UNITED
STATES SECURITIES AND EXCHANGE COMMISSION




Washington,
D.C. 20549






FORM
10-Q






(Mark
One)




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






For the
quarterly period endedSeptember 30, 2008






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






For the
transition period from ________ to ________






COMMISSION
FILE NUMBER000-52529




FORTERUS, INC.


(Exact
name of registrant as specified in its charter)




NEVADA
            20-8623320(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)412
      Olive Street, Suite 263Huntington
      Beach, CA
            92648(Address
      of principal executive offices)
            (Zip
      Code)




951.837.2400


(Registrant's
telephone number, including area code)






Mezey
Howarth Racing Stables, Inc.


(Former name, former
address and former fiscal year, 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 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]






Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest






practicable
date: As of November 17, 2008, the registrant had 13,513,264 shares of
common stock outstanding.















1












PART
I - FINANCIAL INFORMATION






ITEM
1. FINANCIAL STATEMENTS.






The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X,
and, therefore, do not include all information and footnotes necessary for a
complete presentation of financial position, results of operations, cash flows,
and stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the nine months ended September 30, 2008 are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2008.






As used
in this Quarterly Report, the terms “we,” “us,” “our,” “Mezey Howarth,” and the
“Company” mean Forterus, Inc. and its subsidiaries, unless otherwise indicated.
All dollar amounts in this Quarterly Report are expressed in U.S. dollars,
unless otherwise indicated.












2





Forterus
      Inc.(Formerly
      Mezey Howarth Racing Stables, Inc.)Consolidated
      Balance SheetsSeptember
      30, 2008
            
            December
      31, 2007Assets
            
            (Unaudited)Current
      AssetsCash
            $
            102,015
            $
            39,273Accounts
      receivable, net
            
            389,209
            
            370,732Investment
      in race horses
            
            27,198
            
            -Total
      Current Assets
            
            518,422
            
            410,005Property,
      equipment and livestock, net
            
            158,996
            
            77,452Other
      assets
            
            14,236
            
            13,887Deferred
      tax asset
            
            32,700
            
            32,700Loan
      receivable - related party
            
            36,294
            
            27,007Total
      Assets
            $
            760,648
            $
            561,051Liabilities and Stockholders'
      EquityCurrent
      LiabilitiesAccounts
      payable
            $
            235,896
            $
            295,628Accrued
      liabilities
            
            257,178
            
            102,640Deferred
      reveunue
            
            64,295
            
            142,813Notes
      payable - current portion
            
            12,691
            
            7,227Related
      party line of credit
            
            200
            
            85,406Notes
      payable - related party
            
            292,594
            
            -Total
      Current Liabilities
            
            862,854
            
            633,714Notes
      payable - long term
            
            67,700
            
            22,460Total
      Liablities
            
            930,554
            
            656,174Manditorily
      redeemable series C convertible prefered stock;$0.001
      par value, 20,000,000 authorized; 10,075,000 issuedand
      outstanding; liquidiation value of $10,075,000
            
            2,002,646
            
            1,565,377Stockholders'
      DeficitSeries
      A convertible preferred stock; $.001 par value; 20,000,000
      sharesauthorized, 3,322,855 issued and outstanding at September 30,
      2008;liquidation
      value of $3,322,855
            
            3,323
            
            -Series
      B preferred stock; $.001 par value 20,000,000 sharesauthorized; 1,000,000 issued and outstanding;liquidation value of $1,000,000
            
            1,000
            
            1,000Common
      stock; $.001 par value; 180,000,000 sharesauthorized, 13,513,264 and 4,750,000 issued and outstanding
    atSeptember 30, 2008 and December 31, 2007, respectively
            
            13,513
            
            4,750Additional
      paid-in capital
            
            3,362,017
            
            76,250Accumulated
      deficit
            
            (5,552,405)
            
            (1,742,500)Total
      Stockholders' Deficit
            
            (2,172,552)
            
            (1,660,500)Total
      Liabilities and Stockholders' Deficit
            $
            760,648
            $
            561,051












3








Forterus
      Inc.(Formerly
      Mezey Howarth Racing Stables, Inc.)Consolidated
      Statements of Operations(Unaudited)For
      the three months ended September 30
            For
      the nine months ended September 302008
            
            2007
            
            2008
            
            2007Net
      revenue
            $
            1,012,802
            $
            740,191
            $
            3,015,531
            $
            2,676,626Expenses:General
      and administraive expense
            
            2,121,418
            
            253,266
            
            2,684,683
            
            720,930Sales
      and marketing
            
            122,851
            
            131,121
            
            388,319
            
            453,683Payroll
      and facility related expenditures
            
            581,003
            
            400,929
            
            1,501,417
            
            1,336,364Total
      Expenses
            
            2,825,272
            
            785,316
            
            4,574,419
            
            2,510,977Net
      income (loss) from operations
            
            (1,812,470)
            
            (45,125)
            
            (1,558,888)
            
            165,649Other
      income (expense)
            
            9
            
            3,556
            
            (5,290)
            
            101Excess
      fair value of assets and liabilities assumed
            
            (1,673,257)
            
            -
            
            (1,673,257)
            
            -Interest
      expense
            
            (2,516)
            
            (2,932)
            
            (7,924)
            
            (8,777)Net
      income (loss)
            $
            (3,488,234)
            $
            (44,501)
            $
            (3,245,359)
            $
            156,973Weighted
      average number of common shares outstanding:Basic
            
