ITEM 1. BUSINESS
We were incorporated on July 28, 2008 under the laws of the State of Nevada. Our principal offices are loctaed at 6536 102nd Place NE, Kirland, WA 98033 USA. Our telephone number is 206-947-5639. Our fiscal year end is January 31.
During our first year of operations, we intended to commence operations in the entertainment and amusement industry. We purchased coin operated amusement machines for the purpose of placing and operating them in public venues with high traffic flow in Russia. We were initially focused on four amusement games, "Arm Wrestling Game”, "Hammer Game”, "Kicking Game” and “Punching Game” and place them in places such as nightclubs, bars, pubs, cinemas and amusement complexes. Strength testing amusement games have been around for many years, and prior management believed that if placed in high traffic location can be high revenue producers.
Since our inception, we have purchased three such machines from our supplier, “Punchline Europe”. Our business strategy was to continue acquiring and placing additional amusement machines in as many places in different cities of Russia as possible.
In 2010, we determined that we would not be able to generate significant revenues from sales in the area of coin operated amusement machines. During the period ended October 31, 2009, due to the high cost of maintaining the operations of the company in Russia, we took a loss for the historical value of our vending machines and wrote them off on our balance sheet. We have abandoned the machines and are looking for new business ventures to be engaged in. Currently, we do not have any operations or assets.
Employees
We have no employees at the present time. Our officers and directors are responsible for all planning, developing and operational duties, and will continue to do so throughout the early stages of our growth.
We have no intention of hiring employees until our business has been successfully launched and we have sufficient, reliable revenue flow from our operations. Our sole executive officer and director will undertake the work and tasks necessary to bring our business to the point of having positive cash flow by earning revenues. We do not expect to hire any employees within the next twelve (12) months.
ITEM 1A.
ITEM 1A. RISK FACTORS
Risk Related to our Business
You should carefully consider the following risk factors and all other information contained herein as well as the information included in this Annual Report in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional unknown risks and uncertainties, or that we currently believe are immaterial, may also impair our business operations. If any of the following risks occur, our business and financial results could be harmed. You should refer to the other information contained in this Annual Report, including our financial statements and the related notes.
We Have a Limited Operating History.
We have a limited operating history. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. No assurance can be given that we may be able to operate on a profitable basis.
We may Require Significant Additional Financing before we can Commence Operations and There is No Assurance that such Funds will be Available.
Our ability to enter into a new area of business operations is dependent upon our ability to raise significant additional financing. There can be no assurance that we will be able to obtain financing on acceptable terms in light of factors such as the market demand for our securities, the state of financial markets generally and other relevant factors.
Inability Of Our Sole Executive Officer And Director To Devote Sufficient Time To The Operation Of Our Business May Limit Our Success.
Presently, our sole executive officer and director allocates only a portion of his time to our business. Should our business develop faster than anticipated, our officer may not be able to devote sufficient time to the operation of our business to ensure that it continues as a going concern. Even if our management’s lack of sufficient time is not fatal to our existence, it may result in our limited growth and success.
Unproven Profitably Due to Lack of Operating History Makes an Investment in Us an Investment in an Unproven Venture.
We were formed on July 28, 2008. Since our date of inception, we have had no significant revenues or operations and we have few assets. If we cannot obtain new assets and a business objective and then successfully implement our business strategies, we may not be able to generate sufficient revenues to operate profitably. Insufficient revenues would result in termination of our operations, as we cannot fund unprofitable operations unless additional equity or debt financing is obtained.
Our Independent Auditors’ Report States that there is a Substantial Doubt that we will be able to Continue as a Going Concern.
Our independent auditors, Madsen & Associates, Certified Public Accountants, state in their audit report, that since we have minimal business operations to date and losses to date of $85,581, there is a substantial doubt that we will be able to continue as a going concern.
ITEM 2.
ITEM 2. PROPERTIES.
We do not own or rent facilities of any kind. At present we are operating from our principal office that is located within the offices of our President, who provides this space free of charge. We will continue to use this space for our executive offices for the foreseeable future.
