Cosmos Health Inc. - Annual Report: 2010 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
|
x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the fiscal year ended July 31,
2010
|
|
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
|
|
For
the transition period from _________ to ________
|
|
|
Commission
file number: 333-162597
|
|
PRIME ESTATES AND
DEVELOPMENTS, INC.
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Nevada
|
27-0611758
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
200
South Wacker Drive, Suite 3100, Chicago, 60606, IL.
|
60606
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
telephone number: (312) 674.4529
|
|
|
Securities
registered under Section 12(b) of the Exchange Act:
|
|
|
Title
of each class
|
Name
of each exchange on which registered
|
|
None
|
not
applicable
|
|
Securities
registered under Section 12(g) of the Exchange Act:
|
|
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common Stock, par
value $0.001
|
not
applicable
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes o 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 x No
o
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the past 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
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) 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. Yes o No
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer o
|
Accelerated
filer o
|
|
Non-accelerated
filer o
|
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 o No
x
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. Not
available
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date. 24,275,282 as of November 15,
2010.
Table of
Contents
|
Page
|
||
|
PART I
|
||
|
Item 1.
|
Business
|
3
|
|
Item 2.
|
Properties
|
4
|
|
Item 3.
|
Legal
Proceedings
|
4
|
|
Item 4.
|
Submission of Matters to a Vote
of Security Holders
|
4
|
|
PART II
|
||
|
Item 5.
|
Market for Registrant’s Common
Equity and Related Stockholder Matters and Issuer Purchases of Equity
Securities
|
5
|
|
Item 6.
|
Selected Financial
Data
|
5
|
|
Item 7.
|
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
|
6
|
|
Item 7A.
|
Quantitative and Qualitative
Disclosures About Market Risk
|
8
|
|
Item 8.
|
Financial Statements and
Supplementary Data
|
8
|
|
Item 9.
|
Changes In and Disagreements With
Accountants on Accounting and Financial Disclosure
|
9
|
|
Item
9A(T).
|
Controls and
Procedures
|
9
|
|
Item 9B.
|
Other
Information
|
10
|
|
PART III
|
||
|
Item 10.
|
Directors, Executive Officers and
Corporate Governance
|
11
|
|
Item 11.
|
Executive
Compensation
|
13
|
|
Item 12.
|
Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters
|
14
|
|
Item 13.
|
Certain Relationships and Related
Transactions, and Director Independence
|
15
|
|
Item 14.
|
Principal Accountant Fees and
Services
|
15
|
|
PART IV
|
||
|
Item 15.
|
Exhibits, Financial Statement
Schedules
|
16
|
2
PART I
Company
Overview
Prime
Estates and Developments, Inc. (“Prime Estates”, “The Company”, “we”, or “us”)
was incorporated in the State of Nevada on July 21, 2009 for the purpose of
acquiring and operating commercial real estate and real estate related
assets. Our principal office is located at 200 South Wacker Drive,
Suite 3100, Chicago, Illinois 60606. Telephone: 312.674.4529.
Our
Business
We intend
to acquire and operate commercial real estate and real estate related-assets in
Greece, Bulgaria, Romania and the United States. We intend to focus on acquiring
commercial properties such as those requiring development, redevelopment or
repositioning, those located in markets and submarkets with what we believe to
be high growth potential and those available from sellers who are distressed or
face time-sensitive deadlines.
In
addition, given current economic circumstances in the real estate industry, our
investment strategy may also include investments in real estate-related assets
that we believe present opportunities for significant current income. Such
investments may also have what we believe to be opportunities for capital gain,
whether as a result of a discount purchase or related equity
participations.
We may
acquire a wide variety of commercial properties, including office, industrial,
retail, hospitality, recreation and leisure, single-tenant, multifamily and
other real properties. These properties may be existing, income-producing
properties, newly constructed properties or properties under development or
construction and may include multifamily properties purchased for conversion
into condominiums and single-tenant properties that may be converted for
multifamily use.
Assuming
we raise sufficient funding, our investment strategy is designed to provide
investors with a diversified portfolio of real estate
assets. Although we have reviewed the real estate markets in the
countries in which we intend to acquire properties, we have no contract,
agreement or commitment to acquire any property as of the date of this
filing.
Specifically,
we have taken the following steps in furtherance of our business
plan:
We have
enriched our knowledge in the real estate market in Greece, Bulgaria, Romania
and the United States by studying the existing statistics on this market and by
having extensive discussions with many experts of the market as
follows:
|
·
|
Overall
we have reviewed 39 properties or development projects in two countries,
the USA and Greece.
|
|
|
·
|
The
types of properties we have reviewed are 8 residential and 31
commercial.
|
|
|
·
|
Overall
we have met with 37 real estate agents in two countries, the USA and
Greece.
|
|
|
·
|
We
have met with 20 real estate agents in the U.S. and another 17 in
Greece.
|
|
|
·
|
We
have contacted two appraisers, one in the U.S. and another one in Greece.
The appraiser we contacted in Greece is able to make appraisals also in
Bulgaria and in Romania. In his team he also includes other scientists
such as architects, engineers, topographers and
seismologists.
|
|
|
·
|
We
have signed Consulting Agreements with 8 consultants that will assist the
company in Management, Public Relations, Strategic Planning, Corporate
organization & structure, estimation, due diligence, acquisition,
development, renovation, sale, and management of Real Estate properties,
locating proper Real Estate, management of Real Estate, and locating and
introducing buyers for Real Estate that the company wishes to lease or
sell.
|
|
|
·
|
In
July 2010 we signed a Joint Venture Agreement with Madison Realty
Advisors, LLC (“Madison”). Madison has extensive experience in the
business of acquiring, financing, managing and selling commercial real
estate properties for itself and third parties. Madison will actively seek
commercial real estate properties for acquisition. In connection
therewith, Madison will negotiate the acquisition, perform due diligence
on the properties, arrange financing and close the properties. Then
perform property management, asset management and be responsible for the
ultimate disposition of the properties. All property acquisitions shall be
subject to the approval of Prime.
|
3
Our
discussions with various individuals concerning these properties and projects
has included general discussions of acquiring properties directly either
ourselves or in a joint venture with others or of developing properties either
ourselves or in a joint venture with others, as described above. As
of the date of this filing, all such discussions have been general and we have
no specific plan as to whether we will acquire or develop ourselves or jointly
any specific properties or projects. There is no limitation in the
amount of funds we may invest in either property acquisition or property
development. There is no limitation on or percentage allocation of
funds or assets between property acquisition and property development or between
100% ownership or joint venture ownership.