            8,901,706
            
            4,750,000
            
            12,139,040
            
            4,750,000Dilutive
            
            8,901,706
            
            4,750,000
            
            12,139,040
            
            45,050,000Net
      income (loss) per common share - Basic
            $
            (0.39)
            $
            (0.01)
            $
            (0.27)
            $
            0.03Net
      income (loss) per common share - Dilutive
            $
            (0.39)
            $
            (0.01)
            $
            (0.27)
            $
            0.00











4





Forterus
      Inc.(Formerly
      Mezey Howarth Racing Stables, Inc.)Consolidated
      Statements of Cash Flows(Unaudited)Nine
      Months Ended
            
            Nine
      Months EndedSeptember
      30, 2008
            
            September
      30, 2007Cash
      flows from operating activities:Net
      loss
            $
            (3,245,359)
            $
            156,973Adjustments
      to reconcile net loss to net cash providedby
      operating activities:Depreciation
            
            15,363
            
            19,152Common stock issued for services
            
            1,750,000
            
            -Excess fair value of common stock issued for Forterus
            
            1,673,257
            
            -Changes
      in operating assets and liabilities:Accounts receivable
            
            (18,478)
            
            (127,067)Accounts payable
            
            (67,140)
            
            25,517Accrued liabilities
            
            54,367
            
            36,229Deferred revenues
            
            (78,518)
            
            (40,878)Net
      cash provided by operating activities
            
            83,492
            
            69,926Cash
      flows from investing activities:Purchase of property, equipment and livestock
            
            (9,824)
            
            (2,570)Other assets
            
            (350)
            
            (689)Cash received from Forterus reverse acquisition
            
            1,975
            
            -Issuance
      of related party notes receivable
            
            (9,287)
            
            (2,921)Net cash used in investing activities
            
            (17,486)
            
            (6,180)Cash
      flows from financing activities:Dividends paid
            
            (52,750)
            
            (45,335)Payments on related party line of credit
            
            (5,014)
            
            (5,094)Payments on notes payable
            
            (5,657)
            
            (13,419)Proceeds
      from issuance of related party notes payable
            
            60,157
            
            -Net
      cash provided by (used in) financing activities
            
            (3,264)
            
            (63,848)Net
      increase (decrease) in cash for the period
            
            62,742
            
            (102)Cash
      and beginning of period
            
            39,273
            
            52,353Cash
      at the end of the period
            $
            102,015
            $
            52,251Supplemental
      disclosure of cash flow information:Cash paid during the period for income
      taxes
            $
            800
            $
            800Cash
      paid during the period for interest
            $
            2,932
            $
            8,777Supplemental
      disclosure of non-cash investing and financing activities:Fair
      value of common stock and Series B preferred stock issued in connection
      with Forterus acquision
            $
            1,547,853
            $
            -Accrual
      of Series C preferred dividends
            $
            74,527
            $
            -Accretion of Series C preferred discount
            $
            437,269
            $
            411,865









5










FORTERUS, INC.


(Formerly
Mezey Howarth Racing Stables, Inc)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)






NOTE
1 – HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




History




Forterus,
Inc. (the “Forterus”), formerly Mezey Howarth Racing Stables,
Inc., was organized under the laws of the State of Nevada on February 27,
2007.





On June
25, 2008, Forterus entered into a binding Letter of Intent ("LOI") for the
acquisition of all the outstanding stock of ABTTC, Inc.
(“ABTTC”).  The LOI contemplated consideration of 2.85 times
gross revenue of ABTTC from August 2007 through July 2008 (estimated to be $4.8
million).  On August 8, 2008, Forterus closed on the ABTTC transaction. The
compensation issued to ABTTC consists of 4,375,000 shares of common
stock, 1,000,000 shares of Series B Preferred Stock and 10,075,000 Series C
Convertible Preferred Stock.  Forterus and ABTTC will be collectively
known as the “Company”. The purpose of the acquisition was to increase the
Company’s operations.





This
share exchange transaction resulted in ABTTC’s stockholders obtaining a majority
voting interest in the Company. Accounting principles generally accepted in the
United States of America require that the company whose stockholders retain the
majority interest in a combined business be treated as the acquirer for
accounting purposes, known as a reverse transaction (“RTO”). Therefore, the RTO
resulting in ABTTC being treated as the accounting acquirer and Forterus as the
acquired party. Accordingly, the historical financial statements and operations
of ABTTC have been reported for the periods presented, which is commonly
referred to as a change in reporting entity.  The assets and
liabilities of Forterus were recorded at fair value on the date of the RTO, and
operations of Forterus since the date of the RTO.





The
1,763,264 shares of common stock and 3,322,855 shares of Series A convertible
preferred stock outstanding prior to the RTO are accounted for at an estimated
fair value of $1,547,853 at the time of the RTO. The fair value was determined
based on an average of the closing market price of the Company’s common stock
shortly before and after the transaction was announced. In accordance with SFAS
141 “Business Combinations” the Company recorded the assets and liabilities of
the former Forterus at their fair value. As a result the net liabilities assumed
by the Company were $125,404. Thus, the Company recorded a day-one impairment of
the investment of $1,673,257 due to the limited cash flows to expand operations,
its limited operating history and limited future cash projections of Forterus.
The Company intends to operate Forterus, however, the current focus of the
Company has been shifted to the operations of ABTTC. Significant assets and
liabilities assumed by the Company were: $87,083 in horses; $27,198 in
investments; and $232,437 in related party notes payable. The operations of
Forterus have been included in the accompanying financial statements from the
closing date of August 8, 2008.