We do not have any manufacturing plants and have minimal equipment for the operation of our business.
We do not have any investments or interests in any real estate.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
We are not currently party to any legal proceedings, nor are we aware of any contemplated or pending legal proceedings against us.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
PART II
ITEM 5.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market for Common Equity and Related Stockholder Matters
(a) Market Information
Our shares of common stock, par value $0.001 per share, were quoted on the OTC Bulletin Board under the symbol “AVLH” from May 22, 2009, through March 25, 2010. Since then, our stock has been quoted on the PinkSheets.com under the same ticker symbol.
Fiscal Year Ended January 31, 2012
Quarter Ended
April 30, 2011
July 31, 2011
October 31, 2011
January 31, 2012
High
$0.00
$0.00
$0.00
$0.00
Low
$0.00
$0.00
$0.00
$0.00
Fiscal year ended January 31, 2011
Quarter Ended
April 30, 2010
July 31, 2010
October 31, 2010
January 31, 2011
High
$0.00
$0.00
$0.00
$0.00
Low
$0.00
$0.00
$0.00
$0.00
(b) Holders
As of April 27, 2012, there were 33 holders of record of our common stock.
(c) Dividend Policy
We have never declared or paid dividends on our common stock. We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.
(d) Securities authorized for issuance under equity compensation plans
None.
RECENT SALES OF UNREGISTERED SECURITIES
We have not sold any unregistered securities during the period covered by this annual report.
USE OF PROCEEDS FROM SALE OF REGISTERED SECURITIES
Not applicable.
DESCRIPTION OF SECURITIES
Common Stock
Each record holder of common stock is entitled to one vote for each share held in all matters properly submitted to the stockholders for their vote. Cumulative voting for the election of directors is not permitted by the By-Laws of Avalon.
Holders of outstanding shares of common stock are entitled to such dividends as may be declared from time to time by the Board of Directors out of legally available funds; and, in the event of liquidation, dissolution or winding up of the affairs of Avalon, holders are entitled to receive, ratably, the net assets of Avalon available to stockholders. Holders of outstanding shares of common stock have no preemptive, conversion or redemptive rights. To the extent that additional shares of Avalon’s common stock are issued, the relative interest of the existing stockholders may be diluted.
Stock Purchase Warrants
None.
Stock Purchase Options
None.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
We were incorporated on July 28, 2008 under the laws of the state of Nevada. Our principal offices are located at 6536 102nd Place NE, Kirland, WA 98033 USA. Our telephone number is 206-947-5639. Our fiscal year end is January 31.
During our first year of operations, we intended to commence operations in the entertainment and amusement industry. We purchased coin operated amusement machines for the purpose of placing and operating them in public venues with high traffic flow in Russia. We were initially focused on four amusement games, "Arm Wrestling Game”, "Hammer Game”, "Kicking Game” and “Punching Game” and place them in places such as nightclubs, bars, pubs, cinemas and amusement complexes. Strength testing amusement games have been around for many years, and prior management believed that if placed in high traffic location can be high revenue producers.
Since our inception, we have purchased three such machines from our supplier, “Punchline Europe”. Our business strategy was to continue acquiring and placing additional amusement machines in as many places in different cities of Russia as possible.
In 2010, we determined that we are unable to generate significant revenues from sales during the period ended October 31, 2009, due to the high cost of maintaining the operations of the company in Russia, we took a loss for the historical value of our vending machines and wrote them off on our balance sheet. We have abandoned the machines and are looking for new business ventures to be engaged in. Currently, we do not have any operations or assets.
RESULTS OF OPERATION
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.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Year Ended January 31, 2012
Our net loss for the year ended January 31, 2012 was $17,143, compared to a loss of $29,097 during the same period from the prior fiscal year. During the year ended January 31, 2012, we did not generate any revenue and incurred general and administrative expenses of $17,143, compared to $29,097 in 2011. The decrease in our general and administrative expenses for the year ended January 31, 2012, compared to the same period from the prior fiscal year was due mainly to decreases in legal and audit fees.