Competition
We face
significant competition both in acquiring properties, repositioning properties
and in attracting renters. Our market area is highly competitive, and we will
face direct competition from a significant number of real estate investors, many
with a local, state-wide or regional presence and, in some cases, a national
presence. Many of these investors are significantly larger and have greater
financial resources than we do. We have significantly less capital, assets,
revenues, employees and other resources than our local, regional and/or national
and international competition.
We will
compete based upon the following factors: We intend to blend
best-in-class, sell-side fundamental research with an established quantitative
construction process. The team’s systematic approach strives to add excess
return while targeting volatility and tracking error to help control
risk. The quantitative approach efficiently processes large volumes
of information, analyzes complex interactions and removes behavioral biases from
investment decisions. The research is provided by analysts that are selected by
the team based on their quality of research, demonstrated record of
success, breadth and consistency of coverage.
Intellectual
Property
At
present, we do not have any patents, trademarks, licenses, franchises,
concessions, and royalty agreements, labor contracts or other proprietary
interests.
Employees
We have
no employees. The Company officers and directors are currently
fulfilling their roles via consulting agreements.
Research
and Development Expenditures
We have
not incurred any research or development expenditures since our
incorporation.
Subsidiaries
We do not
have any subsidiaries.
Besides
our leased office space, we do not presently lease or own any real
property.
We rent
the following property as our U.S. corporate office:
· Address:
City/State/Zip: 200 South Wacker Drive, Suite 3100, Chicago, Illinois
60606
· Name
of Landlord: Regus
· Term
of Lease: One year commencing October 1, 2010
· Monthly
Rental: $1,140
· Adequate
for current needs: Yes
We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
No
matters were submitted to a vote of the Company’s shareholders during the year
ended July 31, 2010.
4
PART II
Item 5. Market for Registrant’s
Common Equity and Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market
Information
Our
symbol is PMLT which is quoted on the OTCBB. Our first trade occurred
on July 23, 2010 where 400 shares traded hands for $1.25. Subsequent
to that date we have had light activity.
Penny
Stock
The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. Penny stocks are generally equity securities with
a market price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the SEC, that: (a) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains a description of the
broker’s or dealer’s duties to the customer and of the rights and remedies
available to the customer with respect to a violation of such duties or other
requirements of the securities laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks
and the significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in
penny stocks; and (f) contains such other information and is in such form,
including language, type size and format, as the SEC shall require by rule or
regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with (a) bid and offer quotations for the penny stock; (b)
the compensation of the broker-dealer and its salesperson in the transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each
penny stock held in the customer’s account.
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.
These
disclosure requirements may have the effect of reducing the trading activity for
our common stock should our stock ever be traded on a public market. Therefore,
stockholders may have difficulty selling our securities.
Holders
of Our Common Stock
As of
July 31, 2010, we had 24,218,960 shares of our common stock issued and
outstanding, held by approximately 53 persons.
Dividends
We
have not paid any cash dividends to date and does not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development
of our business.
Securities
Authorized for Issuance under Equity Compensation Plans
We do not
have any equity compensation plans.
A smaller
reporting company is not required to provide the information required by this
Item.
5
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,”
“will,” “would,” “will be,” “will continue,” “will likely result,” and similar
expressions. We intend such forward-looking statements to be covered by the
safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for
purposes of complying with those safe-harbor provisions. Forward-looking
statements are based on current expectations and assumptions that are subject to
risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on our operations and future prospects on a
consolidated basis include, but are not limited to: changes in economic
conditions, legislative/regulatory changes, availability of capital, interest
rates, competition, and generally accepted accounting principles. These risks
and uncertainties should also be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Further information concerning our business, including additional factors that
could materially affect our financial results, is included herein and in our
other filings with the SEC.
Plan
of Operation in the Next Twelve Months
Our
activities currently consist of website creation, and establishing additional
cooperation agreements with real estate agents to establish the flow of real
estate opportunities. We do not intend to activate a website until we
acquire properties and do not intend to put investor info on the site once
activated. We have not completed any closings that would result in revenue to
date and there can be no assurances that any future closings will result in
revenue.
Specifically,
our plan of operations for the next 12 months is as follows:
|
·
|
From
today until the end of January 2011 we plan to raise additional funds in
order to be able to cover our operational expenses and have the needed
financing to acquire our first pieces of real estate. We believe that the
proceeds raised in our prior Private Placements will satisfy our cash
requirements only until we finish our efforts for additional financing at
the end of January 2011. If we will not be able to raise any additional
funds by the end of January 2011 we do not anticipate to have the ability
to continue our operations. We may need to obtain debt financing to
implement our business plan. However, we initially contemplate pursuing
equity financing only to cover our expenses and finance our first
acquisitions of real estate properties. Of course, there is no assurance
that we will be able to raise any future capital in any amount and if we
fail to do so investors could lose their entire investment. We
estimate the cost of this equity financing if we are able to secure it to
be about $6,000, primarily legal and accounting costs and filing fees
associated with such an offering.
|
|
·
|
From
the beginning of February 2011 until the end of April 2011 we plan to
focus our efforts in order to locate the proper properties for acquisition
and do a full estimation and due diligence on them. We also plan to create
more collaborations with existing real estate agents in order to be able
to locate more properties and receive offers from properties that are
getting sold at opportunistic prices. We also plan to create
collaborations with freelancers who will have specific experience and
knowledge in certain specialized real estate areas such as appraisers,
engineers, archeologists, etc. The freelancers will be used in case by
case scenario whenever there is a need for their specialty. We wish to
create such collaborations with freelancers in order to have accurate real
estate estimations and development plans, and in order to have these
services at discount prices. The cost that we estimate to have in order to
locate the freelancers will be about $2,000.
