Urban Barns Foods Inc. - FORM 10-K

Urban Barns Foods Inc. - FORM 10-K - November 13, 2009

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EX-31.2 - CFO SECTION 302 CERTIFICATION - Urban Barns Foods Inc.

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EX-31.1 - CEO SECTION 302 CERTIFICATION - Urban Barns Foods Inc.

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EX-32.2 - CFO SECTION 906 CERTIFICATION - Urban Barns Foods Inc.

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EX-32.1 - CEO SECTION 906 CERTIFICATION - Urban Barns Foods Inc.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2009 Commission file number 333-145897 URBAN BARNS FOODS INC. (Exact Name of Registrant as Specified in Its Charter) Nevada 20-0215404 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) Office 404 - 4th Floor, Albany House 324-326 Regent Street London, United Kingdom W1B 3HH (Address of Principal Executive Offices & Zip Code) 702-993-6122 (Telephone Number) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X] 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 [ ] No [X] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] 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. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] As of November 13, 2009, the registrant had 43,400,000 shares of common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market had been established.

URBAN BARNS FOODS INC. TABLE OF CONTENTS Page No. -------- Part I Item 1. Business 3 Item 2. Properties 9 Item 3. Legal Proceedings 9 Item 4. Submission of Matters to a Vote of Securities Holders 9 Part II Item 5. Market for Common Equity and Related Stockholder Matters 10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 8. Financial Statements 13 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 25 Item 9A. Controls and Procedures 25 Part III Item 10. Directors and Executive Officers 25 Item 11. Executive Compensation 30 Item 12. Security Ownership of Certain Beneficial Owners and Management 32 Item 13. Certain Relationships and Related Transactions 32 Item 14. Principal Accounting Fees and Services 32 Part IV Item 15. Exhibits 33 Signatures 33 2

PART I ITEM 1. BUSINESS FORWARD-LOOKING STATEMENTS This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results. As used in this annual report, the terms "we", "us", "our" mean Urban Barns Foods Inc., unless otherwise indicated. All dollar amounts refer to US dollars unless otherwise indicated. SUMMARY Urban Barns Foods Inc. was incorporated in the State of Nevada on May 21, 2007 as HL Ventures Inc. to engage in the acquisition, exploration and development of natural resource properties. We carried out exploration on one property during 2008 however the results were not promising and management determined it was in the best interests of the shareholders to abandon the property and actively pursue an appropriate plan of action to provide the best return on investment to the shareholders. We are a development stage company with no revenues and a limited operating history. The principal executive offices are located at Office 404 - 4th Floor, Albany House, 324-326 Regent Street, London W1B 3HH, United Kingdom. The U.S. telephone and fax number is (702)993-6122. We have sold $72,000 in equity securities and issued $7,000 in common stock in exchange for mineral property expenses paid by our officer on our behalf. From inception until the date of this filing we have had limited operating activities. Our financial statements from inception (May 21, 2007) through the year ended July 31, 2009 report no revenues and a net loss of $77,150. Our independent auditor has issued an audit opinion for Urban Barns Foods Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. 3

Our stock is listed on the OTC Bulletin Board under the symbol URBF, but there has been no active trading market to date. We have a total of 100,000,000 authorized common shares with a par value of $0.001 per share with 43,400,000 common shares issued and outstanding on July 31, 2009. Subsequent to July 31, 2009, on August 19, 2009, our 7 for 1 forward stock split, approved by the Board of Directors on July 22, 2009, became effective resulting in there being 43,400,000 shares of common stock issued and outstanding. Cash provided by financing activities for the period from inception (May 21, 2007) through July 31, 2009 was $72,000 consisting of 1,600,000 shares of common stock that were issued to our director, Mr. Hassan, in exchange for $8,000 US, or $.005 per share and 3,200,000 shares of common stock that were issued to twenty six investors for $64,000 or $0.02 per share pursuant to our Registration Statement on Form SB-2. An additional 1,400,000 shares were issued to Mr. Hassan in exchange for $7,000 in mineral property costs that he paid on behalf of the company. We have since abandoned our mineral property and entered into a share exchange agreement with Urban Barns Foods Inc., a private company for the acquisition of this company through the issuance of our securities. If this share exchange transaction closes, we will file all required disclosure in a timely manner. Until the transactions closes, our management will continue reviewing other business combination opportunities. BUSINESS STRATEGY We have identified the following guidelines that we believe are important in evaluating a prospective target business. We will use these guidelines in evaluating business combination opportunities; however, we may decide to enter into a business combination with a target business that does not meet all of these guidelines. We may not be able to complete a business combination with any target business that meets all or part of these guidelines due to our limited human, capital and other resources. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. ESTABLISHED COMPANY WITH POSITIVE CASH FLOW. We intend to acquire an established company with a history of positive cash earnings before interest, taxes, depreciation and amortization. We do not intend to acquire a start-up company, a company with speculative business plans or a company that we believe has significant risk attached to it. STRONG COMPETITIVE POSITION IN INDUSTRY. We intend to analyze the strengths and weaknesses of a target business relative to its competitors. The factors we will consider include product quality, customer loyalty, cost impediments associated with customers switching to competitors, patent protection, brand positioning and capitalization. We will seek to acquire a business that has developed a strong position within its market, is well positioned to capitalize on growth opportunities and operates in an industry with significant barriers to entry. We will seek to acquire a business that demonstrates advantages when compared to its competitors, which may help to protect its market position and profitability. 4