The weighted average number of shares outstanding was 121,320,000 for the year ended January 31, 2012.
LIQUIDITY AND CAPITAL RESOURCES
As at January 31, 2012, and 2011, we had no assets. As at January 31, 2012, our total liabilities were $57,081, which resulted in a working capital deficit of $57,081, compared to total liabilities of $39,938 and a working capital deficit of $39,938 as of January 31, 2011. The increase in our working capital deficit was due to a decrease in accounts payable of $14,820 and an increase in advances from director of $31,963 incurred during the year ended January 31, 2012.
Stockholders deficit increased from $39,938 for the year ended January 31, 2011 to $57,081 for the year ended January 31, 2012.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the year ended January 31, 2012, net cash flows used in operating activities was $31,963 consisting of a net loss of $17,143 and changes in accounts payable of $14,820. Net cash flows used in operating activities was $72,498 for the period from inception July 28, 2008 to January 31, 2012.
Cash Flows from Investing Activities
For the year ended January 31, 2012, we did not generate net cash flows from investing activities. For the period from inception July 28, 2008 to January 31, 2012, net cash used in investing activities was $9,900 used to purchase vending equipment.
Cash Flows from Financing Activities
We have financed our operations primarily from either advances from director or the issuance of equity and debt instruments. For the year ended January 31, 2012, cash flows provided by financing activities was $31,963 which were advances from a director. For the period from inception July 28, 2008 to January 31, 2012, net cash provided by financing activities was $82,398.
.
PLAN OF OPERATION AND FUNDING
The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position should be read in conjunction with our most recent financial statements and notes appearing in our Form 10-K for the year ended January 31, 2012.
Our survival is dependent upon the identification and successful completion of additional long-term or permanent equity financing, the support of creditors and shareholders, and, ultimately, the acquisition and/or implementation of profitable operations. There can be no assurances that we will be successful, which would in turn significantly affect our ability to survive as a going concern. If not, we will be required to dissolve. We will continue to seek means of financing in order to acquire an ongoing business or assets or to implement a new business strategy.
We do not anticipate making any major purchases of capital assets, or conducting any research and development in the next twelve (12) months. Other than our current sole executive officer, we have no employees at the present time. We do not expect to hire any employees within the next twelve (12) months.
We currently do not any have cash. However, our sole officer and director has personally committed to provide up to an aggregate amount of $25,000 in funds to meet our operational needs. We believe that with this commitment we have sufficient cash resources to satisfy our needs through December 2012. Our ability to satisfy cash requirements thereafter and the need for additional funding is dependent on our ability to acquire new business and generate revenue from such new business in sufficient quantity and on a profitable basis. To the extent that we require additional funds, we may attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Should we require additional cash in the future, there can be no assurance that we will be successful in raising additional debt or equity financing on terms acceptable to us, if at all.
The recent and continuing downturn in the U.S. economy has had an effect on our ability to generate revenues and to attract long-term financing for our operations. The downturn in the U.S. economy has also made it more difficult to find investors that either have capital to invest or are willing to put capital at risk by investing in our company. We anticipate that both effects of the current economic rescission will continue to hinder our abilities to become a profitable company and to grow our operations.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, 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 are material to investors.
GOING CONCERN
The independent auditors' report accompanying our January 31, 2012 financial statements contained 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.
ITEM 7A.
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required by this Item begin on Page of this Form 10-K, and include (1) Report of Independent Registered Public Accounting Firm; (2) Balance Sheets; (3) Statements of Operations, Statements of Cash Flows, Statement of Stockholders’ Equity; and (4) Notes to Financial Statements.