|
|
|
·
|
Moreover,
by the end of April 2011 we believe that we will be able to locate enough
real estate opportunities and do a full estimation and due diligence on
them so that we will be able to take our first decision to acquire our
first property. We estimate that the cost in order to locate a property at
an opportunistic price and the cost of the needed due diligence for the
first property will be about
$3,000.
|
|
·
|
In
May 2011we believe that we will be able to close our first deal, do the
necessary paperwork and therefore acquire our first property. Moreover, in
order to have a diversified portfolio of properties we plan to locate and
acquire at least three more properties by the end of November 2011. Among
the properties that we will buy we intent to buy some properties that
generate or will within a period of three months generate income from
rent. Overall we plan to spend about 80% of the capital that we will have
raised in order to acquire real estate properties in the next twelve
months. Assuming that we will manage to raise about $10,000,000 until the
end of January 2011, we will invest about $8,000,000 in real estate
assets. Moreover, we plan to invest up to 5% of our raised funds in more
liquid types of assets such as real estate related securities, primarily
such as bonds backed by real estate. We plan to keep the rest
of our funds in cash. We estimate that the rest of our cash position will
be enough to cover all operational expenses of the company at least until
the end of the first quarter of
2012.
|
6
Significant
Equipment
We do not
intend to purchase any significant equipment for the next twelve
months.
Employees
We do not
have plans to change the number of our employees during the next twelve
months.
Results
of Operations for the year ended July 31, 2010
We have
not earned any revenues since our inception on July 21, 2010 aside from a de
minimus amount of interest income. We do not anticipate earning
revenues until such a time that we will be able to close our first real estate
transaction.
We
incurred operating expenses in the amount of $3,788,281, including related-party
interest of $952 for the year ended July 31, 210. The majority of
this cost is non-cash in nature and consists of shares issued to eight
consultants (3,811,960 shares issued with a corresponding general and
administrative expense of $3,720,196). The remainder of the expenses
were for compliance costs associated with our statutory filings.
We
anticipate our operating expenses will increase as we more fully implement our
business plan. The increase will be attributable to expenses to operating our
business, and the professional fees to be incurred in connection with our
reporting obligations as a public company as our business activity
increases.
Liquidity
and Capital Resources
As of
July 31, 2010, we had minimal cash and a working capital deficit of
$17,481. We currently do not engage nor intend to engage in any
business activities that provide cash flow until we enter into our first real
estate transaction.
Off
Balance Sheet Arrangements
As of
July 31, 2010, there were no off balance sheet arrangements.
Going
Concern
Our
financial statements are prepared using generally accepted accounting principles
applicable to a going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. We have
had no operating revenues and have generated no operations.
In order
to continue as a going concern and achieve a profitable level of operation, we
will need, among other things, additional capital resources and to develop a
consistent source of revenues. Management’s plans include seeking
capital to acquire operating real estate that should provide cash flows from
operations.
Our
ability to continue as a going concern is dependent upon our ability to
successfully accomplish our goals and eventually attain profitable
operations. The accompanying financial statements in this report do
not include any adjustments that might be necessary if we are unable to continue
as a going concern.
Critical
Accounting Policies
In
December 2001, the SEC requested that all registrants list their most “critical
accounting polices” in the Management Discussion and Analysis. The SEC indicated
that a “critical accounting policy” is one which is both important to the
portrayal of a company’s financial condition and results, and requires
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.
7
Recently
Issued Accounting Pronouncements
In June
2009, the Financial Accounting Standards Board (FASB) issued ASC Statement No.
105. The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles (ASC 105). ASC 105 has become the
single source authoritative nongovernmental U.S. generally accepted accounting
principles (GAAP), superseding existing FASB, American Institute of Certified
Public Accountants, Emerging Issues Task Force, and related accounting
literature. ASC 105 reorganized the thousands of GAAP pronouncements
into roughly 90 accounting topics and displays them using a consistent
structure. Also included is relevant SEC guidance organized using the
same topical structure in separate sections. The Company adopted ASC
105 on July 1, 2009. The adoption of ASC 105 did not have an impact
on the Company’s financial position or results of operations.
On
April 1, 2009, the Company adopted ASC 825-10-65, Financial Instruments –
Overall – Transition and Open Effective Date Information (ASC 825-10-65). ASC
825-10-65 amends ASC 825-10 to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements and also amends ASC 270-10 to require those disclosures in all
interim financial statements. The adoption of ASC 825-10-65 did not have a
material impact on the Company’s results of operations or financial
condition.
On
April 1, 2009, the Company adopted ASC 855, Subsequent Events (ASC 855).
ASC 855 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. It requires the disclosure of the
date through which an entity has evaluated subsequent events and the basis for
that date – that is, whether that date represents the date the financial
statements were issued or were available to be issued. This disclosure
should alert all users of financial statements that an entity has not evaluated
subsequent events after that date in the set of financial statements being
presented. The adoption of ASC 855 did not have a material impact on the
Company’s results of operations or financial condition.
On
July 1, 2009, the Company adopted ASU No. 2009-05, Fair Value
Measurements and Disclosures (Topic 820) (ASU 2009-05). ASU 2009-05 provided
amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for
the fair value measurement of liabilities. ASU 2009-05 provides clarification
that in circumstances in which a quoted price in an active market for the
identical liability is not available, a reporting entity is required to measure
fair value using certain techniques. ASU 2009-05 also clarifies that when
estimating the fair value of a liability, a reporting entity is not required to
include a separate input or adjustment to other inputs relating to the existence
of a restriction that prevents the transfer of a liability. ASU 2009-05 also
clarifies that both a quoted price in an active market for the identical
liability at the measurement date and the quoted price for the identical
liability when traded as an asset in an active market when no adjustments to the
quoted price of the asset are required are Level 1 fair value measurements. The
adoption of ASU 2009-05 did not have a material impact on the Company’s results
of operations or financial condition.
In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to ASC 605, Revenue Recognition) (ASU
2009-13). ASU 2009-13 requires entities to allocate revenue in an
arrangement using estimated selling prices of the delivered goods and services
based on a selling price hierarchy. The amendments eliminate the residual method
of revenue allocation and require revenue to be allocated using the relative
selling price method. ASU 2009-13 should be applied on a prospective
basis for revenue arrangements entered into or materially modified in fiscal
years beginning on or after June 15, 2010, with early adoption permitted.