EXPERIENCED MANAGEMENT TEAM. We will seek to acquire a business that has an experienced management team with a proven track record for delivering growth and profits. We believe that the operating expertise of our management team will complement, not replace, the target business' management team. DIVERSIFIED CUSTOMER AND SUPPLIER BASE. We will seek to acquire a business that has a diversified customer and supplier base. We believe that a company with a diversified customer and supplier base is generally better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact its customers, suppliers and competitors. COMPETITION In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities with business objectives similar to ours. There are many blank check companies seeking to carry out a business plan similar to ours that have completed initial public offerings in the United States. Furthermore, there are a number of additional blank check companies in the registration process that have not yet completed initial public offerings, and there are likely to be more blank check companies that have completed initial public offerings before we are able to successfully consummate a business combination. We may also be subject to competition from entities other than blank check companies, which may be special acquisition companies or capital pool companies, that have a business objective similar to ours, including venture capital firms, leverage buyout firms and operating businesses looking to expand their operations through the acquisition of a target business. Many of these entities are well-established and have extensive experience identifying and effecting business combinations either directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources may be relatively limited in comparison to many of these competitors. While we believe that numerous potential target businesses may be available for acquisition, our ability to acquire a certain attractive target business will be limited by our available financial resources. This inherent competitive limitation may give others an advantage in pursuing the acquisition of a target business. The fact that stockholder approval may delay the completion of a business combination is an additional limitation that may be viewed unfavorably by certain target businesses. Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and our access to the United States public equity markets may give us a competitive advantage in acquiring a target business with significant growth potential on favorable terms over privately-held entities with business objectives similar to ours. If we succeed in effecting a business combination, there will likely be further intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively. 5

We believe that we will succeed in consummating a business combination with a target business or businesses as a result of our collective strengths: SUCCESSFUL OPERATING EXPERIENCE. Our officer and sole director has experience in business development, capital raising and the marketing and management of various companies. We believe that his experience will provide us with a competitive advantage in assessing whether a target business has the necessary resources to compete successfully as a publicly-traded company. EXPERIENCE IN IDENTIFYING AND EXECUTING ACQUISITIONS. Our management has extensive experience in identifying and evaluating successful business acquisition opportunities, performing in-depth due diligence, negotiating with owners and management, structuring, financing and closing transactions in both the public and private markets. EXTENSIVE DEAL-SOURCING NETWORK. Our management has an extensive network of business relationships with executives and board members of privately- and publicly-held companies, as well as with private equity funds, venture capital funds and hedge funds. We believe that these contacts will provide us with significant business acquisition opportunities. SOURCES OF TARGET BUSINESSES We anticipate candidates for a business combination will be brought to our attention by various unaffiliated sources, including executives, private equity funds, venture capital funds, investment bankers, attorneys, accountants and other members of the financial community, who may present solicited or unsolicited proposals. We expect such sources to become aware that we are seeking a business combination candidate by a variety of means, such as publicly available information relating to this offering, public relations and marketing efforts, articles that may be published in industry trade papers discussing our intention to effect a business combination, or direct contact by management of potential target businesses. Our management, as well as our existing stockholders and their affiliates, may also bring to our attention target business candidates. We do not anticipate engaging the services of professional firms that specialize in business combinations on any formal basis. In no event will we pay our existing management, our existing stockholders, or any entity with which they are affiliated any finder's fee or other compensation for services rendered to us prior to or in connection with the consummation of a business combination. In addition, neither our existing management nor our existing stockholders will receive any finder's fee, consulting fees or any similar fees or other compensation from any other person or entity, including any target company, in connection with any business combination other than any compensation or fees to be received for any services provided following such a business combination. The time and costs required to select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination. 6

