f10q_alto.htm


UNITED STATES  
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 [X]        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2011

[   ]        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission File Number 000-53592

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

Nevada
 (State or other jurisdiction of incorporation or organization)
27-0686507
(I.R.S. Employer Identification No.)
 
245 Park Avenue, Suite 2431, New York, NY 10167
(Address of principal executive offices)  (Zip Code)
 
(801) 816-2520
(Registrant's telephone number, including area code)
 
 
(Former Address if Changed Since Last Report)
 
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [  ]    No [X]

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 [ ] (Do not check if a smaller reporting company)
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 [ ]    No [X]

As of April 8, 2011 there were 329,013,332 shares of our common stock issued and outstanding.

 
 
 





TABLE OF CONTENTS


   
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PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements.

The Financial Statements of the Company are prepared as of February 28, 2011.


CONTENTS
 
 
2
 
 
3
 
 
4
 
 
5
 
 
6
 


 
1
 

ALTO GROUP HOLDINGS INC.
  
(an exploration stage company)
  
 
             
             
ASSETS
  
   
February 28,
    
November 30,
  
   
2011
    
2010
  
   
(Unaudited)
        
             
CURRENT ASSETS
            
             
Cash and cash equivalents
   $ 28,423     $ 2,142  
Loans receivable
     7,500       -  
                 
Total Current Assets
     35,923       2,142  
                 
PROPERTY AND EQUIPMENT, net of accumulated
                
  depreciation of $2,796 and $-0-, respectively
     95,056       -  
                 
OTHER ASSETS
                
                 
Mining assets
     45,500       45,500  
Other assets
     12,000       -  
Mineral property acquistion costs, less reserve
                
  for impairment of $6,500
     -       -  
                 
Total Other Assets
     57,500       45,500  
                 
TOTAL ASSETS
   $ 188,479     $ 47,642  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
  
                 
CURRENT LIABILITIES
                
                 
Accounts payable and accrued liabilities
   $ 277,498     $ 87,265  
Due to related parties
     188,500       148,500  
Notes and loans payable
     1,149,746       267,500  
                 
Total Current Liabilities
     1,615,744       503,265  
                 
TOTAL LIABILITIES
     1,615,744       503,265  
                 
STOCKHOLDERS' DEFICIT
                
                 
Preferred stock, $0.00001 par value; 100,000,000 shares
                
  authorized:
                
  Series A Preferred Stock, 20,000,000 shares designated,
                
    14,000,000 and 14,000,000 shares issued and outstanding,
                
    respectively
     140       140  
  Series B Preferred Stock, 100,000 and 100,000 shares
                
    issued and outstanding, respectively
     1       1  
Common stock, $0.00001 par value; 350,000,000 shares
                
  authorized, 253,013,332 and 120,013,332 shares issued
                
  and outstanding and to be issued, respectively
     2,530       1,200  
Additional paid-in capital
     6,562,371       4,015,101  
Deficit accumulated during the exploration stage
     (7,992,307 )     (4,472,065 )
                 
Total Stockholders' Deficit
     (1,427,265 )     (455,623 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
   $ 188,479     $ 47,642  
                 
The accompanying notes are an integral part of these financial statements.
  
                 
 
 
 
2
 

 
ALTO GROUP HOLDINGS INC.
  
(an exploration stage company)
  
 
(Unaudited)
  
                   
               
From Inception
  
               
on September 21,
  
   
For the Three Months Ended
    
2007 Through
  
   
February 28,
          
February 28,
  
   
2011
    
2010
    
2011
  
                   
NET REVENUES
   $ -     $ -     $ -  
                         
OPERATING EXPENSES
                        
                         
Exploration and carrying costs
     211,480       -       238,455  
Officers' and directors' compensation (including
                        
  stock-based compensation of $-0-, $-0-,
                        
  and $860,000, respectively)
     48,000       -       1,060,000  
Consulting fees (including stock-based compensation
                        
  of $-0-, $2,200,000, and $2,300,000, respectively)
     159,650       2,212,000       2,513,950  
Professional fees (including stock-based compensation
                        
  of $2,372,017, $-0-, and $3,052,017, respectively)
     2,468,878       5,797       3,315,696  
General and administrative
     183,077       -       348,445  
Donated services
     -       -       18,400  
Impairment of mineral property
                        
  acquisition costs
     -       -       6,500  
                         
Total Operating Expenses
     3,071,085       2,217,797       7,501,446  
                         
LOSS FROM OPERATIONS
     (3,071,085 )     (2,217,797 )     (7,501,446 )
                         