On July
7, 2008, the Company changed its name to Forterus, Inc.  The Company
changed its name to reflect the current business model of operating diverse
business activities, including thoroughbred breeding and racing, and drug and
alcohol rehabilitation. The Company's businesses are operated under its
divisions or subsidiaries Mezey Howarth Racing Stable and ABTTC,
Inc.  The Company’s under the name ABTTC, provide drug and alcohol
rehabilitation services.  ABTTC currently operates in and around
Murrieta, California, where it houses clients while they receive
treatment.  The Company, under the name Mezey Howarth Racing Stable,
buys, sells and races thoroughbred race horses of every age from broodmares,
weanlings, and yearlings to racing age horses.  The Company will
continue to operate Mezey Howarth Racing Stables, however, the focus of the
operations in the short term will be with ABTTC.








6





The following unaudited pro forma operating data gives effect
to the acquisition of Forterus as if it had occurred on January 1, 2007 and
2008, respectively. Pro forma financial information is not necessarily
indicative of the results of operations that may have occurred had the
acquisition of Forterus occurred at the beginning of 2007 and
2008.





Three
      Months Ended September 30
            
            
            Nine
      Months Ended
              September
      302008
            
            2007
            
            
            2008
            
            2007Revenues
            $
            1,012,802
            $
            770,191
            
            $
            3,015,531
            $
            2,707,067Net
      loss
            $
            (3,497,753)
            $
            (1,829,362)
            
            $
            (6,839,144)
            $
            (1,654,369)Basic
      and diluted loss per share
            $
            (0.34)
            $
            (0.16)
            
            $
            (0.55)
            $
            (0.14)





Basis
of Presentation




The
unaudited condensed consolidated financial statements of the Company have been
prepared in accordance with U.S. generally accepted accounting principles for
interim financial information and pursuant to the requirements for reporting on
Form 10-Q. Accordingly, they do not include all the information and footnotes
required by accounting principles generally accepted in the United States of
America for annual financial statements. However, the information included in
these interim financial statements reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of the management,
necessary for the fair presentation of the consolidated financial position and
the consolidated results of operation. Results shown for interim periods are not
necessarily indicative of the results to be obtained for a full year. The
condensed balance sheet information as of December 31, 2007 was derived from the
audited consolidated financial statements included in the Company’s financial
statements included in Form 8-K filed on November 19, 2008 with the SEC. These
interim financial statements should be read in conjunction with that report. All
material inter-company accounts and transactions have been eliminated in
consolidation.




Going
Concern and Plan of Operation




The
Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.  The Company has
negative working capital of $344,432 and a loss from operations of $1,558,888
for the nine months ended September 30, 2008, and requires additional
financing.   These conditions raise substantial doubt about its
ability to continue as a going concern.  It is the Company’s plan is to
expand the services and market of ABTTC through acquisitions and/or organic
growth and to acquire at least 20 additional horses for the Company’s
stables.  To finance these planned acquisitions, the Company has plans to
raise $1,000,000 in capital through either debt or equity
offerings.  There are no assurances that management will be able to
raise these funds, or generate sufficient revenues from its business operations
to achieve profitability.





Per Share
Information




Basic per
share information is computed based upon the weighted average number of common
shares outstanding during the period. Diluted per share information consists of
the weighted average number of common shares outstanding, plus the dilutive
effects of options and warrants calculated using the treasury stock method. In
loss periods, dilutive common equivalent shares are excluded as the effect would
be anti-dilutive. There are no options and warrants outstanding. The Series A
Convertible Preferred Stock converts into 1,084,871, Series C Convertible
Preferred Stock converts into 40,300,000 shares of common stock and have been
excluded from the diluted net loss per share for the three and nine month
periods ended September 30, 2008, as the effects would have been
anti-dilutive.  During the three and nine months ended September 30,
2007, 40,300,000 shares of common stock were included in the calculation of
dilutive earnings per share which was a result of the conversion of the Series
C. There were no adjustments to the net income for the three and nine months
ended to arrive at net income for preferred stock shareholders.




Use of Estimates in the Preparation
of Financial Statements




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, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates and
assumptions.





Net
Client Revenue





Net
client revenue is recorded at its estimated net realizable amounts from Clients,
third-party payors, and others for services rendered.  The Company has
agreements with third-party payors that provide for payment at amounts different
from established service rates.  In these cases, the Company records
revenue for services rendered at established rates and records an appropriate
reserve to account for the difference in amounts which will be received from
third-party payors. In the cases, where the Company does not have agreements
with third-party payors the Company estimates the discount based on previous
history with the third-party.





Deferred
Revenue





Fees paid
by clients upon entering the treatment center are recorded as deferred revenue
and are amortized over the period of time the patient is receiving
treatment.  Any unused fees are returned to the client after leaving
the treatment center. As of September 30, 2008 and December 31, 2007, the
Company had deferred revenue of $64,295 and $142,813, respectively, recorded on
the accompanying balance sheets.





Cash
and Cash Equivalents





The
Company considers all highly liquid investments with insignificant interest rate
risk and original maturities of three months or less from the date of purchase
to be cash equivalents. The carrying amounts of cash and cash equivalents
approximate their fair values. The Company at times maintains cash and cash
equivalents balances at certain financial institutions in excess of amounts
insured by federal agencies. Management does not believe that as a result of
this concentration, it is subject to any unusual financial risk beyond the
normal risk associated with commercial banking relationships.





Allowance
for Doubtful Accounts





The
Company performs ongoing credit evaluations and continually monitors its
collection of amounts due from its Clients. The Company adjusts credit limits
and payment terms granted to its Clients based upon payment history and the
Client's current creditworthiness and insurance coverage. The Company requires
deposits from its Clients to secure amounts due from them. Historically, the
Company has not experienced significant collection issues.  The
Company records specific reserves when an allowance is required.