FAIR MARKET VALUE OF TARGET BUSINESS The fair market value of a target business will be determined by our Board of Directors based upon standards generally accepted by the financial community, such as actual and potential sales, earnings, cash flow, book value, and the price for which comparable businesses have recently been sold. Other factors contributing to a determination of the fair market value may include timing, the reputation of the target business and the anticipated costs of completing the transaction. We are not required to obtain an opinion from an unaffiliated third party regarding the fair market value of a target business we select at the time of any transaction. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we plan to pay is fair to our stockholders from a financial perspective unless the target is affiliated with our officers, directors, special advisors, existing stockholders or their affiliates. We only recently became a blank cheque company, and because our sole officer and director has no experience in evaluating business combinations for blank check companies, his judgment may not meet the criteria that independent investment banking firms or other similar blank check companies usually use. PROBABLE LACK OF BUSINESS DIVERSIFICATION It is probable that we will have the ability to effect only a single business combination. Unlike other entities which may have the resources to complete several business combinations with entities operating in multiple industries or multiple areas of a single industry, we will likely not have sufficient resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with a single entity or a limited number of entities, our lack of diversification may leave us dependent upon the performance of a single business or a limited number of businesses, and result in us being dependent upon the development or market acceptance of a single or limited number of products or services. LIMITED ABILITY TO EVALUATE THE MANAGEMENT OF A TARGET BUSINESS Although we intend to closely scrutinize the management of prospective target businesses when evaluating the potential to effect a business combination, we cannot assure you that our assessment will prove to be correct. In addition, we cannot assure you that new members who join our management team following a business combination will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our sole officer and director, if any, in a target business cannot presently be stated with any certainty. While it is possible that our current officer and director will remain associated with us in some capacity following a business combination, it is unlikely that he will devote his full efforts to our affairs after the consummation of a business combination. Moreover, we cannot assure you that our officers and directors will have substantial experience or knowledge concerning the operations of any particular target business. OPPORTUNITY FOR STOCKHOLDER APPROVAL OF BUSINESS COMBINATION We may not submit a business combination to our stockholders for approval if the nature of the transaction would not ordinarily require stockholder approval under applicable governing laws. If we are required to submit the transaction to our stockholders for approval, we will furnish our stockholders with proxy 7

solicitation materials, which will include a description of the operations of the target business and certain required financial information regarding the business. Also, we will proceed with the business combination only if a majority of the votes cast by the holders of our common stock at the meeting are in favor of the business combination. To compensate for a potential shortfall in cash, we may be required to structure the business combination, in whole or in part, using the issuance of our common stock as consideration. Accordingly, any increase in the number of shares of our issued and outstanding common stock could hinder our ability to consummate a business combination in an efficient manner or to optimize our capital structure. When we seek stockholder approval for a business combination, we will not offer each stockholder a right to have their shares of common stock redeemed for cash if the stockholder votes against the business combination and the business combination is approved and completed. BANKRUPTCY OR SIMILAR PROCEEDINGS There has been no bankruptcy, receivership or similar proceeding. REORGANIZATIONS, PURCHASE OR SALE OF ASSETS There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business. COMPLIANCE WITH GOVERNMENT REGULATION Other than general business and tax laws we are not subject to any other government regulations. PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, OR LABOR CONTRACTS We have no current plans for any registrations such as patents, trademarks, copyrights, franchises, concessions, royalty agreements or labor contracts. We will assess the need for any copyright, trademark or patent applications on an ongoing basis. NEED FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES We are not required to apply for or have any government approval for our products or services. RESEARCH AND DEVELOPMENT COSTS DURING THE LAST TWO YEARS We have not expended funds for research and development costs since inception. EMPLOYEES AND EMPLOYMENT AGREEMENTS Our only employee is our officer, Deniz Hassan who currently devotes 4-5 hours per week to company matters, he will devote as much time as the board of directors determines is necessary to manage the affairs of the company. There are no formal employment agreements between the company and our current employee. 8

REPORTS TO SECURITIES HOLDERS We provide an annual report that includes audited financial information to our shareholders. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules of Regulation S-K for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements, including filing Form 10K annually and Form 10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. ITEM 2. PROPERTIES We do not currently own any property. The office facilities at Office 404 - 4th Floor, Albany House, 324-326 Regent Street, London W1B 3HH, United Kingdom are provided to us on a rent free basis by the directors of the company. The facilities include telephone, fax, a reception area and office and meeting facilities. Management believes the current premises are sufficient for its needs at this time. We currently have no investment policies as they pertain to real estate, real estate interests or real estate mortgages. ITEM 3. LEGAL PROCEEDINGS We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On July 22, 2009 and immediately effective, the Company filed an Amendment to its Articles of Incorporation with the Secretary of State of Nevada to change its name from HL Ventures Inc. to Urban Barns Foods Inc. and to increase the Company's authorized capital from 75,000,000 common shares with $0.001 par value to 100,000,000 common shares with $0.001 par value. The Company received written consent from holders of 51.6% of the Company's common stock for the increase in authorized capital and the name change. 9

PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is listing for trading on the Over the Counter Bulletin Board under the symbol URBF. There has been no trading of our securities, and, therefore, no high and low bid pricing. As of the date of this report we have 27 shareholders of record. We have paid no cash dividends and have no outstanding options. We have no securities authorized for issuance under equity compensation plans. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS This report contains forward-looking statements that involve risk and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend", and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us as described in the "Risk Factors" section and elsewhere in this report. RESULTS OF OPERATIONS We are still in our development stage and have generated no revenues to date. We incurred operating expenses of $55,715 and $13,845 for the years ended July 31, 2009 and 2008, respectively. These expenses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business and the preparation and filing of our required reports with the U.S. Securities and Exchange Commission. Our net loss from inception (May 21, 2007) through July 31, 2009 was $77,150. We have sold $72,000 in equity securities and issued $7,000 in common stock in exchange for mineral property expenses paid by our officer on our behalf. LIQUIDITY AND CAPITAL RESOURCES The following table provides selected financial data about our company for the year ended July 31, 2009. Balance Sheet Data: 7/31/09 ------------------- ------- Cash $2,823 Total assets $3,098 Total liabilities $1,248 Shareholders' equity $3,098 10

Our cash balance at July 31, 2009 was $2,823 with outstanding liabilities of $1,248. If we experience a shortage of funds prior to generating revenue we may utilize funds from our director, who has informally agreed to advance funds, however he has no formal commitment, arrangement or legal obligation to advance or loan funds to us. PLAN OF OPERATION We expect that our total expenses will increase over the next year as we increase business operations through the acquisition of an operating business. We have not been able to reach the break-even point since our inception and have had to rely on outside capital resources. We do not anticipate making any revenues for the next year. Over the next 12 months, we plan to close the business combination with Urban Barns Foods Inc., the private company or identify another partner for a business combination. In order to find and negotiate a business combination or acquire an operating business, we may incur expenses that outpace our cash resources. Should we require additional capital resources, we will proceed by way of private placements, loans or possibly a direct offering. There can be no assurance we will successfully raise sufficient capital to meet our future cash requirements. We expect to require approximately $230,000 in financing to acquire a potential business and fund its operations over the next 12 months (beginning December 2009), as follows: Target completion Estimated Description date or period expenses($) ----------- -------------- ----------- Due diligence of the potential target business 12 months 20,000 Legal and accounting fees related to acquisition of the potential target business 12 months 50,000 Acquisition costs of the potential business 12 months 80,000 Development of the potential business 12 months 80,000 ------- TOTAL 230,000 ======= OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES BASIS OF ACCOUNTING The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a July 31, year-end. BASIC 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 11

(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 May 21, 2007 (inception). Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company. CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In accordance with FASB 16 all adjustments are normal and recurring. 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. 12

ITEM 8. FINANCIAL STATEMENTS SEALE AND BEERS, CPAs PCAOB & CPAB REGISTERED AUDITORS www.sealebeers.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Urban Barns Foods Inc. (f.k.a. HL Ventures, Inc.) (A Development Stage Company) We have audited the accompanying balance sheets of Urban Barns Foods Inc. (f.k.a. HL Ventures, Inc.) (A Development Stage Company) as of July 31, 2009 and July 31, 2008, and the related statements of operations, stockholders' equity and cash flows for the years ended July 31, 2009 and July 31, 2008 and since inception on May 21, 2007 through July 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Urban Barns Foods Inc. (f.k.a. HL Ventures, Inc.) (A Development Stage Company) as of July 31, 2009 and July 31, 2008, and the related statements of operations, stockholders' equity and cash flows for the years ended July 31, 2009 and July 31, 2008 and since inception on May 21, 2007 through July 31, 2009, 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. As discussed in Note 3 to the financial statements, the Company has had no operation since inception and generated a net loss of $77,150, which raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Seale and Beers, CPAs -------------------------------- Seale and Beers, CPAs Las Vegas, Nevada November 10, 2009 50 S. Jones Blvd., Suite 202, Las Vegas, NV 89107 Phone: (888) 727-8251 FAX: (888) 782-2351 13

URBAN BARNS FOODS INC. (f.k.a. HL Ventures Inc.) (A Development Stage Company) Balance Sheets -------------------------------------------------------------------------------- As of As of July 31, July 31, 2009 2008 -------- -------- ASSETS CURRENT ASSETS Cash $ 2,823 $ 53,315 -------- -------- TOTAL CURRENT ASSETS 2,823 53,315 OTHER ASSETS Deposits 276 4,250 -------- -------- TOTAL CURRENT ASSETS 276 4,250 -------- -------- TOTAL ASSETS $ 3,098 $ 57,565 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $ 1,248 $ -- -------- -------- TOTAL CURRENT LIABILITIES 1,248 -- TOTAL LIABILITIES 1,248 -- STOCKHOLDERS' EQUITY Common stock, ($0.001 par value, 100,000,000 shares authorized; 43,400,000 shares issued and outstanding as of July 31, 2009 and July 31, 2008) 43,400 43,400 Additional paid-in capital 35,600 35,600 Deficit accumulated during development stage (77,150) (21,435) -------- -------- TOTAL STOCKHOLDERS' EQUITY 1,850 57,565 -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 3,098 $ 57,565 ======== ======== The accompanying note are an integral part of these financial statements 14