OTHER INCOME (EXPENSES)
                        
                         
Gain from forgiveness of amounts due to
                        
  former related parties
     -       -       28,539  
Write off of Goodwill
     (431,713 )     -       (431,713 )
Interest expense
     (17,444 )     -       (87,687 )
                         
Total Other Income (Expenses)
     (449,157 )     -       (490,861 )
                         
LOSS BEFORE INCOME TAXES
     (3,520,242 )     (2,217,797 )     (7,992,307 )
                         
INCOME TAX EXPENSE
     -       -       -  
                         
NET LOSS
   $ (3,520,242 )   $ (2,217,797 )   $ (7,992,307 )
                         
BASIC AND FULLY DILUTED:
                        
Net loss per common share
   $ (0.03 )   $ (0.03 )   $ (0.10 )
                         
Weighted average shares outstanding
     136,372,236       81,013,333       77,694,746  
                         
The accompanying notes are an integral part of these financial statements.
  
 
 
 
 
3
 

ALTO GROUP HOLDINGS INC.
  
(an exploration stage company)
  
 
For the period from Inception (September 21, 2007) to February 28, 2011
                                                             
                                                   
Deficit
        
                                                   
Accumulated
        
   
Series A
    
Series B
                
Additional
          
During the
        
   
Preferred Stock
    
Preferred Stock
    
Common Stock
    
Paid-in
    
Subscriptions
    
Exploration
        
   
Shares
    
Par
    
Shares
    
Par
    
Shares
    
Par
    
Capital
    
Receivable
    
Stage
    
Total
  
                                                             
Balance at Inception on
                                                            
  September 21, 2007
     -     $ -       -     $ -       -     $ -     $ -     $ -     $ -     $ -  
                                                                                 
Common shares sold for cash
                                                                                
  at $0.000125 per share
     -       -       -       -       48,000,000       480       5,520       -       -       6,000  
                                                                                 
Common shares sold for cash
                                                                                
  at $0.00125 per share
     -       -       -       -       31,680,000       317       39,283       (4,500 )     -       35,100  
                                                                                 
Donated services and expenses
     -       -       -       -       -       -       2,400       -       -       2,400  
                                                                                 
Net loss for the year ended
                                                                                
  November 30, 2007
     -       -       -       -       -       -       -       -       (5,772 )     (5,772 )
                                                                                 
Balance, November 30, 2007
     -       -       -       -       79,680,000       797       47,203       (4,500 )     (5,772 )     37,728  
                                                                                 
Common stock subscriptions collected
     -       -       -       -       -       -       -       4,500       -       4,500  
                                                                                 
Donated services and expenses
     -       -       -       -       -       -       9,600       -       -       9,600  
                                                                                 
Net loss for the year ended
                                                                                
  November 30, 2008
     -       -       -       -       -       -       -       -       (64,689 )     (64,689 )
                                                                                 
Balance, November 30, 2008
     -       -       -       -       79,680,000       797       56,803       -       (70,461 )     (12,861 )
                                                                                 
Donated services and expenses
     -       -       -       -       -       -       6,400       -       -       6,400  
                                                                                 
Forgiveness of due to related party by
                                                                                
  then majority stockholder on
                                                                                
  September 15, 2009
     -       -       -       -       -       -       28,006       -       -       28,006  
                                                                                 
Net loss for the year ended
                                                                                
  November 30, 2009
     -       -       -       -       -       -       -       -       (58,395 )     (58,395 )
                                                                                 
Balance, November 30, 2009
     -       -       -       -       79,680,000       797       91,209       -       (128,856 )     (36,850 )
                                                                                 