The Company does not expect adoption of ASU 2009-13 to have a material impact on
the Company’s results of operations or financial condition.
A smaller
reporting company is not required to provide the information required by this
Item.
See the
financial statements annexed to this annual report.
8
None.
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) under the Exchange Act.
This rule defines internal control over financial reporting as a process
designed by, or under the supervision of, the Company’s Chief Executive Officer
and Chief Financial Officer, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP. Our internal control over
financial reporting includes those policies and procedures that:
|
·
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect our transactions and
dispositions;
|
|
·
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP, and that
our receipts and expenditures are being made only in accordance with
authorizations of management and directors of the
Company; and
|
|
·
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could
have a material effect on the financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. In addition, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
With the
participation of the Chief Executive Officer and the Chief Financial Officer,
our management conducted an evaluation of the effectiveness of our internal
control over financial reporting. Based on this evaluation, our
management has concluded that our internal control over financial reporting was
not effective as of July 31, 2010, as the result of a material
weakness. The material weakness results from significant
deficiencies in internal control that collectively constitute a material
weakness.
A
significant deficiency is a deficiency, or combination of deficiencies, in
internal control over financial reporting that is less severe than a material
weakness, yet important enough to merit attention by those responsible for
oversight of the registrant’s financial reporting. We had the following
significant deficiencies at July 31, 2010:
|
·
|
We
have only one consultant to oversee bank reconciliations, posting
payables, and so forth, so there are no checks and balances on internal
controls.
|
Remediation
of Material Weakness
We are
unable to remedy the material weakness in our internal controls until we are
able to hire additional employees, so that we may then introduce checks and
balances on internal controls.
Limitations
on the Effectiveness of Internal Controls
Our
management, including our Chief Executive Officer and our Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal control over financial reporting are or will be capable of preventing
or detecting all errors or all fraud. Any control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that
the control system’s objectives will be met. The design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements, due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns may occur
because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of controls. The design of any system of controls is based
in part on certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Projections of any evaluation of controls
effectiveness to future periods are subject to risk.
9
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 our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.
During
the most recently completed fiscal quarter, there has been no change in our
internal control over financial reporting that has materially affected or is
reasonably likely to materially affect, our internal control over financial
reporting.
None
10
PART III
The
following information sets forth the name of our sole executive officers and
directors, their ages age as of July 31, 2010 and their present
positions.
|
Name
|
Age
|
Position Held with the
Company
|
||
|
Spiros
Sinnis1
|
37
|
Chief
Executive Officer and Board Chairman
|
||
|
Vasileios
Mavrogiannis
|
38
|
Chief
Financial Officer and Director
|
||
|
Panagiotis
Drakopoulos
|
38
|
Secretary
and Director
|
|
|
1.
|
Mr.
Sinnis resigned on October 21, 2010 as Chief Executive Officer and Board
Chairman of the Company. He was replaced on an interim basis by
Mr. Panagiotis Drakopoulos (See Note 7 to the Financial
Statements).
|
Set forth
below is a brief description of the background and business experience of our
executive officers and directors.
Spiros
Sinnis
Spiros
Sinnis joined us as President and Director upon formation. From
November 2008 to July 2009 he was Business Development Manager of Dynamic
Investments Ltd., a business consulting firm. From July 2007 to
November 2008, he was Chief Marketing Officer, Lifecycle Investments, a Life
Settlement company. From July 1998 to July 2007, he was President of
Sinnis Consulting consulting European Institutions on investments.
On
October 21, 2010, Mr. Sinnis resigned as Chief Executive Officer and Board
Chairman of the Company. He was replaced on an interim basis by Mr.
Panagiotis Drakopoulos.
Vasileios
Mavrogiannis
Vasileios
Mavrogiannis joined us as Treasurer and Director upon
formation. Since June 2006, he has been Director and Vice-President
of Dynamic Investments Ltd., a business consulting firm. Prior to
June 2006, he was unemployed.
Panagiotis
Drakopoulos
Panagiotis
Drakopoulos joined us as Secretary and Director upon formation. Since
June 2006, he has been Director and President of Dynamic Investments
Ltd., a business consulting firm. From June 2006 to July 2009 he was
also Director of Sea Star Shipping SA, involved in the management of
ships. Prior to June 2006, he was unemployed.
Directors
Our
bylaws authorize no less than one (1) and more than nine (9)
directors. As of July 31, 2010, we had three
directors: Spiros Sinnis, Vasileios Mavrogiannis and Panagiotis
Drakopoulos. On October 25, 2010, Mr. Sinnis was replaced by
Panagiotis Drakopoulos as Chairman of the Board.
Term
of Office
Our
Directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Family
Relationships
There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, during the past five years, none of the
following occurred with respect to a
present or former director, executive officer, or employee: (1) 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; (2) any conviction in a
criminal proceeding or being subject to a
pending criminal
proceeding (excluding traffic violations and
other minor offenses); (3) 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 or her
involvement in any type of business, securities or banking
activities; and (4) being found
by a court of competent jurisdiction (in a civil
action), the SEC or the
Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
11
Audit
Committee
We do not
have a separately-designated standing audit committee. The entire Board of
Directors performs the functions of an audit committee, but no written charter
governs the actions of the Board when performing the functions of what would
generally be performed by an audit committee, including approving the selection
of our independent accountants.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers and
persons who beneficially own more than ten percent of a registered class of the
Company’s equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent
beneficial shareholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. To the best of our
knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments
thereof) received by us during or with respect to the year ended July 31, 2010,
the following persons have failed to file, on a timely basis, the identified
reports required by Section 16(a) of the Exchange Act during fiscal year ended
July 31, 2010:
|
Name
and principal position
|
Number
of late reports
|
Transactions
not timely reported
|
Known
failures to file a required form
|
||||
|
Spiros
Sinnis, Chief Executive Officer and Board Chairman
|
0
|
0
|
0
|
||||
|
Vasileios
Mavrogiannis, Chief Financial Officer and Director
|
0
|
0
|
0
|
||||
|
Panagiotis
Drakopoulos, Corporate Secretary and Director
|
0
|
0
|
0
|
Code
of Ethics
As of
July 31, 2010 , we had not adopted a Code of Ethics for Financial Executives,
which would include our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
12
Summary
Compensation Table
The table
below summarizes all compensation awarded to, earned by, or paid to both to our
officers and to our directors for all services rendered in all capacities to us
for our fiscal year ended July 31, 2010 and for the period from inception (July
21, 2009) to July 31, 2009.
|
SUMMARY
COMPENSATION TABLE
|
|||||||||||||||||||
|
Name
|
YE
7/31
|
Salary ($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||
|
Spiros
Sinnis
|
2010
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||
|
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
Vasileios
Mavrogiannis
|
2010
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||
|
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
Panagiotis
Drakopoulos
|
2010
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||
|
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Mr.