URBAN BARNS FOODS INC. (f.k.a. HL Ventures Inc.) (A Development Stage Company) Statements of Operations -------------------------------------------------------------------------------- May 21, 2007 (inception) Year Ended Year Ended through July 31, July 31, July 31, 2009 2008 2009 ----------- ----------- ----------- REVENUES Revenues $ -- $ -- $ -- ----------- ----------- ----------- TOTAL REVENUES -- -- -- OPERATIONG EXPENSES Professional Fees 8,000 8,500 16,500 Property Expenditures 8,500 750 16,250 Office and Administration 39,215 4,595 44,400 ----------- ----------- ----------- TOTAL OPERATING EXPENSES (55,715) (13,845) (77,150) Provision for Income Taxes -- -- -- ----------- ----------- ----------- NET INCOME (LOSS) $ (55,715) $ (13,845) $ (77,150) =========== =========== =========== BASIC EARNINGS PER SHARE $ (0.00) $ (0.00) =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 43,400,000 32,261,202 =========== =========== The accompanying note are an integral part of these financial statements 15

URBAN BARNS FOODS INC. (f.k.a. HL Ventures Inc.) (A Development Stage Company) Statement of Stockholders' Equity From May 21, 2007 (Inception) through July 31, 2009 -------------------------------------------------------------------------------- Deficit Accumulated Common Additional During Common Stock Paid-in Development Stock Amount Capital Stage Total ----- ------ ------- ----- ----- BALANCE, MAY 21, 2007 -- $ -- $ -- $ -- $ -- Stock issued for cash on June 29, 2007 @ $0.005 per share 11,200,000 11,200 (3,200) 8,000 Stock issued for cash advanced on behalf of the Company on July 18, 2007 @ $0.005 per share 9,800,000 9,800 (2,800) 7,000 Net loss, July 31, 2007 (7,590) (7,590) ---------- -------- -------- --------- --------- BALANCE, JULY 31, 2007 21,000,000 21,000 (6,000) (7,590) 7,410 ========== ======== ======== ========= ========= Stock issued for cash on January 30, 2008 @ $0.02 per share 22,400,000 22,400 41,600 64,000 Net loss, July 31, 2008 (13,845) (13,845) ---------- -------- -------- --------- --------- BALANCE, JULY 31, 2008 43,400,000 43,400 35,600 (21,435) 57,565 ========== ======== ======== ========= ========= Net loss, July 31, 2009 (55,715) (55,715) ---------- -------- -------- --------- --------- BALANCE, JULY 31, 2009 43,400,000 $ 43,400 $ 35,600 $ (77,150) $ 1,850 ========== ======== ======== ========= ========= Note: On August 19, 2009 the Company effected a 7 for 1 forward split of its share capital such that every one share of common stock issued and outstanding prior to the split was exchanged for three post-split shares of common stock. This forward split has been retro-actively applied to all previous periods. The accompanying note are an integral part of these financial statements 16

URBAN BARNS FOODS INC. (f.k.a. HL Ventures Inc.) (A Development Stage Company) Statement of Cash Flows -------------------------------------------------------------------------------- May 21, 2007 (inception) Year Ended Year Ended through July 31, July 31, July 31, 2009 2008 2009 -------- -------- -------- OPERATING ACTIVITIES Net income (loss) $(55,715) $(13,845) $(77,150) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: (Increase) decrease in Deposits 3,975 (4,250) (276) Increase (decrease) in Accounts Payable 1,428 (590) 1,248 -------- -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (50,492) (18,685) (76,177) INVESTING ACTIVITIES NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- -- FINANCING ACTIVITIES Proceeds from issuance of common stock -- 64,000 79,000 -------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -- 64,000 79,000 -------- -------- -------- NET INCREASE (DECREASE) IN CASH (50,492) 45,315 2,823 CASH AT BEGINNING OF PERIOD 53,315 8,000 -- -------- -------- -------- CASH AT END OF PERIOD $ 2,823 $ 53,315 $ 2,823 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during period for: Interest $ -- $ -- $ -- ======== ======== ======== Income Taxes $ -- $ -- $ -- ======== ======== ======== The accompanying note are an integral part of these financial statements 17