Conversion of common stock
                                                                                
  to Series A preferred stock
                                                                                
  on March 3, 2010
     14,000,000       140       -       -       (48,000,000 )     (480 )     360,340       -       -       360,000  
                                                                                 
Common stock issued for
                                                                                
  acquistion of mining assets
                                                                                
  on March 12, 2010
     -       -       -       -       10,000,000       100       45,400       -       -       45,500  
                                                                                 
Common stock issued for
                                                                                
  services
     -       -       -       -       33,333,332       333       2,599,667       -       -       2,600,000  
                                                                                 
Intrinsic value of beneficial conversion
                                                                                
  feature relating to issuance of $50,000
                                                                                
  prommissory note on July 14, 2010
     -       -       -       -       -       -       38,936       -       -       38,936  
                                                                                 
Series B preferred stock issued to
                                                                                
  chief executive officer for services
                                                                                
  on October 15, 2010
     -       -       100,000       1       -       -       199,999       -       -       200,000  
                                                                                 
Conversion of notes payable and
                                                                                
  accrued interest into common stock,
                                                                                
  including $664,155 excess of fair value
                                                                                
  of common stock issued over amount
                                                                                
  of debt and accrued interest settled
                                                                                
  (charged to professional fees in the
                                                                                
  statement of operations)
     -       -       -       -       45,000,000       450       679,550       -       -       680,000  
                                                                                 
Net loss for the year ended
                                                                                
  November 30, 2010
     -       -       -       -       -       -       -       -       (4,343,209 )     (4,343,209 )
                                                                                 
Balance, November 30, 2010
     14,000,000       140       100,000       1       120,013,332       1,200       4,015,101       -       (4,472,065 )     (455,623 )
                                                                                 
Unaudited:
                                                                                
Common stock issued for
                                                                                
  acquistion of Liberty American, LLC
                                                                                
  on Janury 24, 2011
     -       -       -       -       10,000,000       100       144,900       -       -       145,000  
                                                                                 
Conversion of notes payable and
                                                                                
  accrued interest into common stock,
                                                                                
  including $2,372,017 excess of fair
                                                                                
  value of common stock issued over
                                                                                
  amount of debt and accrued interest
                                                                                
  settled (charged to professional fees
                                                                                
  in the statement of operations)
     -       -       -       -       123,000,000       1,230       2,402,370       -       -       2,403,600  
                                                                                 
Net loss for the three months ended
                                                                                
  February 28, 2011
     -       -       -       -       -       -       -       -       (3,520,242 )     (3,520,242 )
                                                                                 
Balance, February 28, 2011
     14,000,000     $ 140       100,000     $ 1       253,013,332     $ 2,530     $ 6,562,371     $ -     $ (7,992,307 )   $ (1,427,265 )
                                                                                 
The accompanying notes are an integral part of these finanical statements.
  
 
 
 
4
 

 
ALTO GROUP HOLDINGS INC.
  
(an exploration stage company)
  
 
(Unaudited)
  
               
From Inception
  
               
on September 21,
  
   
For the Three Months Ended
    
2007 Through
  
   
February 28,
    
February 28,
  
   
2011
    
2010
    
2011
  
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
                   
Net loss
   $ (3,520,242 )   $ (2,217,797 )   $ (7,992,307 )
Adjustments to reconcile net loss to net
                        
 cash used by operating activities:
                        
Depreciation
     2,796       -       2,796  
Write off of goodwill
     431,713       -       431,713  
Stock issued for services, including $2,372,017, $-0-, and
                        
  $3,036,172, respectively, of excess of fair value of common stock
                        
  issued over amount of debt and accrued interest settled (charged
                        
  to professional fees in the statement of operations)
     2,372,017       2,200,000       6,196,172  
Amortization of debt discount
     -       -       38,936  
Gain from forgiveness of amounts due to related parties
     -       -       (28,539 )
Donated services and expenses
     -       -       18,400  
Impairment of mineral property acquisition costs
     -       -       6,500  
Changes in operating assets and liabilities:
                        
Other assets
     (12,000 )             (12,000 )
Accounts payable and accrued liabilities
     124,203       5,797       307,314  
Accrued consulting fees and expenses due to  related parties
     40,000       12,000       217,038  
                         