Advertising
Costs





The
Company expenses all costs of advertising as incurred.  The Company
expensed $339,387 and $428,569 of advertising costs during the nine months ended
September 30, 2008 and 2007, respectively.




NOTE 3
– COMMITMENTS and CONTINGENCIES





Legal





A former
employee filed a complaint against the Company claiming they had been subjected
to inappropriate behavior from another employee.  In 2007, the Company
settled the complaint for $40,000.  Payments made under this
settlement were $24,100 during the year ended December 31, 2007 with the
remaining balance of $15,900 due to be paid in May 2008.  During the
nine month ended September 30, 2008, the Company satisfied the
obligation.





In
addition, the Company is currently in discussions with a former shareholder of
ABTTC, and current employee, related to personal expenditures paid on behalf of
the Company for the shareholder, see Note 6. The Company is discussing potential
resolutions to the expenditures including the termination, settlement, etc. At
this time the Company has not made an agreement nor estimate the likelihood of a
possible settlement.





Operating
Lease





In
September 2008, the Company expanded its office facilities to accommodate its
growth.  The lease increased its space to 11,033 square feet for
$8,120 per month.  The lease expires in thirty six
months.







7





NOTE 4
- STOCKHOLDERS' DEFICIT




Common
Stock




In August
2008, the Company issued 7,000,000 shares of common stock to a consultant for
investor relation services. The Company valued the shares on the date of the
agreement at $1,750,000, or $0.25 per share, based on the closing market price
of the Company’s common stock. The shares were expensed immediately as there
were no additional performance requirements.





Preferred
Stock




Series A
Convertible Preferred Stock


The
Company's Board of Directors approved the issuance of its Series A Convertible
Preferred Stock.  Subsequent to quarter end the terms of the Series A
Convertible Preferred Stock were modified so that they provide voting rights of
one to one and conversion rights of 0.4 shares of common stock for one share of
Series A Convertible Preferred Stock .  As of September 30, 2008, there are
5,424,355 shares of Series A Convertible Preferred Stock authorized, issued, and
outstanding. See Note 6 for discussion of the issuances.  The Series A
Convertible Preferred Stock has preferences in liquidation over common stock but
not with regard to dividends. The Series A Convertible Preferred Stock is
subordinated to the Series C Convertible Preferred Stock.  The
previous voting rights where 20 per share and each share of Series A Convertible
Preferred Stock could be converted into 10 shares of common stock.





Series B Preferred
Stock


The
Series B Preferred Stock (“Series B”) has no conversion rights or
dividend.  The Series B has voting rights equal to 100 votes per share
of Series B and vote together with common shareholders. The Series B has a
liquidation value of $1.00 and is subordinated to the Series C Preferred Stock.
In connection with the acquisition of ABTTC, the Company issued 1,000,000 shares
of Series B, see Note 1. Due to the reverse acquisition, the Company has
shown theses shares as being outstanding since inception and recorded them at
their par value.




Series
C Convertible Preferred Stock


The
Series C Convertible Preferred Stock (“Series C”) is redeemable on or before
August 31, 2018.  The Series C has an annual dividend of 6% which the
Company may defer at its election for thirty days or convert into shares of
common stock.  Upon issuance, the Series C has a conversion right
equal to the market price as of the date of the close of the acquisition of
$0.25 or four (4) common shares for each share of Series C.  The
Series C have no voting rights on general business operations; however, they
must approve new series of securities. In addition, the Series has a liquidation
value of $1.00 per share and is senior to all other classes of securities. In
connection with the acquisition of ABTTC, the Company issued 10,075,000 shares
of Series C, see Note 1.





Due to
the redemption feature of the Series C, the Company has accounted for the Series
C as a liability under SFAS 150 “Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity”. Due to the reverse
acquisition, the Company has shown theses shares as being outstanding since
inception. In addition, the Company recorded the initial fair value of the
Series C as zero and is accreting to the redemption of $10,750,000 using an
effective interest rate of approximately 6%. The 6% discount was based upon the
current interest rate on the Series C. During the nine months ended September
30, 2008 and 2007, the Company amortized $437,269 and $411,866, respectively to
retained earnings. As of September 30, 2008, the carrying value of the Series C
is $2,002,646. In addition, during the nine months ended September 30, 2008, the
Company accrued $74,527 in Series C dividends payable.





NOTE
5 – SEGMENTS





Currently,
the Company generates all of its revenues and incurs the majority of its
expenses from its drug and alcohol rehabilitation centers. The revenues and
expenditures of its breeding and racing of thorough bred horses segment is
inconsequential to the financial statements for the three and nine months ended
September 30, 2008. However, as of September 30, 2008, the breeding and racing
segment comprised $119,909 of the Company’s assets.




NOTE 6
- RELATED PARTY TRANSACTIONS




As of
September 30, 2008, Wade Mezey, a board of director has lent the Company
$119,721 for operating expenses. The advances bear interest at 10% per annum and
are due on demand.




As of
September 30, 2008, Paul Howarth, a board of director and chief executive
officer, and his wife have lent the Company $108,757 for operating expenses. The
advances bear interest at 10% per annum and are due on demand.





The
Company currently leases two facilities, toll free phone lines and its telephone
equipment from three of its shareholders under verbal
contracts.  Rental payments under these leases for the nine months
ending September 30, 2008 and 2007 totaled $195,029 and $ 174,944,
respectively.