Sinnis is the Chief Executive Officer and Board Chairman
Mr.
Mavrogiannis is the Chief Financial Officer and a Director
Mr. Drakopoulos is the Corporate Secretary
and a Director
Narrative
Disclosure to the Summary Compensation Table
We have
not entered into any employment agreement or consulting agreement with our
executive officers. There are no arrangements or plans in which we
provide pension, retirement or similar benefits for executive
officers.
Although
we do not currently compensate our officers, we reserve the right to provide
compensation at some time in the future. Our decision to compensate
officers depends on the availability of our cash resources with respect to the
need for cash to further our business purposes.
Outstanding
Equity Awards at Fiscal Year-End
The table
below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer as of July 31,
2010.
|
OUTSTANDING
EQUITY AWARDS AT YEAR END
|
|||||||||||||||||||
|
Number
of Securities Underlying Unexercised Options (#)
|
Option
Exercise
|
Option
Expiration
|
Option
Expiration
|
No.
of Shares or Units of Stock that Have Not
|
Market
Value of Shares or Units of Stock that Have Not
|
Market
Value of Shares or Units of Stock that Have Not
|
Equity
Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That
Have Not
|
||||||||||||
|
Name
|
Exercisable
|
Unexercisable
|
Price
($)
|
Date
|
Date
|
Vested
(#)
|
Vested
($)
|
Vested
($)
|
Vested
|
||||||||||
|
Spiros
Sinnis
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||
|
Vasileios
Mavrogiannis
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||
|
Panagiotis
Drakopoulos
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||
Stock
Option Grants
We have
not granted any stock options to the executive officers or directors since our
inception.
13
Director
Compensation
The table
below summarizes all compensation awarded to, earned by, or paid to our director
for all services rendered in all capacities to us for the period from inception
(July 21, 2009) through July 31, 2010.
|
DIRECTOR
COMPENSATION
|
|||||||||||||||
|
Name
|
Fees
Earned or
Paid
in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||
|
Spiros
Sinnis
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||
|
Vasileios
Mavrogiannis
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||
|
Panagiotis
Drakopoulos
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||
Narrative
Disclosure to the Director Compensation Table
We do not
pay any compensation to our directors at this time. However, we reserve the
right to compensate our directors in the future with cash, stock, options, or
some combination of the above.
We have
not reimbursed our directors for expenses incurred in connection with attending
board meetings nor have we paid any directors fees or other cash compensation
for services rendered as a director for the period from inception (July 21,
2009) to July 31, 2010.
We have
no formal plan for compensating our directors for their services in their
capacity as directors. In the future we may grant options to our
directors to purchase shares of common stock as determined by our Board of
Directors or a compensation committee that may be established.
Stock
Option Plans
We did
not have a stock option plan as of July 31, 2010.
The
following table sets forth certain information known to us with respect to the
beneficial ownership of our Common Stock as of July 31, 2010, by (1) all persons
who are beneficial owners of 5% or more of our voting securities, (2) each
director, (3) each executive officer, and (4) all directors and executive
officers as a group. The information regarding beneficial ownership of our
common stock has been presented in accordance with the rules of the Securities
and Exchange Commission. Under these rules, a person may be deemed to
beneficially own any shares of capital stock as to which such person, directly
or indirectly, has or shares voting power or investment power, and to
beneficially own any shares of our capital stock as to which such person has the
right to acquire voting or investment power within 60 days through the exercise
of any stock option or other right. The percentage of beneficial ownership as to
any person as of a particular date is calculated by dividing (a) (i) the number
of shares beneficially owned by such person plus (ii) the number of shares as to
which such person has the right to acquire voting or investment power within 60
days by (b) the total number of shares outstanding as of such date, plus any
shares that such person has the right to acquire from us within 60 days.
Including those shares in the tables does not, however, constitute an admission
that the named stockholder is a direct or indirect beneficial owner of those
shares. Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares that power with that person’s
spouse) with respect to all shares of capital stock listed as owned by that
person or entity.
14
Except as
otherwise indicated, all Shares are owned directly and the percentage shown is
based on 24,218,960 shares of common stock issued and outstanding as of July 31,
2010.
|
Name
and Address of Beneficial Owners of Common Stock1
|
Title
of Class
|
Amount
and Nature of
Beneficial
Ownership
|
%
of Common Stock2
|
||||
|
Spiros
Sinnis
200
South Wacker Drive, Suite 3100, Chicago, 60606, IL.
|
Common
Stock
|
6,659,967
|
27.5%
|
||||
|
Vasileios
Mavrogiannis
200
South Wacker Drive, Suite 3100, Chicago, 60606, IL.
|
Common
Stock
|
6,666,666
|
27.5%
|
||||
|
Panagiotis
Drakopoulos
200
South Wacker Drive, Suite 3100, Chicago, 60606, IL.
|
Common
Stock
|
6,666,667
|
27.5%
|
||||
|
DIRECTORS
AND OFFICERS – TOTAL
|
19,993,300
|
82.5%
|
|||||
|
5%
SHAREHOLDERS
|
|||||||
|
None
|
Common
Stock
|
0
|
0%
|
||||
|
Total
of 5% shareholders
|
0
|
0%
|
Other
than the shareholders listed above, we know of no other person who is the
beneficial owner of more than five percent (5%) of our common
stock.