Net Cash Used by Operating Activities
     (561,513 )     -       (813,977 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
                         
Cash received in connection with acquisition of  Liberty American, LLC
     65       -       65  
Purchases of property and equipment
     (97,852 )     -       (97,852 )
Mineral property acquisition costs
     -       -       (6,500 )
                         
Net Cash Used by Investing Activities
     (97,787 )     -       (104,287 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
                         
Increase in due to related party
     -       -       28,006  
Proceeds from notes payable
     747,000       -       984,500  
Repayment of note payable
     -       -       (50,000 )
Repayment of loan payable of Liberty American, LLC to the
                        
  Company's corporate counsel
     (61,419 )     -       (61,419 )
Proceeds from sale of common stock
     -       -       45,600  
                         
Net Cash Provided by Financing Activities
     685,581       -       946,687  
                         
NET INCREASE IN CASH AND CASH EQUIVALENTS
     26,281       -       28,423  
                         
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     2,142       575       -  
                         
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 28,423     $ 575     $ 28,423  
                         
SUPPLEMENTAL CASH FLOW INFORMATION:
                        
                         
Cash Payments For:
                        
Interest
   $ -     $ -     $ -  
Income taxes
   $ -     $ -     $ -  
Non-cash investing and financing activities:
                        
Forgiveness of due to related party by then majority
                        
  stockholder on September 15, 2009
   $ -     $ -     $ 28,006  
                         
Stock issued for services
   $ -     $ 2,200,000     $ 2,200,000  
                         
Conversion of notes payable and accrued interest
                        
  into common stock:
                        
    Notes payable ($30,000) and accrued interest
                        
      ($1,356) settled
   $ 31,356     $ -     $ 47,201  
    Excess of fair value of common stock issued
                        
      over amount of debt and accrued interest settled
                        
      (charged to professional fees in the statement
                        
      of operations)
     2,372,017       -       3,036,172  
    Fair value of 123,000,000 shares of common
                        
      stock issued
   $ 2,403,373     $ -     $ 3,083,373  
                         
  Conversion of common stock to Series A
                        
    preferred stock on March 3, 2010
   $ -     $ -     $ 360,000  
                         
Common stock issued for acquistion of mining
                        
  assets on March 12, 2010
   $ -     $ -     $ 45,500  
                         
The accompanying notes are an integral part of these financial statements.
  
 
 
 
5
 
ALTO GROUP HOLDINGS, INC.
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)

 
 
        NOTE 1 -  ORGANIZATION AND DESCRIPTION OF BUSINESS

Alto Group Holdings Inc. (the “Company”) was incorporated in the State of Nevada on September 21, 2007. The Company is an Exploration Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.
 
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at February 28, 2011, the Company has a total stockholders’ deficit of $1,427,265 and has accumulated losses of $7,992,307 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
NOTE 2 -  BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company’s audited financial statements and notes thereto included in its Form 10-K/A filed on April 7, 2011.  Operating results for the three months ended February 28, 2011 are not necessarily indicative of the results to be expected for the year ending November 30, 2011.

NOTE 3 -  ACQUISITION OF LIBERTY AMERICAN, LLC

On January 24, 2011, the Company acquired from the wife of the Company’s corporate counsel all of the membership units of Liberty American, LLC (“Liberty”), a Utah limited liability company that holds certain development rights with respect to the La Cienega gold mining concession in Northern Sonora, Mexico, in exchange for 10,000,000 restricted shares of the Company common stock to be issued within 30 days (issued March 5, 2011).  The agreement embodying the Acquisition contains standard warranties and representations by the Company and the previous owner of Liberty.

