accompanying notes are an integral part of these financial statements. 5
FREIGHT MANAGEMENT CORP. (A Development Stage Company) STATEMENTS OF CASH FLOWS (unaudited) <TABLE> <CAPTION> Date of Incorporation on 6 Months Ended 6 Months Ended September 17, 2007 to June 30, June 30, June 30, 2009 2008 2009 -------- -------- -------- <S> <C> <C> <C> OPERATING ACTIVITIES Net loss for the period $ (9,957) $(40,331) $(68,673) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities Amortization expense 666 666 2,109 Changes in operating assets and liabilities: Prepaid expense and deposit (152) -- (302) Accounts payable and accrued liabilities 3,792 (2,803) 3,800 Due to director 3,900 -- 7,220 -------- -------- -------- Net cash used in operating activities (1,751) (42,468) (55,846) -------- -------- -------- INVESTING ACTIVITIES Website -- -- (4,000) -------- -------- -------- Net cash used in investing activities -- -- (4,000) -------- -------- -------- FINANCING ACTIVITIES Proceeds from issuance of common stock -- -- 61,000 -------- -------- -------- Net cash provided by financing activities -- -- 61,000 -------- -------- -------- (Decrease) increase in cash during the period (1,751) (42,468) 1,154 Cash, beginning of the period 2,905 60,208 -- -------- -------- -------- Cash, end of the period $ 1,154 $ 17,740 $ 1,154 ======== ======== ======== Supplemental disclosure with respect to cash flows: Cash paid for income taxes $ -- $ -- $ -- Cash paid for interest $ -- $ -- $ -- </TABLE> The accompanying notes are an integral part of these financial statements. 6
FREIGHT MANAGEMENT CORP. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2009 (unaudited) NOTE 1. GENERAL ORGANIZATION AND BUSINESS The Company was originally incorporated under the laws of the state of Nevada on September 17, 2007. The Company has limited operations and in accordance with SFAS #7, is considered a development stage company, and has had no revenues from operations to date. Initial operations have included organization, capital formation, target market identification, new product development and marketing plans. Management is attempting to obtain additional financing to complete development and then market an integrated website for planning and analyzing shipping logistics to prospective clients. See Note 5. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES The relevant accounting policies and procedures are listed below. The company has adopted a December 31 year end. ACCOUNTING BASIS The basis is generally accepted accounting principles. EARNINGS PER SHARE In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of SFAS No. 128 effective its inception. The basic earnings (loss) per share is calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. The Company has not issued any options or warrants or similar securities since inception. 7
FREIGHT MANAGEMENT CORP. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2009 (unaudited) NOTE 2. (CONTINUED) DIVIDENDS The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid during the periods shown. CASH AND BANK ACCOUNTS The Company's bank account is not FDIC insured. FOREIGN CURRENCY TRANSLATION The Company has adopted the US dollar as its functional and reporting currency because all of its transactions are denominated in US currency CASH EQUIVALENTS The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. INCOME TAXES Income taxes are provided in accordance with Statement of Financial accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of 8
FREIGHT MANAGEMENT CORP. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2009 (unaudited) NOTE 2. (CONTINUED) the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. WEBSITE COSTS Website costs consist of software development costs, which represent capitalized costs of design, configuration, coding, installation and testing of the Company's website up to its initial implementation. Upon implementation in December 2007, the asset is being amortized to expense over its estimated useful life of three years using the straight-line method. Ongoing website post-implementation costs of operation, including training and application maintenance, will be charged to expense as incurred. See Note 7. NOTE 3. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has net losses for the period from inception to June 30, 2009 of $68,673. The Company intends to fund operations through sales and equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements through the next fiscal year ending December 31, 2009. The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and then attaining profitable operations. In response to these problems, management has planned the following actions: * The Company has cleared a Registration Statement with the SEC and obtained a trading symbol to trade its common shares on the OTCBB. * Management intends to raise additional funds through public or private placement offerings. * Management is currently completing development of its proposed internet/web based product to generate sales. There can be no assurances, however, that management's expectations of future sales will be realized. 9
FREIGHT MANAGEMENT CORP. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2009 (unaudited) NOTE 3. (CONTINUED) These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 4. STOCKHOLDERS' EQUITY AUTHORIZED The Company is authorized to issue 75,000,000 shares of $0.001 par value common stock. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. ISSUED AND OUTSTANDING On September 17, 2007 (inception), the Company issued 4,000,000 shares of its common stock to its Directors for cash of $8,000. See Note 5. On December 31, 2007, the Company closed a private placement for 1,060,000 common shares at a price of $0.05 per share, or an aggregate of $53,000. The Company accepted subscriptions from 39 offshore non-affiliated investors. NOTE 5. RELATED PARTY TRANSACTIONS The Company's neither owns nor leases any real or personal property. The Company's Directors provides office space free of charge. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. The amount due to a director of $7,220 has no repayment terms, is unsecured without interest and is for reimbursement of company incorporation and general operating expenses. The company plans to pay the amount within the next 12 months, if it has sufficient cash to do so. On September 17, 2007 (inception), the Company issued 4,000,000 shares of its common stock to its Directors for cash of $8,000. See Note 4. 10