One of
the Company’s shareholders had a note outstanding for expenses paid by the
Company on their behalf.  The note resulted from the Company
discovering the presence of unauthorized personal expenditures paid on behalf of
the individuals. The note is non-interest bearing and payable on
demand.  Amounts outstanding for this note for as of September 30,
2008 and December 31, 2007 were $31,643 and $27,007, respectively.





As of
September 30, 2008, three shareholders have lent the Company $43,050 for
operating expenses. The advances bear interest rates ranging from 12% to 23% per
annum and are due on demand.










8





ITEM II. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS






Introduction
Portions of the section include "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995.




Forward
Looking Statement




The
information contained in this Form 10-Q and documents incorporated herein by
reference are intended to update the information contained in the Company's Form
10-KSB for its fiscal year ended December 31, 2008 which includes our audited
financial statements for the year ended December 31, 2008 and such information
presumes that readers have access to, and will have read, the "Management's
Discussion and Analysis of Financial Condition and Results of Operations," "Risk
Factors" and other information contained in such Form 10-KSB and other Company
filings with the Securities and Exchange Commission ("SEC").




This
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements involve risks and uncertainties, and
actual results could be significantly different than those discussed in this
Form 10-Q. Certain statements contained in Management's Discussion and Analysis,
particularly in "Liquidity and Capital Resources," and elsewhere in this Form
10-Q are forward-looking statements. These statements discuss, among other
things, expected growth, future revenues and future performance. Although we
believe the expectations expressed in such forward-looking statements are based
on reasonable assumptions within the bounds of our knowledge of our business, a
number of factors could cause actual results to differ materially from those
expressed in any forward-looking statements, whether oral or written, made by us
or on our behalf. The forward-looking statements are subject to risks and
uncertainties including, without limitation, the following: (a) changes in
levels of competition from current competitors and potential new competition,
(b) possible loss of customers, and (c) the company's ability to attract and
retain key personnel, (d) The Company's ability to manage other risks,
uncertainties and factors inherent in the business and otherwise discussed in
this 10-Q and in the Company's other filings with the SEC. The foregoing should
not be construed as an exhaustive list of all factors that could cause actual
results to differ materially from those expressed in forward-looking statements
made by us. All forward-looking statements included in this document are made as
of the date hereof, based on information available to the Company on the date
thereof, and the Company assumes no obligation to update any forward-looking
statements.




Critical
Accounting Policies




In
December 2001, the Securities and Exchange Commission (the “SEC”) issued
disclosure guidance for “critical accounting policies.” The SEC defines
“critical accounting policies” as those that require application of management’s
most difficult, subjective or complex judgments, often as a result of the need
to make estimates about the effect of matters that are inherently uncertain and
may change in subsequent periods.




The
Company’s significant accounting policies are described in Note 1 in the
Company's Form 8-K/A filed on November 19, 2008. Not all of these
significant accounting policies require management to make difficult, subjective
or complex judgments or estimates. However, the following policies are deemed to
be critical within the SEC definition. The Company’s senior management has
reviewed these critical accounting policies and estimates and the related
Management’s Discussion and Analysis of Financial Condition and Results of
Operations with the Board of Directors.




Results of
Operations




Revenues




Three
      Months Ended September 30
            
            Nine
      Months Ended September 302008
            
            2007
            
            2008
            
            2007$
            1,012,802
            $
            740,191
            $
            3,015,531
            $
            2,676,626







All of
the Company’s revenue was derived from its drug and alcohol rehabilitation
segment during the periods presented. Proceeds received from investments in
thoroughbreds accounted for under the cost basis are recorded as other
income and expense







General
and Administrative Expenses





General
and administrative expenses consist primarily of (a) salaries and related
personnel costs, related to our executive, finance, human resource,
information technology and operations organizations, (b) facilities expenses,
(c) accounting and legal professional fees, and (d) other related
overhead.





Three
      Months Ended September 30
            
            Nine
      Months Ended September 302008
            
            2007
            
            2008
            
            2007General
      & Administrative Expenses
            $
            2,121,418
            $
            253,266
            $
            2,684,683
            $
            720,930Sales
      & Marketing Expenses
            
            122,851
            
            131,121
            
            388,319
            
            453,683Payroll
      and Facility related  Expenses
            
            581,003
            
            400,929
            
            1,501,417
            
            1,336,364




General
and administration costs increased by $1,868,152 in the third quarter of 2008 as
compared to the third quarter in 2007.  The change was primarily the
result of $1,750,000 of expense recorded as compensation for a consultant who
provided investor communication services to the company.  Other
increased expenses included increased housing costs for clients at the
rehabilitation centers due to an increase in the number of housed
clients.





General
and administration costs increased by $1,963,553 during the first nine months of
2008 as compared to the same period in 2007.   This increase was
the result of $1,750,000 of expense recorded from issuing stock to a consultant
as compensation for providing investor communication services to the
Company.  Professional fees increased by $178,986 due to the cost of
its public filings and maintaining compliance.





Sales and
marketing expenses decreased by $8,270 in the third quarter of 2008 as compared
to the third quarter in 2007 primarily the result of the company reducing its
advertising costs to reallocate resources to inside sales representatives (see
payroll and facility related expenses section for comments on increased
headcount).





Sales
& marketing expenses decreased by $65,364 during the first nine months of
2008 as compared to the same period in 2007 primarily the result of the company
reducing its advertising costs to reallocate resources to inside sales
representatives (see payroll and facility related expenses section for comments
on increased headcount).





Payroll
and facility related expenses increased by $180,074 in the third quarter of 2008
as compared to the third quarter in 2007 primarily the result of an increase in
salaries and wages expense of $222,559.  This increased was the result
of an increase in headcount as the company prepares to expand its business and
reduce its dependence on subcontract labor.  This shift away from
subcontract labor resulted in a decrease $42,042 in this area.