None of
our directors or executive officers, nor any proposed nominee for election as a
director, nor any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to all of our outstanding
shares, nor any members of the immediate family (including spouse, parents,
children, siblings, and in-laws) of any of the foregoing persons has any
material interest, direct or indirect, in any transaction over the last two
years or in any presently proposed transaction which, in either case, has or
will materially affect us.
Below is
the table of Audit Fees (amounts in US$) billed by our auditor in connection
with the audit of the Company’s annual financial statements for the years
ended:
|
Financial
Statements for the
Year Ended July 31,
|
Audit Services
|
Audit Related Fees
|
Tax Fees
|
Other Fees
|
||||||||||||
|
2010
|
$ | 8,700 | $ | 0 | $ | 0 | $ | 0 | ||||||||
|
Inception
(7/21/09) to 7/31/09
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
15
PART IV
Index to
Financial Statements Required by Article 8 of Regulation S-X:
|
Audited
Financial Statements:
|
|
|
F-1
|
Report
of Independent Registered Public Accounting Firm
|
|
F-2
|
Consolidated
Balance Sheets as of July 31, 2010 and 2009;
|
|
F-3
|
Statements
of Operations for the year ended July 31, 2010 and the periods from
inception (July 21, 2009) to July 31, 2010 and 2009;
|
|
F-4
|
Statement
of Stockholders’ Deficit for period from inception to July 31,
2010;
|
|
F-5
|
Statements
of Cash Flows for the year ended July 31, 2010 and the periods from
inception (July 21, 2009) to July 31, 2010 and 2009;
|
|
F-6
|
Notes
to Financial Statements
|
|
Exhibit
No.
|
Description
|
|
|
3.1
|
Articles
of Incorporation, as amended
(1)
|
|
|
3.2
|
Bylaws,
as amended
(1)
|
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Securities Exchange Act Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Securities Exchange Act Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
1 Incorporated by reference to the Registration Statement on Form S-1 filed on October 20, 2009.
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Prime
Estates and Developments, Inc.
|
By:
|
/s/ Panagiotis Drakopoulos
|
|
|
Panagiotis Drakopoulos
|
||
|
Chief
Executive Officer and Board Chairman
|
||
|
November
15, 2010
|
||
In
accordance with Section 13 or 15(d) of the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
|
By:
|
Vasileios Mavrogiannis
|
|
|
Vasileios
Mavrogiannis
Chief
Financial Officer and Director
|
||
|
November
15, 2010
|
||
16
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
Prime
Estates and Developments, Inc.
(A
Development Stage Company)
We have
audited the accompanying balance sheets of Prime Estates and Developments,
Inc.(A Development Stage Company) as of July 31, 2010 and 2009 and the related
statements of operations, changes in shareholders’ equity (deficit) and cash
flows for the period then ended and from inception (July 21, 2009) through July
31, 2010. 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
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 Prime Estates and Developments,
Inc. as of July 31, 2010 and 2009, and the results of its operations and cash
flows for the periods described above 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
statement, the Company suffered a net loss from operations and has a net capital
deficiency, which raises substantial doubt about its ability to continue as a
going concern. Management’s plans regarding those 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/
M&K CPAS, PLLC
www.mkacpas.com
Houston,
Texas
November
15, 2010
17
PRIME
ESTATES AND DEVELOPMENTS, INC.
(A
Development Stage Company)
Balance
Sheets
|
July 31,
2010
|
July
31, 2009
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and equivalents
|
$ | 470 | $ | - | ||||
|
TOTAL
ASSETS
|
$ | 470 | $ | - | ||||
|
LIABILITIES
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 2,079 | $ | 4,600 | ||||
|
Note
payable – related party
|
15,872 | - | ||||||
|
TOTAL
LIABILITIES
|
17,951 | 4,600 | ||||||
|
SHAREHOLDERS’
EQUITY (DEFICIT)
|
||||||||
|
Preferred
stock, par value $0.001, authorized 100 million shares, none issued or
outstanding
|
- | - | ||||||
|
Common
stock, par value $0.001, authorized 200 million, 24,218,960 and 20,000,000
issued and outstanding at July 31, 2010 and 2009,
respectively.
|
24,219 | 20,000 | ||||||
|
Additional
paid-in capital
|
3,751,129 | (20,000 | ) | |||||
|
Deficit
accumulated during the development phase
|
(3,792,829 | ) | (4,600 | ) | ||||
|
TOTAL
SHAREHOLDERS’ EQUITY (DEFICIT)
|
(17,481 | ) | (4,600 | ) | ||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
$ | 470 | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
18
(A
Development Stage Company)
Statements
of Operations
|
Year
Ended
July
31,
2010
|
Inception
(July 21, 2009) to July 31, 2009
|
From
Inception (7/21/09) to Jul 30, 2010
|
||||||||||
|
Interest
income
|
$ | 52 | $ | - | $ | 52 | ||||||
|
General
and administrative expenses
|
3,787,329 | 4,600 | 3.791,929 | |||||||||
|
Interest
expense - related parties
|
952 | - | 952 | |||||||||
|
Net
operating loss
|
(3,788,229 | ) | (4,600 | ) | (3,792,829 | ) | ||||||
|
NET
LOSS
|
$ | (3,788,229 | ) | $ | (4,600 | ) | $ | (3,792,829 | ) | |||
|
Net
loss per share, basic and fully diluted
|
$ | (0.18 | ) | $ | - | |||||||
|
Weighted
average number of shares outstanding
|
20,908,152 | 20,000,000 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
19
PRIME
ESTATES AND DEVELOPMENTS, INC.
(A
Development Stage Company)
Statements
of Shareholders’ Equity (Deficit)
|
Common Stock, Par Value
$0.001
|
Additional
Paid
In
|
Develop.