FREIGHT MANAGEMENT CORP. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2009 (unaudited) NOTE 6. INCOME TAXES Net deferred tax assets are $nil. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a 100% valuation allowance. Management believes it is likely that any deferred tax assets will not be realized. As of December 31, 2008, the Company has a net operating loss carry forward of approximately $58,716, of which $1,576 will expire by December 31, 2027 and the balance of $57,140 by December 31, 2028. The Company has not filed its federal tax returns since inception. NOTE 7. WEBSITE Accumulated Cost amortization Net book value ---- ------------ -------------- Website costs $4,000 $2,109 $1,891 ====== ====== ====== Website costs are amortized on a straight line basis over 3 years, its estimated useful life. NOTE 8. OPERATING LEASES AND OTHER COMMITMENTS The Company currently has no operating lease commitments or any other commitments. 11
ITEM 2. MANAGEMENT'S PLAN OF OPERATION GENERAL OVERVIEW Freight Management Corp. was incorporated on September 17, 2007, in the State of Nevada. Our principal executive offices are located Suite 200, 8275 Eastern Avenue, Las Vegas, NV, 89123. Our telephone number is (702) 938-0496. We are a development stage company with no revenue and limited operations to date. Our common stock is quoted on the OTC Bulletin Board under the symbol "FGGT". Since incorporation, we have not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. Freight Management has never declared bankruptcy, has never been in receivership, and has never been involved in any legal action or proceedings. Subsequent to our incorporation, we have focused our operations on the development of an internet based, intelligent online system for business owners, freight forwarders, junior employees in the shipping/freight industry and business people in the export/import industry who require assistance with their freight and shipping related queries. We have named the system "FRINFO, or Freight Information". The system was planned to utilize a comprehensive database to provide prospective customers with customized, specific professional advice and solutions to their related shipping queries and issues. When completed and tested, FRINFO would successfully enable the generation of online real time solutions and advice to questions submitted by the customers, and guide them to the most optimum logistics solutions, which would potentially include lower freight rates, best trade routes and the most ideal transportation means/mode. When completed, it will also include tabular sections for frequently asked questions (FAQ's) and their related answers, as well as industry related terms, abbreviations, and widely used terminology. On completion, we are planning that the software will ultimately be made available online to potential customers on our website at: www.freightmanagementcorp.com We currently have no revenues or customers for our services. At this stage in our development, there can be no assurance that we will be successful in generating revenues from our subscription based online system or that prospective customers seeking shipping advise will be receptive to using our service. As of the date hereof, we have not been successful in raising the additional funding necessary to continue with our business plan. Historically, we have been able to raise a limited amount of capital through private placements of our common stock, but we are uncertain about our continued ability to raise funds privately. The recent credit crisis has only made our situation more difficult, because investors who were historically receptive to startup situations have become almost nonexistent in this current environment. Without further loans from our directors, we only have sufficient funds to continue with our business in a maintenance mode for the next 1-2 months. We believe that a commercial version of FRINFO requires an additional $30-35,000 in cash for additional development costs and at least 3-6 months to complete development. As of the date hereof, we still need to complete development of a second tier intelligence discipline for FRINFO to ensure that client driven queries are answered correctly. We also need to design and build database enhancement tools, and software for predictive modeling and statistical analysis of queries prior to actual release. As a result of this difficult environment and our lack of cash to continue with our business, our directors have been analyzing the various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions which would likely involve a change of business. Our preference is to raise additional, suitable financing to continue with business, but at this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further significant financing. 12
POTENTIAL MERGERS AND ACQUISITIONS Concurrent with efforts to find suitable financing for our business, we are also focusing on analyzing potential business opportunities with more established business entities for merger or acquisition with our company. In certain instances, a target business may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. We anticipate that any new acquisition or business opportunities by our company will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company requires additional financing and we are unable to acquire such funds, our business may fail. In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company and our existing business will close down. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors. We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Management believes that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. Mr. Abotaleb is undertaking the search for and analysis of new business opportunities. He is not a professional business analyst. In seeking or analyzing prospective business opportunities, Mr. Abotaleb may utilize the services of outside consultants or advisors. At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a combination or merger with another business opportunity, or whether the opportunity's operations will be profitable. Further, we believe that our company may have more difficulties raising capital for our existing business than for a new business opportunity. We have held preliminary negotiations with prospective business entities but have not entered into any formal written agreements for a business combination or opportunity. If any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission. If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail. PLAN OF OPERATION The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position of our Company should be read in conjunction with our most recent financial statements and notes appearing elsewhere in this Form 10-Q; and our 10K for December 31, 2008, filed on edgar on February 17, 2009. We are a development stage company with very limited operations to date, no revenue, very limited financial backing and few assets. Our immediate priority is to either secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect. This is critical to to ensure our survival and to preserve our shareholder's investment in our common shares. At this stage in our operations, we believe either course is acceptable, as our operations have not 13