AVALON HOLDING GROUP, INC
(A Development Stage Company)
FINANCIAL STATEMENTS
JANUARY 31, 2012
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Avalon Holding Group Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Avalon Holding Group, Inc. (A Development Stage Company) (The Company) as of January 31, 2012 and 2011, and the related statements of operations, stockholders' equity (deficiency), and cash flows for each of the years in the two-year period ended January 31, 2012, and the period from July 28, 2008 (date of inception) to January 31, 2012. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness for the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Avalon Holding Group, Inc. (A Development Stage Company) as of January 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two-year period ended January 31, 2012, and the period from July 28, 2008 (date of inception) to January 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company will need additional working capital for its planned activities and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Madsen & Associates CPA’s, Inc.
Murray, Utah
April 26, 2012
Avalon Holding Group, Inc
(A Development Stage Company)
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
Avalon Holding Group, Inc
(A Development Stage Company)
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements.
Avalon Holding Group, Inc
STATEMENT OF STOCKHOLDERS’ (DEFICIT)
From Inception on July 28, 2008 to January 31, 2012
The accompanying notes are an integral part of these statements.
Avalon Holding Group, Inc
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements.
AVALON HOLDING GROUP, INC
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2012
1. ORGANIZATION AND BUSINESS OPERATIONS
a)
Organization
AVALON HOLDING GROUP, INC (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on July 28, 2008.
b)
Development Stage Activities
The Company is in the development stage as defined under ASC 915 and commenced operations in the entertainment and amusement industry by placing and operating amusement gaming machines in public venues with high traffic flow in Russia. For the period from inception on July 28, 2008 through January 31, 2012, the Company has generated $446 in revenues and has accumulated losses of $85,581.
Based upon our business plan, we are a development stage enterprise, and we present our financial statements in conformity with the accounting principles generally accepted in the United States of America. As a development stage enterprise, we disclose the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from our inception to the current balance sheet date.
2. BASIS OF PRESENTATION - GOING CONCERN
Our accompanying financial statements have been prepared in conformity with GAAP, which contemplates our continuation as a going concern. However, we have minimal business operations to date. In addition, from the period from inception on July 28, 2008 through January 31, 2012, we have incurred losses of $85,581, and have a working capital deficit of $57,081. These matters raise substantial doubt about our ability to continue as going concern. The management of the Company has developed a strategy to acquire the necessary working capital to operate for the coming year, from director advances and additional equity investment. There is no assurance that future capital raising plans will be successful in obtaining sufficient funds to assure our eventual profitability. While management believes these plans will provide the opportunity for us to continue as a going concern, there is no assurance the actions will be successful.
Our financial statements do not include any adjustments that might result from these uncertainties.
AVALON HOLDING GROUP, INC
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2012
3. SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding our financial statements. These accounting policies conform to generally accepted accounting principles in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars.
a)
Income Taxes
We have adopted the ASC subtopic 740-10. ASC 740-10 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of ASC 740-10, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
We provide deferred taxes for the estimated future tax effects attributable to temporary differences and carry forwards when realization is more likely than not.
b)
Property and Equipment
Property and equipment is stated at cost, and is depreciated over estimated useful lives using primarily the straight line method for financial reporting purposes. Useful lives range from 3 to 5 years. We evaluate property and equipment at least annually for impairment. Since inception, all of the equipment has been sold for a net loss of $8,935. The Company has no property and equipment of value as of January 31, 2012.
c)
Basic and Diluted Loss Per Share
In accordance with ASC subtopic 260-10, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At January 31, 2012 and January 31, 2011, we had no stock equivalents that were dilutive.
d)
Fair Value of Financial Instruments
The carrying value of our financial instruments, consisting of accounts payable, approximates their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is management’s opinion that we are not exposed to significant interest, currency or credit risks arising from these financial statements.
AVALON HOLDING GROUP, INC
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2012
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
e)
Revenue Recognition
It is our policy that revenues will be recognized in accordance with ASC subtopic 605-10. Under ASC 605-10, product revenues (or service revenues) are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or service has been performed), the sales price is fixed and determinable and collectability is reasonably assured.
f)
Use of Estimates
The preparation of financial statements in conformity with GAAP 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
g)
Cash and Cash Equivalents
Cash is comprised of cash on hand and demand deposits. Cash equivalents include short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
4. RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.
5. COMMON STOCK
The authorized capital of the Company is 500,000,000 common shares with a par value of $ 0.001 per share.