Stage
|
Total
Shareholders’
|
|||||||||||||||||||
|
Date
|
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
|||||||||||||||||
|
Balances
at inception
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||||
|
Founders’
shares
|
07/31/09
|
20,000,000 | 20,000 | (20,000 | ) | - | - | |||||||||||||||
|
Net
loss, 7/21/09 to 7/31/09
|
(4,600 | ) | (4,600 | ) | ||||||||||||||||||
|
Balances,
7/31/09
|
20,000,000 | 20,000 | (20,000 | ) | (4,600 | ) | (4,600 | ) | ||||||||||||||
|
Shares
issued for services
|
08/04/09
|
101,960 | 102 | 10,094 | 10,196 | |||||||||||||||||
|
Shares
issued for cash
|
09/15/09
|
392,000 | 392 | 38,808 | 39,200 | |||||||||||||||||
|
02/03/10
|
15,000 | 15 | 14,985 | 15,000 | ||||||||||||||||||
|
Imputed
interest on related-party debt
|
952 | 952 | ||||||||||||||||||||
|
Shares
issued for services
|
06/16/10
|
3,710,000 | 3,710 | 3,706,290 | 3,710,000 | |||||||||||||||||
|
Net
loss, year ended 7/31/10
|
(3,788,229 | ) | (3,788,229 | ) | ||||||||||||||||||
|
Balances,
7/31/10
|
24,218,960 | $ | 24,219 | $ | 3,751,129 | $ | (3,792,829 | ) | $ | (17,481 | ) | |||||||||||
The
accompanying notes are an integral part of these financial
statements.
20
(A
Development Stage Company)
Statements
of Cash Flows
|
Year
Ended July 31,
|
From
Inception (7/21/09) to July 31,
|
|||||||||||
|
2010
|
2009
|
2010
|
||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net
loss
|
$ | (3,788,229 | ) | $ | (4,600 | ) | $ | (3,792,829 | ) | |||
|
Adjustments
to reconcile net loss with cash used in operations:
|
||||||||||||
|
Stock
based compensation
|
3,720,196 | 3,720,196 | ||||||||||
|
Imputed
interest
|
952 | 952 | ||||||||||
|
Change
in operating assets and liabilities:
|
- | |||||||||||
|
Other
current assets
|
- | - | ||||||||||
|
Accounts
payable and accrued expenses
|
(2,521 | ) | 4,600 | 2,079 | ||||||||
|
Net
cash used in operating activities
|
(69,602 | ) | - | (69,602 | ) | |||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
| - | - | - | ||||||||||
|
Net
cash provided by / used in investing activities
|
- | - | - | |||||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
|
Proceeds
from related party note payable
|
15,872 | 15,872 | ||||||||||
|
Proceeds
from the sale of common stock
|
54,200 | 54,200 | ||||||||||
|
Net
cash provided by financing activities
|
70,072 | - | 70,072 | |||||||||
|
NET
INCREASE / (DECREASE) IN CASH
|
470 | - | 470 | |||||||||
|
Cash
at beginning of period
|
- | - | - | |||||||||
|
Cash
at end of period
|
$ | 470 | $ | - | $ | 470 | ||||||
|
SUPPLEMENTAL
DISCLOSURES
|
||||||||||||
|
Cash
paid for interest
|
$ | - | $ | - | $ | - | ||||||
|
Cash
paid for income taxes
|
- | - | - | |||||||||
The
accompanying notes are an integral part of these financial
statements.
21
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2010 and 2009
NOTE
1 – NATURE OF ORGANIZATION
Business
and Organization
Prime
Estates and Developments, Inc. (“Prime Estates”, “The Company”, “we”, or “us”)
was incorporated in the State of Nevada on July 21, 2009 for the purpose of
acquiring and operating commercial real estate and real estate related
assets. On the date of its inception, the Company issued 20 million
shares of its common stock to three founders which were recorded at no value
(offsetting increases and decreases in Common Stock and Additional Paid in
Capital).
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
The
Company follows accounting principles generally accepted in the United States of
America. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the periods presented have been reflected
herein.
Use of
Estimates
The
preparation of financial statements, in conformity with accounting principles
generally accepted in the United States, requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these
estimates.
Cash and
Cash Equivalents
The
Company considers all highly liquid debt instruments and other short-term
investments with a maturity of three months or less, when purchased, to be cash
equivalents. There are no cash equivalents at July 31, 2010 nor
2009.
Revenue
Recognition
We plan
to recognize revenues from real estate sales under the full accrual method which
requires that revenues be recognized when the sale is consummated; when the
initial and continuing investments by the buyer in the property are sufficient;
All the risks and rewards of ownership reside with buyer; There is no continuing
duty or involvement by the seller post-sale (after closing); and, There is no
future subordination of any buyer receivable (seller financing cases). The
Company may also earn rental income and management fees. The fees are
recognized as they are earned.
Basic and
Diluted Net Loss Per Share
The
Company follows ASC No. 260, “Earnings Per Share” (ASC No. 260) that requires
the reporting of both basic and diluted earnings (loss) per
share. Basic earnings (loss) per share is computed by dividing net
income (loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. The calculation
of diluted earnings (loss) per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock. In accordance with ASC No. 260, any anti-dilutive
effects on net earnings (loss) per share are excluded. For the
periods ended July 31, 2010 and 2009, there were no common stock
equivalents.
As
of the year ended July 31, 2010 and 2009, there were no potentially
dilutive securities outstanding.
Fair
Value of Financial Instruments
Pursuant
to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is
required to estimate the fair value of all financial instruments included on its
balance sheet as of July 31, 2010. The Company’s financial instruments consist
of cash, accounts payable and notes payable to a related party. The
Company considers the carrying value of such amounts in the financial statements
to approximate their fair value due to the short-term nature of these financial
instruments.
22
Income
Taxes
The
Company recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered. The Company provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets likely.
Recent
Accounting Pronouncements
In June
2009, the Financial Accounting Standards Board (FASB) issued ASC Statement No.
105. The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles (ASC 105). ASC 105 has become the
single source authoritative nongovernmental U.S. generally accepted accounting
principles (GAAP), superseding existing FASB, American Institute of Certified
Public Accountants, Emerging Issues Task Force, and related accounting
literature. ASC 105 reorganized the thousands of GAAP pronouncements
into roughly 90 accounting topics and displays them using a consistent
structure. Also included is relevant SEC guidance organized using the
same topical structure in separate sections. The Company adopted ASC
105 as of its inception. The adoption of ASC 105 did not have an
impact on the Company’s financial position or results of
operations.