URBAN BARNS FOODS INC. (f/k/a HL Ventures Inc.) (A Development Stage Company) Notes to Financial Statements July 31, 2009 -------------------------------------------------------------------------------- NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Urban Barns Foods Inc. (f/k/a HL Ventures Inc., the "Company") was incorporated under the laws of the State of Nevada on May 21, 2007. On July 22, 2009 the Company amended its Articles of Incorporation to change its name from HL Ventures Inc. to Urban Barns Foods Inc. as well as increase the authorized shares to 100,000,000, $0.001 par value common shares from 75,000,000, $0.001 par value common shares. The Company was formed to engage in the acquisition, exploration and development of natural resource properties. The Company conducted exploration activities on its Luk 1-4 mineral claims in Esmeralda County, Nevada during April-May 2008 but results of the exploration program were limited and it was eventually decided, after discussions with the Company's consulting geologist, to abandon any further exploration on the claims. Based on the poor showings of its exploration program the Company proceeded to look at other business opportunities in the aim of maximizing shareholder wealth. On July 22, 2009, the Company entered into a binding letter of intent (the "LOI") with Urban Barns Foods Inc., an Alberta company ("UB"). Pursuant to the terms of the LOI, the Company and UB have agreed to engage in a share exchange which, if completed, would result in UB becoming a wholly owned subsidiary of the Company. On July 22, 2009 the Company filed an amendment to its articles of incorporation to change its name from HL Ventures Inc. to Urban Barns Foods Inc. The Company is in the development stage. Its activities to date have been limited to capital formation, organization, development of its business plan and had previously commenced limited exploration activities on its mining claims. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. BASIS OF ACCOUNTING The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a July 31 year-end. B. BASIC 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 May 21, 2007 (inception). 18

URBAN BARNS FOODS INC. (f/k/a HL Ventures Inc.) (A Development Stage Company) Notes to Financial Statements July 31, 2009 -------------------------------------------------------------------------------- NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS: RECENT ACCOUNTING PRONOUNCEMENTS In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted. In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company's financial position, statements of operations, or cash flows at this time. In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB's amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company's financial position, statements of operations, or cash flows at this time. In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities--an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after 20

URBAN BARNS FOODS INC. (f/k/a HL Ventures Inc.) (A Development Stage Company) Notes to Financial Statements July 31, 2009 -------------------------------------------------------------------------------- NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows. In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for "plain vanilla" share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements--an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business Combinations. This Statement replaces FASB Statement No. 141, Business 21

URBAN BARNS FOODS INC. (f/k/a HL Ventures Inc.) (A Development Stage Company) Notes to Financial Statements July 31, 2009 -------------------------------------------------------------------------------- NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Combinations, but retains the fundamental requirements in Statement 141. This Statement establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The effective date of this statement is the same as that of the related FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The Company will adopt this statement beginning March 1, 2009. It is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. NOTE 3. GOING CONCERN The accompanying financial statements are presented on a going concern basis. The Company had no operations during the period from May 21, 2007 (inception) to July 31, 2009 and generated a net loss of $77,150. This condition raises substantial doubt about the Company's ability to continue as a going concern. Even though the Company is currently in the development stage and has minimal expenses, management does not believe that the company's current cash of $2,823 will be sufficient to cover the expenses they will incur during the next twelve months. NOTE 4. WARRANTS AND OPTIONS There are no warrants or options outstanding to acquire any additional shares of common. NOTE 5. RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities as they become available. Thus they 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. 22

URBAN BARNS FOODS INC. (f/k/a HL Ventures Inc.) (A Development Stage Company) Notes to Financial Statements July 31, 2009 -------------------------------------------------------------------------------- NOTE 6. INCOME TAXES As of July 31, 2009 ------------------- Deferred tax assets: Net operating tax carryforwards $ 77,150 Other 0 -------- Gross deferred tax assets 26,231 Valuation allowance (26,231) -------- Net deferred tax assets $ 0 ======== Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance. NOTE 7. NET OPERATING LOSSES As of July 31, 2009, the Company has a net operating loss carryforward of approximately $77,150. Net operating loss carryforward expires twenty years from the date the loss was incurred. NOTE 8. STOCK TRANSACTIONS Transactions, other than employees' stock issuance, are in accordance with paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees' stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable. On June 29, 2007 the Company issued a total of 11,200,000 shares of common stock to one director for cash at $0.000714 per share for a total of $8,000. On July 18, 2007 the Company issued a total of 9,800,000 shares of common stock to one director for cash advanced on behalf of the Company at $0.000714 per share for a total of $7,000. On January 30, 2008 the Company issued a total of 22,400,000 shares of common stock to twenty six unrelated investors for cash at $0.00286 per share for a total of $64,000. As of July 31, 2009 the Company had 43,400,000 shares of common stock issued and outstanding. 23

URBAN BARNS FOODS INC. (f/k/a HL Ventures Inc.) (A Development Stage Company) Notes to Financial Statements July 31, 2009 -------------------------------------------------------------------------------- NOTE 9. STOCKHOLDERS' EQUITY The stockholders' equity section of the Company contains the following classes of capital stock as of July 31, 2009: * Common stock, $ 0.001 par value: 100,000,000 shares authorized; 43,400,000 shares issued and outstanding. NOTE 10. SUBSEQUENT EVENTS On August 19, 2009 the Company effected a 7 for 1 forward split of its share capital such that every one share of common stock issued and outstanding prior to the split was exchanged for seven post-split shares of common stock. This forward split has been retro-actively applied to all previous periods. 24