been profitable and our company will fail without further significant financing. We currently have a small working capital deficiency including what we owe to our director. Our director has indicated that he is willing to lend our company minimum funds to enable us meet our statutory corporate and reporting obligations for the next 12 months through unsecured, no interest loans. We believe we require a minimum of $70,000 in additional financing to continue and commercially develop our existing business over the next 12 months, including $30-35,000 of development costs to complete our proposed product. Concurrent with our search for additional financing for our existing business, we are also actively seeking business opportunities with established business entities for the merger of a target business with our company. In certain instances, a target business may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. We anticipate that any new acquisition or business opportunities by our company will require additional financing and that we will close our existing business. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue this new plan. If our company requires additional financing and we are unable to acquire such funds, our business may fail. We may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. At this stage, we cannot quantify what additional financing we will require to complete a combination or merger with another business opportunity, or whether the opportunity's operations will be profitable. RESULTS OF OPERATIONS Our company posted losses of $9,957 for the 6 months ended June 30, 2009 compared to $40,331 for the comparable period. From inception to June 30, 2009 we have incurred losses of $68,673. The principal components of our losses for the 6 months ended June 30, 2009 included general and administrative costs of $9,291 and amortization of our website of $666. During the comparable period in 2008, we incurred $18,550 for FRINFO software development costs, $21,115 for general & administrative expense and $666 for website amortization. LIQUIDITY AND CASH RESOURCES At June 30, 2009 we had a working capital deficiency of $2,344. This does not include $7,220 owed to our director, who has indicated that the amount is repayable within the next 12 months only if there is sufficient cash to do so. On the same basis, this compares to working capital of $3,047 at December 31, 2008. At June 30, 2009 we had $1,154 in cash. Because we have little remaining cash and have not generated any revenue from our business, we need to raise additional funds for the future development of our business and to respond to unanticipated requirements or expenses, or to fund the identification, evaluation and combination or merger with a suitable business opportunity. Other than limited loans from our director to continue with our statutory requirements for the next 12 months, we do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing. There can be no assurance that additional financing will be available to us, or on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans and our business will then likely fail. 14
ITEM 4. CONTROLS AND PROCEDURES Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: * Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; * Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and * Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of June 30, 2009 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board was the lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. This material weakness was identified by our Chief Executive Officer in connection with the review of our financial statements as of June 30, 2009. Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. This annual report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the 15
Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this annual report. MANAGEMENT'S REMEDIATION INITIATIVES In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated a plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management. Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. While we are actively seeking outside members, including candidates with accounting experience, we cannot provide any assurance that we will be successful. Given the size of our company, lack of revenues and current lack of financing to continue with our business, it is unlikely that anyone will agree to join our Board until general economic conditions and our own business prospects improve significantly. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Pursuant to Rule 601 of Regulation SK, the following exhibits are included herein or incorporated by reference. Exhibit Number Description ------ ----------- 3.1 Articles of Incorporation* 3.2 By-laws* 31.1 Certification of CEO Pursuant to 18 U.S.C. ss. 1350, Section 302 31.2 Certification of CFO Pursuant to 18 U.S.C. ss. 1350, Section 302 32.1 Certification Pursuant to 18 U.S.C. ss.1350, Section 906 32.2 Certification Pursuant to 18 U.S.C. ss. 1350, Section 906 - ---------- * Incorporated by reference to our S-1 A/2 and SB-2 Registration Statement, File Number 333-148920 (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 23rd day of July, 2009. FREIGHT MANAGEMENT CORP. Date: July 23, 2009 By: /s/ Ibrahim Abotaleb ---------------------------------------------- Name: Ibrahim Abotaleb Title: President/CEO, Principal Executive Officer Date: July 23, 2009 By: /s/ Gerald Lewis ---------------------------------------------- Name: Gerald Lewis Title: Secretary Treasurer, Principal Financial and Accounting Officer 17