At its
inception, the Company adopted ASC 825-10-65, Financial Instruments – Overall –
Transition and Open Effective Date Information (ASC 825-10-65). ASC 825-10-65
amends ASC 825-10 to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements and also amends ASC 270-10 to require those disclosures in all
interim financial statements. The adoption of ASC 825-10-65 did not have a
material impact on the Company’s results of operations or financial
condition.
At its
inception, the Company adopted ASC 855, Subsequent Events (ASC 855). ASC 855
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. It requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis for that date –
that is, whether that date represents the date the financial statements were
issued or were available to be issued. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent events
after that date in the set of financial statements being presented. The adoption
of ASC 855 did not have a material impact on the Company’s results of operations
or financial condition.
At its
inception, the Company adopted ASU No. 2009-05, Fair Value Measurements and
Disclosures (Topic 820) (ASU 2009-05). ASU 2009-05 provided amendments to ASC
820-10, Fair Value Measurements and Disclosures – Overall, for the fair value
measurement of liabilities. ASU 2009-05 provides clarification that in
circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value
using certain techniques. ASU 2009-05 also clarifies that when estimating the
fair value of a liability, a reporting entity is not required to include a
separate input or adjustment to other inputs relating to the existence of a
restriction that prevents the transfer of a liability. ASU 2009-05 also
clarifies that both a quoted price in an active market for the identical
liability at the measurement date and the quoted price for the identical
liability when traded as an asset in an active market when no adjustments to the
quoted price of the asset are required are Level 1 fair value measurements. The
adoption of ASU 2009-05 did not have a material impact on the Company’s results
of operations or financial condition.
NOTE 3 -
GOING CONCERN
The
Company’s financial statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the realization of
assets and liquidation of liabilities in the normal course of
business. The Company has had no revenues and has generated
from operations.
In order
to continue as a going concern and achieve a profitable level of operations, the
Company will need, among other things, additional capital resources and
developing a consistent source of operating
revenues. Management’s plans include seeking financing to
acquire productive real estate properties.
23
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations. The accompanying financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
NOTE 4 –
CAPITAL STRUCTURE
Common
Stock
The
Company is authorized to issue 200 million common shares and has issued
24,218,960 as of July 31, 2010.
On August
4, 2009, we issued 101,960 shares to three consultants related to our statutory
filings. These shares were valued at $0.10 per share which reflects
the price at which our common stock was issued pursuant to a private placement
in September, 2009 (see below). These costs were recorded as a charge
to general and administrative expense.
During
September, 2009, we issued 392,000 shares at $0.10 per share to 43 accredited
investors for $39,200 in cash. This price was used to value the stock
based compensation described in the previous paragraph.
In
February, 2010, we issued 15,000 shares to an accredited investor for $15,000 in
cash.
In June,
2010 we issued 3,710,000 shares to eight consultants. We valued these
shares at the grant date ($1.00) and recorded a charge to general and
administrative expense of $3,710,000.
Preferred
Stock
The
Company is authorized to issue 100 million shares of preferred stock which has
preferential liquidation rights over common stock and is
non-voting. As of July 31, 2010, no shares have been
issued.
Potentially
Dilutive Securities
No
options, warrants or other potentially dilutive securities have been issued as
of July 31, 2010.
NOTE 5 –
INCOME TAXES
Deferred
income taxes are determined using the liability method for the temporary
differences between the financial reporting basis and income tax basis of the
Company’s assets and liabilities. Deferred income taxes are measured
based on the tax rates expected to be in effect when the temporary differences
are included in the Company’s tax return. Deferred tax assets and
liabilities are recognized based on anticipated future tax consequences
attributable to differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases.
The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 35% to pretax income
from continuing operations for the periods ended July 31, 2010 and 2009 due to
the following:
|
2010
|
2009
|
|||||||
|
Net
operating loss carryforwards
|
$ | 25,422 | $ | 1,610 | ||||
|
Valuation
allowance
|
(25,422 | ) | (1,610 | ) | ||||
| $ | - | $ | - | |||||
At July
31, 2010, the Company had net operating loss forwards of approximately $72,600
that may be offset against future taxable income through 2025. No tax
benefit has been reported in the July 31, 2010 financial statements since due to
the uncertainty surrounding the realizability of the benefit. The
potential tax benefit is offset by a valuation allowance of the same
amount.
NOTE 6 –
RELATED PARTY TRANSACTIONS
On the
date of our inception, we issued 20 million shares of our common stock to our
three officers and directors which were recorded at no value (offsetting
increases and decreases in Common Stock and Additional Paid in
Capital).
24
In
January, 2010, certain shareholders paid expenses on behalf of the company
totaling $15,872. This contribution is not evidenced by a promissory
note and bears no interest. We therefore imputed interest expense of
$952, charging income with that amount and increasing Additional Paid in
Capital.
We
believe that all related party transactions were on terms at least as favorable
as we would have secured in arm’s-length transactions with third
parties. Except as set forth above, we have not entered into any
material transactions with any director, executive officer, and promoter,
beneficial owner of five percent or more of our common stock, or family members
of such persons.
NOTE 7 –
SUBSEQUENT EVENTS
On
October 30, 2010, we issued 56,322 shares of our common stock to four accredited
investors and received $22,529 in cash.
On
October 21, 2010, Spiros Sinnis resigned as Chief Executive Officer and Board
Chairman.
On
October 25, 2010, the Board appointed Panagiotis Drakopoulos as Board Chairman
and Chief Executive Officer.
The
Company has evaluated subsequent events through the date these financial
statements were issued.
25
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
Prime
Estates and Developments, Inc.
|
|||
|
Date:
November 15, 2010
|
By:
|
/s/ Panagiotis Drakopoulos | |
|
Panagiotis
Drakopoulos
|
|||
|
Chairman
and Chief Executive Officer
|
|||
In
accordance with the Exchange Act , this report has been duly signed by the
following persons on behalf of the Company and in the capacities and on the
dates indicated.
|
/s/ Vasileios
Mavrogiannis
|
||||
|
Vasileios
Mavrogiannis
|
Date:
November 15, 2010
|
|||
|
Chief
Financial Officer and Director
|
|
/s/ Panagiotis
Drakopoulos
|
||||
|
Panagiotis
Drakopoulos
|
Date:
November 15, 2010
|
|||
|
Corporate
Secretary and Director
|
26