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to our company, particularly during the period when this report was being prepared. 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 such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. 25

Under the supervision and with the participation of our president, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of July 31, 2009, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below. Management assessed the effectiveness of the Company's internal control over financial reporting as of evaluation date and identified the following material weaknesses: INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting. INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to properly implement control procedures. LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS: We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future. Management, including our president, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended July 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 26

CEO AND CFO CERTIFICATIONS Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS The officer and directors of Urban Barns Foods Inc., whose one year terms will expire 6/1/10, or at such a time as their successor(s) shall be elected and qualified are as follows: Name & Address Age Position Date First Elected Term Expires -------------- --- -------- ------------------ ------------ Deniz Hassan 27 President, 5/21/07 6/1/10 Office 404 - 4th Floor Secretary, Albany House Treasurer, 324-326 Regent Street CFO, CEO & London W1B 3HH Director United Kingdom Adrian Lee 43 Director 5/21/07 6/1/10 Office 404 - 4th Floor Albany House 324-326 Regent Street London W1B 3HH United Kingdom The foregoing persons are promoters of Urban Barns Foods Inc., as that term is defined in the rules and regulations promulgated under the Securities and Exchange Act of 1933. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified. Mr. Hassan currently devotes 4-5 hours per week to company matters. In the future he intends to devote as much time as the board of directors deems necessary to manage the affairs of the company. Mr. Lee currently devotes 1-2 hours per week to company matters. No executive officer or director of the corporation has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him or her from acting as an investment advisor, underwriter, 27

broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities. No executive officer or director of the corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending. BACKGROUND INFORMATION DENIZ HASSAN has been President, Secretary, Treasurer, CEO, CFO and Director of the Company since inception. His work experience includes the following: 2005 to the present Advertising Manager for Third Sector, Haymarket Media. Third Sector is Great Britain's market leading publication for the not-for-profit sector 2003 to 2005 Online Design & Engineering Design Engineer, designing safe piping systems for major oil refineries Education 2000 - 2003 BEng (Hons) Mechanical Design, Materials and Manufacturing Engineering ADRIAN LEE has been a Director of the Company since inception. His work experience includes the following: 2003 to the present Commercial Sales Director for Stoneacre, a Doncaster, South Yorkshire automotive company 1999 to 2003 Senior Sales Manager for Reg Vardy, a Doncaster automotive company. 1996 to 1999 Tool Engineer for Picador Engineering, Doncaster. 1992 - 1996 Tool Engineer for Linton and Hurst, Doncaster 1986 - 1992 Clearance Diver for Her Majesty's Forces - Navy CODE OF ETHICS Our board of directors adopted our code of ethical conduct that applies to all of our employees and directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We believe the adoption of our Code of Ethical Conduct is consistent with the requirements of the Sarbanes-Oxley Act of 2002. Our Code of Ethical Conduct is designed to deter wrongdoing and to promote: 28

* Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * Full, fair, accurate, timely and understandable disclosure in reports and documents that we file or submit to the Securities & Exchange Commission and in other public communications made by us; * Compliance with applicable governmental laws, rules and regulations; * The prompt internal reporting to an appropriate person or persons identified in the code of violations of our Code of Ethical Conduct; and * Accountability for adherence to the Code. CONFLICTS None as of the date of this filing. NOMINATING COMMITTEE We have not implemented any material changes to the procedures by which security holders may recommend nominees to our Board of Directors during the twelve months ended July 31, 2009. AUDIT COMMITTEE The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director of us and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee. SIGNIFICANT EMPLOYEES Other than the senior officer described above, we do not expect any other individuals to make a significant contribution to our business. FAMILY RELATIONSHIPS None. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS None of our directors, executive officers, promoters or control persons have been involved in any of the following events during the past five years: * any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 29

* any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); * being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or * being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING Section 16(a) of the Securities Exchange Act of 1934 requires a company's directors and officers, and persons who own more than ten-percent (10%) of the company's common stock, to file with the Securities and Exchange Commission reports of ownership on Form 3 and reports of change in ownership on Forms 4 and 5. Such officers, directors and ten-percent stockholders are also required to furnish the company with copies of all Section 16(a) reports they file. Based on the fact that we do not have a class of securities registered under the Section 12 of the Securities Exchange Act of 1934 none of our 10% shareholders, directors or officers have been required for file reports under Section 16(a) of the Securities Exchange Act of 1934. ITEM 11. EXECUTIVE COMPENSATION Our current officer receives no compensation. The current Board of Directors is comprised of Mr. Lee and Mr. Hassan. SUMMARY COMPENSATION TABLE Change in Pension Value and Non-Equity Nonqualified Incentive Deferred All Name and Plan Compen- Other Principal Stock Option Compen- sation Compen- Position Year Salary Bonus Awards Awards sation Earnings sation Total -------- ---- ------ ----- ------ ------ ------ -------- ------ ----- Adrian Lee 2009 0 0 0 0 0 0 0 0 Director 2008 0 0 0 0 0 0 0 0 2007 0 0 0 0 0 0 0 0 Deniz Hassan 2009 0 0 0 0 0 0 0 0 CEO, CFO, 2008 0 0 0 0 0 0 0 0 President, 2007 0 0 0 0 0 0 0 0 Secretary, Treasurer & Director 30