Payroll
and facility related expenses increased by $165,052 the first nine months of
2008 as compared to the same period in 2007 primarily the result of an
increase in headcount.  This increase in headcount resulted in an
increase in salaries and wages expense of $507,008 as the Company prepares to
expand its business.  In addition, the Company is reducing its
dependence on subcontract labor, which resulted in a decrease of $205,466 in
this area.  In addition, client facility expenses decreased by
$105,634, the result of performing more maintenance and support functions with
in-house staff as opposed to subcontracting out these tasks.





Other Income and
Expense





Three
      Months Ended September 30
            
            Nine
      Months Ended September 302008
            
            2007
            
            2008
            
            2007$
            1,675,764
            $
            624
            $
            1,686,471
            $
            8,676




During
the three and nine months ending September 30, 2008, the Company incurred
interest expenses related to the loans from its shareholders which were not
incurred during three and nine months ending September 30, 2007.  The
Company also incurred an expense of $1,750,000 related a termination fee of the
initial transaction with ABTTC.  The expense was a one-time expense
that occurred during the three and nine months ending September 30,
2008.  The Company received revenue from the sale of a thoroughbred
nine months ending September 30, 2008.





Liquidity
and Capital Resources





Operating
Activities




Nine
      Months Ended September 302008
            
            2007Cash
      provided by operating activities
            $
            83,492
            $
            69,922





The
Company realized and increase in cash from operations of $13,567 for the nine
months ended September 30, 2008 compared to the same period in 2007 primarily
the result of increased revenue and an increase in the collection cycle of its
receivables.





Investing
Activities




Nine
      Months Ended September 302008
            
            2007Cash
      provided (used) in investing  activities
            $
            (17,846)
            $
            (6,180)




The
Company during the nine months ending September 30, 2007 invested in
Thoroughbreds in which the Company owns a minority position.  The
Company has not invested in any such Thoroughbreds in the nine months ending
September 30, 2008.  Instead the company has been acquiring
Thoroughbreds in which it owns a majority position.




Financing
Activities




Nine
      Months Ended September 302008
            
            2007Cash
      (used) in financing activities
            $
            (3,264)
            $
            (63,848)





From
January 1, 2008 through September 30, 2008, the Company’s officers have
provided  an additional $60,157 for operating expenses. Total
amounts due to officers  for advances at September 30, 2008 are
$292,954.  In addition, on of its stockholder’s has allowed the
company to use their line of credit which provided and additional $5,014 for
operating expenses.  Total amounts due for these advances at September
30, 2008 were $80,391





The
Company used $52,750 of funds to pay dividends for the nine months ended
September 30, 2008 as compared to the $45,335 it paid for the nine months ended
September 30, 2007





The
Company has negative working capital of ($344,432) and a loss from operations of
($1,812,470) for the nine months ended September 30, 2008, and requires
additional financing.   These conditions raise substantial doubt about
its ability to continue as a going concern.  It is the Company’s plan is to
expand the services and market of ABTTC through acquisitions and/or organic
growth and to acquire at least 20 additional horses for the Company’s
stables.  To finance these planned acquisitions, the Company has plans to
raise $1,000,000 in capital through either debt or equity
offerings.  There are no assurances that management will be able to
raise these funds, or generate sufficient revenues from its business operations
to achieve profitability.




OVERVIEW





General





Forterus
Inc. and its subsidiaries engage in diverse business activities, including
behavioral healthcare, intervention services, drug and alcohol rehabilitation,
pain management, physical therapy, finance as well as thoroughbred breeding and
racing.





Healthcare
Services





The
Company through its subsidiary ABTTC, Inc (“A Better Tomorrow”) provides
care in drug addiction, alcohol rehabilitation, detox, pain management, and
other addictions.  A Better Tomorrow is accredited by the Commission
on Accreditation of Rehabilitation Facilities (CARF).  Initially
providing 28-day residential drug and alcohol treatment, A Better Tomorrow has
since added additional services in response to market demand, including a
gambling treatment program; a pain management program to help individuals who
are addicted to prescription painkillers; an outpatient treatment program that
provides three hours of treatment, three days per week; an adolescent treatment
program; and treatment services for Spanish speakers. The clinic also recently
launched a financing program for clients with good credit histories. The company
seeks to continue the growth of A Better Tomorrow through the expansion of its
services and growth into additional markets.  The Company is currently
actively searching for additional acquisitions to expand the services of A
Better Tomorrow.





Initially
providing 28-day residential drug and alcohol treatment, A Better Tomorrow has
since added additional services in response to market demand. These
include:





n
            Gambling
      treatment (2006).





n
            Professional
      intervention services, which are available on a nationwide basis
      (2006).





n
            A
      pain management program to help individuals who are addicted to
      prescription painkillers (2006).





n
            An
      outpatient treatment program, which can accommodate individuals who need
      follow up therapy as well as individuals whose addictive behaviors have
      not yet reached the point of requiring a 28-day, residential treatment
      program (2007).





n
            A
      separate adolescent treatment program, in which youths are treated
      separately from adults (2008).





n
            Spanish-language
      treatment services (2008).





ABTTC
Acquisition





On June
25, 2008, the Company entered into a binding Letter of Intent ("LOI") for the
acquisition of ABTTC, Inc. (“ABTTC”).  The LOI
contemplated consideration of 2.85 times gross revenue of ABTTC from
August 2007 through July 2008 (estimated to be $4.8 million).  On August 8,
2008, the Company closed on the ABTTC transaction. The
compensation issued to ABTTC consists of 4,375,000 shares of common
stock, 1,000,000 shares of Series B Preferred Stock and 10,075,000 Series C
Convertible Preferred Stock.