 
6
 
ALTO GROUP HOLDINGS, INC.
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)


NOTE 3 -  ACQUISITION OF LIBERTY AMERICAN, LLC (continued)

The estimated fair values of the identifiable net assets of Liberty at January 24, 2011 (date of acquisition) consisted of:

Cash and cash equivalents
   $ 65  
Loan receivable
     7,500  
Total assets
     7,565  
         
Account payable
     61,951  
Accrued interest payable
     35,662  
Notes payable
     196,665  
Total liabilities
     294,278  
         
Identifiable net assets
   $ (286,713 )
 
Goodwill of $431,713 (excess of the $145,000 fair value of the 10,000,000 common shares over the $286,713 negative identifiable net assets of Liberty) was recorded at the January 24, 2011 acquisition date.  As the Company believed that the fair value of the goodwill recorded by the Company was $-0-, the entire $431,713 goodwill was written off on the January 24, 2011 acquisition date.

The following pro forma information summarized the results of operations for the periods indicated as if the acquisition occurred at November 30, 2009.  The pro forma information is not necessarily indicative of the results that would have been reported had the transaction actually occurred on November 30, 2009.

   
Three Months Ended February 28,
  
   
2011
    
2010
  
             
Net revenues
   $ -0-     $ 2,598  
                 
Exploration and carrying costs
     211,480       -  
Officers and directors’ compensation
     48,000       -  
Consulting fees
     159,650       2,218,000  
Professional fees
     2,468,878       5,797  
General and administrative
     183,085       31,043  
                 
Total operating expenses
     3,071,093       2,254,840  
                 
Loss from operations
     (3,071,093 )     (2,252,242 )
                 
Interest expense
     (40,426 )     (12,127 )
                 
Net loss
   $ (3,111,519 )   $ (2,264,369 )
                 
Diluted loss per common share
   $ (0.02 )   $ (0.03 )


 
7
 
ALTO GROUP HOLDINGS, INC.
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)

 
 
        NOTE 4-  RELATED PARTY BALANCES / TRANSACTIONS

Due to related parties consist of:
            
   
February 28,
2011
    
November 30,
2010
  
             
Accrued consulting fees and expenses due to current officers and directors
     188,500       148,500  
Total
   $ 188,500     $ 148,500  

The above debt is unsecured, non-interest bearing, and has no specific terms of repayment.

On September 15, 2009, the former (from inception to February 10, 2010) majority stockholder forgave the then $28,006 balance due him. This forgiveness has been recorded as a capital contribution in the accompanying statements of stockholders’ equity (deficit).

During the three months ended February 28, 2010, the Company recognized a total of $2,400 for donated management services at $800 per month provided by the former (from inception to February 10, 2010) majority stockholder and former (from inception to July 31, 2009) sole director of the Company.

During the three months ended February 28, 2011, the Company accrued $48,000 in consulting fees due to three directors of the Company to consulting agreements (Note 6).


 
8
 
ALTO GROUP HOLDINGS, INC.
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)


NOTE 5 -  NOTES AND LOANS PAYABLE

Notes and loans payable consisted of the following:
  
February 28,
 2011
    
November 30,
2010
  
 
Note payable dated June 7, 2010 to an unsolicited accredited investor, interest at 12% per annum, due on December 7, 2010, unsecured, now past due and in default
   $ 22,000     $ 22,000  
 
Notes payable to an unsolicited accredited investor, interest at 9% per annum, due in varying amounts from October 27, 2011 to February 28, 2012, unsecured
     852,000       140,000  
 
Notes payable dated December 1, 2010 to an unsolicited accredited investor, interest at 12% per annum, due May 31, 2011, convertible into common stock at a conversion price equal to 60% of the then current market price
     35,000       -  
 
Notes payable to the Company’s corporate counsel dated from July 31, 2010 to February 28, 2011 (arising from services rendered), interest at 9% per annum, due monthly from July 31, 2011 to February 28, 2012 in eight $10,000 amounts, unsecured
     80,000       80,000  
 
Note payable to the Company’s corporate counsel dated November 1, 2010, interest at 9% per annum, due November 1, 2011, unsecured
     20,000       20,000  
 
Note payable to the Company’s corporate counsel dated July 14, 2010, interest at 8% per annum, due April 16, 2011, unsecured
     5,500       5,500  
 
Note payable of Liberty American, LLC to the Company’s corporate counsel, interest at 12% per annum, due on demand, unsecured
     135,246       -  
 
Total Notes and Loans Payable