There are no current employment agreements between the Company and its executive officer. On June 29, 2007, a total of 1,600,000 shares of common stock were issued to Mr. Hassan in exchange for cash in the amount of $8,000 U.S., or $.005 per share. On July 18, 2007 an additional 1,400,000 shares were issued to him in exchange for $7,000 in mineral property expenses he paid on behalf of the Company. Pursuant to the 7 for 1 forward stock split that became effective on August 19, 2009, Mr. Hassan currently holds 20,500,000 shares of common stock. The terms of these stock issuances were as fair to the Company, in the opinion of the board of directors, as could have been made with an unaffiliated third party. Mr. Hassan currently devotes approximately 4-5 hours per week to manage the affairs of the Company. Mr. Lee currently devotes 1-2 hours per week to the Company. Mr. Lee and Mr. Hassan have agreed to work with no remuneration until such time as the Company receives sufficient revenues necessary to provide management salaries. At this time, we cannot accurately estimate when sufficient revenues will occur to implement this compensation, or what the amount of the compensation will be. PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof. COMPENSATION OF DIRECTORS We reimburse our directors for expenses incurred in connection with attending board meetings but did not pay director's fees or other cash compensation for services rendered as a director in the year ended July 31, 2009. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director. No director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. The Board of Directors as a whole participates in the consideration of executive officer and director compensation. 31

COMPENSATION COMMITTEE REPORT Our sole directors and executive officer have reviewed the Compensation Discussion and Analysis and the requirements pertaining to this item. Our management has determined that no disclosure is necessary as we have not adopted any compensation programs and we have approved that a statement to that effect be disclosed in this Form 10-K ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information on the ownership of Urban Barns Foods Inc. voting securities by officers, directors and major shareholders as well as those who own beneficially more than five percent of our common stock as of the date of this report: Name of No. of Percentage Beneficial Owner(1) Shares of Ownership: ------------------- ------ ------------- Deniz Hassan 20,500,000 48% Adrian Lee 0 0% All Officers and Directors as a Group 20,500,000 48% ---------- (1) Each of the persons named may be deemed to be a "parent" and "promoter" of the Company, within the meaning of such terms under the Securities Act of 1933, as amended. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Mr. Lee and Mr. Hassan were not paid for any underwriting services that they performed on our behalf with respect to our recent offering. They will also not receive any interest on any funds that they may advance to us for expenses incurred prior to generating revenue. On June 29, 2007, a total of 1,600,000 shares of Common Stock were issued to Mr. Hassan in exchange for $8,000 US, or $.005 per share. On July 18, 2007 an additional 1,400,000 shares were issued to him in exchange for $7,000 in mineral property costs that he paid on behalf of the company. Pursuant to the 7 for 1 forward stock split that became effective on August 19, 2009, Mr. Hassan currently holds 20,500,000 shares of common stock. All of such shares are "restricted" securities, as that term is defined by the Securities Act of 1933, as amended, and are held by an officer and director of the Company. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES For the year ended July 31, 2009, the total fees charged to the company for audit services including quarterly reviews were $8,000, for audit-related services were $Nil, for tax services were $Nil and for other services were $Nil. For the year ended July 31, 2008, the total fees charged to the company for audit services including quarterly reviews were $7,000, for audit-related services were $Nil, for tax services were $Nil and for other services were $Nil. 32

PART IV ITEM 15. EXHIBITS The following exhibits are included with this filing: Exhibit Number Description ------ ----------- 3(i) Articles of Incorporation * 3(ii) Bylaws * 10.1 Share Exchange Agreement Entered into with Urban Barns Foods Inc. (1) 31.1 Sec. 302 Certification of Chief Executive Officer 31.2 Sec. 302 Certification of Chief Financial Officer 32.1 Sec. 906 Certification of Chief Executive Officer 32.2 Sec. 906 Certification of Chief Financial Officer ---------- * Document is incorporated by reference and can be found in its entirety in our Registration Statement on Form SB-2, SEC File Number 333-145897, at the Securities and Exchange Commission website at www.sec.gov. (1) Filed as an exhibit to our Current Report on Form 8-K filed on October 9, 2009. SIGNATURES Pursuant to the requirements 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. November 13, 2009 Urban Barns Foods Inc. /s/ Deniz Hassan --------------------------------------------------- By: Deniz Hassan (Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President, Secretary, Treasurer & Director) /s/ Adrian Lee --------------------------------------------------- Director 3

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Urban Barns Foods Inc. - FORM 10-K - November 13, 2009

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