This
share exchange transaction resulted in ABTTC’s stockholders obtaining a majority
voting interest in the Company. Accounting principles generally accepted in the
United States of America require that the company whose stockholders retain the
majority interest in a combined business be treated as the acquirer for
accounting purpose, known as a reverse transaction (“RTO”). Therefore, the RTO
resulting in ABTTC being treated as the accounting acquirer and the Company as
the acquired party. Accordingly, the share exchange transaction has been
accounted for as a recapitalization of the Company whereby the historical
financial statements and operations of ABTTC became the historical financial
statements of the Company, with no adjustment to the carrying value of the
assets and liabilities. The 1,763,264 shares of common stock and 3,322,855
shares of Series A convertible preferred stock outstanding prior to the RTO are
accounted for at an estimated fair value of $1,547,853 at the time of the RTO.
The fair value was determined based on an average of the closing market price of
the Company’s common stock shortly before and after the transaction was
announced. In accordance with SFAS 141 “Business Combinations” the Company
recorded the assets and liabilities of the former Forterus at their fair value.
As a result the net liabilities assumed by the Company were $125,404. Thus, the
Company recorded a day one impairment of the investment of $1,673,257 due to the
limited cash projections of the former Forterus. Significant assets and
liabilities assumed by the Company were: $87,083 in horses; $27,198 in
investments; and $232,437 in related party notes payable.




Seasonality
of Business





Historically,
ABTTC has experienced an increase in clients during the months of the third
quarter and consistently low client acquisitions during the months of first
quarter.  Such variations in client’s impact the ABTTC’s costs of care
during these months, generally having a positive impact on ABTTC’s gross margins
and operating profits during the these months and a negative impact on ABTTC’s
gross margins and operating profits during these months





Concentration
of Risk





For the
nine months ended September 30, 2008, 100%, of our revenue was concentrated in
ABTTC, Inc.   Of this revenue approximately 70% was concentrated
in insurance contracts. The term of each contract is indefinite and terminable
at will by either parties.  The loss of any one of these contracts,
unless replaced by new business, may require us to delay or reduce operating
expenses and curtail our operations.





Mezey
Howarth Racing Stables




The
general objective of the Company’s Thoroughbred division is to acquire
Thoroughbred race prospects, race them and resell them if they are
claimers to generate revenue and profit for the Company. Initially, revenue
will be limited to the Company's portion of any purses won by horses owned by
the Company during their racing campaign and from horses claimed from the
Company. While the Company's administrative office is located in California, it
is anticipated that a some of its activities will take place outside that state.
Public sales and premier races of thoroughbreds are primarily centered in
Kentucky, California, New York and Florida.




Important
factors in predicting racing success of Thoroughbreds are pedigree and
conformation. Pedigree refers to the breeding history of the horse determined by
bloodlines from the Sire and Dam. Conformation is the physical attributes of the
horse as determined by personal observation. Management considers both of these
attributes in selecting all of its Thoroughbreds, and anticipates suitable
investigation for any future prospects acquired by the Company. Management may
retain the services of outside consultants and veterinarians to assist in
evaluation of future Bloodstock. No agreements currently exist with any
consultants, and whether management will continue to utilize the services of the
same consultants is yet to be determined; however, management would not hesitate
to recommend these consultants for service in the future. Given the very large
number of prospects placed into the market in any given year, management does
anticipate that it may be necessary to enlist the aid of bloodstock agents in
locating thoroughbreds suitable to the Company's purpose in the
future.





The
division was organized and exists for the purpose of acquiring, owning,
managing, training, racing and ultimately syndicating thoroughbred racing
prospects. It is not the intention of the Company to enter into the business of
breeding thoroughbreds, although management reserves the right to do so should
it ultimately be determined that it is in the best interest of the Company and
its shareholders. Management has set its efforts towards producing revenues and
profit through the placement of Company Thoroughbreds in established races
throughout the United States. Management anticipates that eventually, Company
revenues and profit will depend to a certain extent upon the sale or syndication
of Company owned Thoroughbreds. It is the intention of management to primarily
focus on the acquisition of Yearlings, although horses of racing age may be
acquired from time to time depending upon the then existing circumstances.
Management anticipates that acquisitions of Bloodstock will initially be limited
due to the Company's limited working capital. Results of Operations
Substantially all of the Company's revenues are obtained from purses offered by
races in which its Thoroughbreds participate. As the Company matures, it may
receive revenues from the sale or syndication of its Thoroughbreds during or
following completion of their racing career. The Expenses incurred by the
Company include operating expenses associated with training and racing its
Thoroughbreds, as well as administrative expenses.




The
Company contracts with trainers for each horse, which is stabled with the
trainer. The trainers used by the Company maintain their stables at the various
racetracks. Accordingly, all of its Thoroughbreds are boarded with independent
third parties. Many factors will influence the Company's determination of
whether and where to race the thoroughbreds acquired by the Company. Pedigree,
past performance, conditioning and purses will be evaluated by the Company in
conjunction with any trainers retained by the Company in plotting the horse's
racing campaign. While no specific venue has been determined as of the date of
this report, it is anticipated that the Thoroughbreds will be raced at the race
tracks in the United States, as the condition and breeding of its Bloodstock
dictates. Possible venues include Churchill Downs and Keeneland in Kentucky,
Hollywood Park and Santa Anita in Los Angeles, Del Mar in San Diego, Remington
Park in Oklahoma City, Aqueduct and Saratoga in New York, Arlington Park in
Chicago and Garden State in New Jersey. Evaluation of racing venues will depend
primarily on recommendations of trainers retained by the Company and the
condition, training and breeding of Company racing prospects. Shareholders may
be provided specific information as to important races in advance and results
following conclusion of races conducted by thoroughbreds of the
Company.