On November 3, 2008, the Company issued 72,000,000 shares of common stock at a price of $0.00004 per share for total cash proceeds of $3,000.
In November 20, 2008, the Company issued 28,800,000 shares of common stock at a price of $0.0002 per share for total cash proceeds of $6,000.
In January 2009, the Company issued 18,600,000 shares of common stock at a price of $0.00083 per share for total cash proceeds of $15,500.
In January 2009, the Company also issued 1,920,000 shares of common stock at a price of $0.002 per share for total cash proceeds of $4,000.
On September 29, 2010, a forward split 24:1 was approved and enacted. All common share references in these financial statements have been retroactively adjusted for this forward split.
AVALON HOLDING GROUP, INC
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2012
6. INCOME TAXES
As of January 31, 2012, the Company had net operating loss carry forwards of approximately $85,581 that may be available to reduce future years’ taxable income through 2032. The approximate deferred tax asset of $29,000 has been fully offset by a valuation allowance, as its realization is determined not likely to occur. The net operating loss carryforwards will begin to expire in 2030.
7. ADVANCES
Advances from a non-related third party as of January 31, 2012 totaled of $9,000 (January 31, 2011 - $9,000). The advances are non-interest bearing, unsecured and are due upon demand.
8. RELATED PARTY TRANSACTIONS
The Company entered into the following transactions with related party:
Advances from a director as of January 31, 2011 totaled $44,898 (January 31, 2011 - $12,935). The advances are non-interest bearing, unsecured and are due upon demand. The amounts and dates of the advances are as follows:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management as appropriate, to allow timely decisions regarding required disclosure.
An evaluation was performed under the supervision and with the participation of our management, including the chief executive officer and the chief financial officer, of the effectiveness of the design and operation of our disclosure procedures. Based on management's evaluation as of the end of the period covered by this Annual Report, our principal executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) were sufficiently effective to ensure that the information required to be disclosed by us in the reports that we file under the Exchange Act is gathered, analyzed and disclosed with adequate timeliness, accuracy and completeness.
Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.
Our management, with the participation of the President, evaluated the effectiveness of the Company’s internal control over financial reporting as of January 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on that evaluation, our management concluded that, as of January 31, 2012, our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. Specifically, management identified the following control deficiency. The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.
Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.
This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
Changes in internal controls
There have been no changes in our internal control over financial reporting identified in connection with the evaluation described above that occurred during our last fiscal quarter that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth the names, ages and positions of our current directors and executive officers:
Name Age Offices Held
Phil Jennings Director, President, Secretary and Treasurer
Phillip Jennings - Director, President, Secretary and Treasurer
Based in Seattle, Mr. Jennings has thirty years of experience as an investment banker and entrepreneur. Among the companies Phil co-founded are Dow Jones Teleres, the first national online real estate company, and Soufun.com, the largest Internet real estate company in the world, based in Beijing. He specializes in deal structure and financing of mergers and acquisitions in the resource, technology and entertainment industries. A former United States Marine Corps Captain and Air America pilot, Phil is also an award-winning author and film producer.
Significant Employees
None.
Family Relationships
None.
Involvement in Certain Legal Proceedings
None.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires any person who is a director or executive officer or who beneficially holds more than ten percent (10%) of any class of our securities which have been registered with the Securities and Exchange Commission, to file reports of initial ownership and changes in ownership with the Securities and Exchange Commission. These persons are also required under the regulations of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on our review of the copies of the Section 16(a) reports furnished to us and a review of our shareholders of record for the fiscal year ended January 31, 2010, there were no filing delinquencies.
Code of Ethics
We have not yet prepared a written code of ethics and employment standards. We have only recently commenced operations. We expect to implement a Code of Ethics during the current fiscal year.