Horses
not deemed qualified to be raced by the Company may be "pinhooked" or re-sold by
the Company shortly following acquisition. Pinhooking can be a means of reducing
the Company's risk in any particular prospect by transferring the horse prior to
completion of his development. A ready market for resale of Thoroughbred racing
prospects exists in various parts of the United States, and management is
familiar with various sales in those venues. While pinhooking may be utilized to
reduce the Company's risk in any single fiscal year, it is not anticipated to be
a major source of revenue in the foreseeable future.




In order
for the Company to expand this division, the Company will need to raise
additional funds to acquire the necessary Thoroughbreds.





Inflation




We
believe that inflation has not has a material effect on our
operations.




Off
Balance Sheet Arrangements




We do not
maintain off-balance sheet arrangements.




Recent Accounting
Pronouncements




SFAS
No. 141R, Business Combinations




In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141(R),Business
Combinations  (SFAS No. 141R). SFAS 141R will significantly
change the accounting for and reporting of business combination transactions in
consolidated financial statements. SFAS 141R retains the fundamental
requirements in Statement 141,Business
Combinations  while providing additional definitions, such as
the definition of the acquirer in a purchase and improvements in the application
of how the acquisition method is applied. This Statement becomes effective
January 1, 2009.  We are currently evaluating the impact this guidance
will have on our financial statements.




ITEM
4. CONTROLS AND PROCEDURES






(a)
Evaluation of disclosure controls and procedures




Our   Chief  Executive  Officer  and  Chief  Financial  Officer  evaluated  our
disclosure  of
controls  and  procedures  (as  defined
in Rule 13a-14 (c) of the Securities Exchange Act of 1934 (the
"Exchange  Act")  as  of  a date within
90 days  before the filing date of this report and has concluded
that  as  of  the evaluation date, our disclosure
controls and procedures are effective to ensure that information  we
are required to disclose in reports that we file or submit under the
Exchange  Act  is recorded, processed, summarized and
reported within the time periods
specified  in  the  Securities and Exchange
Commission's rules and forms.






(b)
Changes in internal controls






Subsequent
to the date of their evaluation, there were no significant changes in our
internal controls over financial reporting or in other factors that
could   significantly   affect   these
controls.  There were no significant deficiencies or material
weaknesses in our internal controls so no corrective actions were
taken.







SIGNATURES






In
accordance with the requirements of the Exchange Act, the registrant has caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.




FORTERUS,
      INC.








By:/s/ Paul
      HowarthNovember
      19, 2008
            Paul
      HowarthChief
      Executive Officer































EXHIBIT
LIST






31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002






31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002






32.1
Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to
Rule 13a - 14(b))



























EXHIBIT
31.1








CERTIFICATION
PURSUANT TO SECTION 302


OF THE
SARBANES-OXLEY ACT OF 2002





I, Paul
Howarth, certify that:





1. I have
reviewed this Form 10-Q for Forterus, Inc.;





2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the periods covered by this report;





3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the small business issuer as
of, and for, the periods presented in this report;





4. The
small business issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and
have:





a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;





b)
Evaluated the effectiveness of the small business issuer's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the
period covered by this report based on such evaluation; and





c)
Disclosed in this report any change in the small business issuer's internal
control over financial reporting that occurred during the small business
issuer's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the small business issuer's internal
control over financial reporting;




and





5. The
small business issuer's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the small business issuer's auditors and the audit committee of the small
business issuer's board of directors (or persons performing the equivalent
functions):





a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the small business issuer's ability to record, process,
summarize and report financial information; and





b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the small business issuer's internal control over
financial reporting.






Date:
November 19, 2008





/s/ Paul
Howarth


--------------------------


Paul
Howarth


Chief
Executive Officer

















EXHIBIT
31.2








CERTIFICATION
PURSUANT TO SECTION 302


OF THE
SARBANES-OXLEY ACT OF 2002





I, Paul
Howarth, certify that:





1. I have
reviewed this Form 10-Q for Forterus, Inc.;





2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the periods covered by this report;





3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the small business issuer as
of, and for, the periods presented in this report;





4. The
small business issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and
have:





a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;





b)
Evaluated the effectiveness of the small business issuer's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the
period covered by this report based on such evaluation; and





c)
Disclosed in this report any change in the small business issuer's internal
control over financial reporting that occurred during the small business
issuer's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the small business issuer's internal
control over financial reporting;




and





5. The
small business issuer's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the small business issuer's auditors and the audit committee of the small
business issuer's board of directors (or persons performing the equivalent
functions):





a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the small business issuer's ability to record, process,
summarize and report financial information; and





b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the small business issuer's internal control over
financial reporting.








Date:
November 19, 2008











/s/ Paul
Howarth


--------------------------


Paul
Howarth


Chief Financial
Officer








EXHIBIT
32.1





CERTIFICATION
OF THE CHIEF EXECUTIVE OFFICER


PURSUANT
TO 18 U.S.C. SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002





I, Paul
Howarth,Chief Executive Officer of Forterus, Inc. (the "Company"), do hereby
certify to the best of my knowledge and belief that:





(1) The
Company’s 10-Q  (the “Report”) fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;
and





(2) the
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.





Date:
November 18, 2008








By: /s/
Paul Howarth


-
----------------------


Paul
Howarth, CEO