Corporate Governance; Audit Committee Financial Expert
We currently do not have an audit committee financial expert or an independent audit committee expert due to the fact that our Board of Directors currently does not have an independent audit committee. Our Board of Directors currently has only one (1) independent member, and thus, does not have the ability to create a proper independent audit committee.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Our executive officers have not received any compensation since the date of our incorporation, and we did not accrue any compensation. There are no securities authorized for issuance under any equity compensation plan, or any options, warrants, or rights to purchase our common stock.
Compensation of Directors
We do not compensate our directors for their time spent on our behalf, but they are entitled to receive reimbursement for all out of pocket expenses incurred for attendance at our Board of Directors meetings.
Pension and Retirement Plans
Currently, we do not offer any annuity, pension or retirement benefits to be paid to any of our officers, directors or employees, in the event of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or will result from the resignation, retirement or any other termination of employment with us, or from a change in our control.
Employment Agreements
We do not have written employment agreements.
Audit Committee
Presently, our Board of Directors is performing the duties that would normally be performed by an audit committee. We intend to form a separate audit committee, and plan to seek potential independent directors. In connection with our search, we plan to appoint an individual qualified as an audit committee financial expert.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock beneficially owned as of April 27, 2012, by: (a) each person (including any “group”, as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who is known us to be the beneficial owner of more than five percent (5%) of any class of our voting securities, (b) each of our directors, and (c) our executive officers and our directors as a group. Unless otherwise specified in the table below, such information, other than information with respect to our directors and officers, is based on a review of statements filed, with the Securities and Exchange commission (the “Commission”) pursuant to Sections 13 (d), 13 (f), and 13 (g) of the Exchange Act with respect to our Common Stock. As of April 27, 2012, there were 121,320,000 shares of Common Stock outstanding.
The number of shares of Common Stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within sixty (60) days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.
(1) Percent of Ownership is calculated in accordance with the Securities and Exchange Commission’s Rule 13(d) - 13(d)(1)
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Other than the stock transactions disclosed below, we have not entered into any transactions in which any of our directors, executive officers, or affiliates, including any member of an immediate family, had or are to have a direct or indirect material interest.
We have not sold any securities within the past three (3) years without registering the securities under the Securities Act of 1933.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees.
The aggregate fees billed by our auditor, Madsen & Associates CPA’s, Inc., during the fiscal years ended January 31, 2012 and 2011, for professional services rendered for the audit of our annual financial statements and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q was $7,055 and $5,115, respectively. A total of $6,000 was paid to Jewitt Schwartz Wolfe and Associates for audit and review services during the fiscal year ended January 31, 2011.
Audit Related Fees.
We incurred no Audit Related Fees during the years ended January 31, 2012, and 2011.
Tax Fees.
We incurred nil fees to auditors for tax compliance, tax advice or tax compliance services during the fiscal year ended January 31, 2012.
All Other Fees.
We did not incur any other fees billed by auditors for services rendered to us other than the services covered in "Audit Fees" for the fiscal year ended January 31, 2012.
The Board of Directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant's independence.
Since there is no audit committee, there are no audit committee pre-approval policies and procedures.
ITEM 15.
ITEM 15. EXHIBITS
Exhibit Index
3.1 Articles of Incorporation*
3.2 By-laws*
31.1 Section 302 Certification - Chief Executive Officer
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer.
*Incorporated by reference to our SB2 Registration Statement, file number 333-119566, filed on October 30, 2006.
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 7th day of May, 2011.
AVALON HOLDING GROUP INC.
Date: May 11, 2012
By:
/s/Phillip Jennings
Name: Phillip Jennings
Title: President, Principal Executive Officer, Secretary, Treasurer, Principal Financial Officer and Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: __/s/ Phillip Jennings___________
Name: Phillip Jennings
Title: President, principal executive officer, Secretary, Treasurer, principal financial officer, principal accounting officer and member of the Board of Directors
Date: May 11, 2012