pmlt_10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2013
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________
Commission File Number: 333-162597
Prime Estates & Developments, Inc.
(Name of registrant in our charter)
|
Nevada
|
|
6552
|
|
27 0611758
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
IRS I.D.
|
|
200 South Wacker Drive, Suite 3100,
Chicago, Illinois
|
|
60606
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Telephone: 312.674.4529
N/A
(Former name, former address and former three months, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
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
As of May 13, 2013 there were 25,305,532 shares issued and outstanding of the registrant’s common stock.
PRIME ESTATES & DEVELOPMENTS, INC.
(A Development Stage Company)
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION |
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3 |
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| |
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| Item 1. |
Financial Statements
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3 |
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| |
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| Item 2. |
Management’s Discussion and Analysis or Plan of Operation.
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16 |
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| |
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| Item 3. |
Quantitative and Qualitative Disclosure about Market Risk
|
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22 |
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| Item 4. |
Controls and Procedures.
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22 |
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| PART II – OTHER INFORMATION |
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23 |
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| |
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| Item 1. |
Legal Proceedings.
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23 |
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| |
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| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
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23 |
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| |
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| Item 3. |
Defaults Upon Senior Securities
|
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24 |
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| Item 4. |
Safety Disclosures .
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24 |
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| Item 5. |
Other Information.
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24 |
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| Item 6. |
Exhibits.
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24 |
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| |
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| SIGNATURES |
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|
26 |
|
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements
PRIME ESTATES & DEVELOPMENTS, INC.
(A Development Stage Company)
BALANCE SHEETS
| |
|
04/30/13
(Unaudited)
|
|
|
07/31/12
(Audited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$ |
6,143 |
|
|
$ |
40 |
|
| |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$ |
6,143 |
|
|
$ |
40 |
|
| |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$ |
700 |
|
|
$ |
2,896 |
|
|
Salaries payable
|
|
|
175,000 |
|
|
|
110,000 |
|
|
Note payable - related party
|
|
|
125,000 |
|
|
|
100,266 |
|
| |
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
300,700 |
|
|
|
213,162 |
|
| |
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001, authorized 100 million shares, none issued and outstanding.
|
|
|
- |
|
|
|
- |
|
|
Common stock, par value $0.001, authorized 200 million, 25,305,532 and 24,709,282 issued and outstanding at April 30, 2013 and July 31, 2012, respectively.
|
|
|
25,305 |
|
|
|
24,709 |
|
|
Additional paid-in capital
|
|
|
4,273,504 |
|
|
|
4,048,332 |
|
|
Common stock payable
|
|
|
- |
|
|
|
6,500 |
|
|
Deficit accumulated during the development phase
|
|
|
(4,593,366 |
) |
|
|
(4,292,663 |
) |
|
TOTAL SHAREHOLDERS' DEFICIT
|
|
|
(294,557 |
) |
|
|
(213,122 |
) |
| |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
$ |
6,143 |
|
|
$ |
40 |
|
The accompanying notes are an integral part of these financial statements.
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
RESULTS OF OPERATIONS
(Unaudited)
| |
|
Nine months ended
April 30,
|
|
|
Three Months Ended
April 30,
|
|
|
From Inception (7/21/09) to
Apr 30,
|
|
| |
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
52 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
294,785 |
|
|
|
267,404 |
|
|
|
56,023 |
|
|
|
52,825 |
|
|
|
4,581,984 |
|
|
Interest expense - related parties
|
|
|
5,918 |
|
|
|
3,459 |
|
|
|
2,020 |
|
|
|
1,739 |
|
|
|
11,434 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss
|
|
|
(300,703 |
) |
|
|
(270,863 |
) |
|
|
(58,043 |
) |
|
|
(54,564 |
) |
|
|
(4,593,366 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$ |
(300,703 |
) |
|
$ |
(270,863 |
) |
|
$ |
(58,043 |
) |
|
$ |
(54,564 |
) |
|
$ |
(4,593,366 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and fully diluted
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
24,965,550 |
|
|
|
24,654,025 |
|
|
|
25,179,689 |
|
|
|
24,691,837 |
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| |
|
|
Common Stock, Par Value $0.001
|
|
|
Additional
Paid In
|
|
|
Common Stock |
|
|
Develop. Stage |
|
|
Total Shareholders' |
|
| |
Date
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
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 |
) |
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Continued)
| |
|
|
Common Stock, Par Value $0.001
|
|
|
Additional
Paid In
|
|
|
Common Stock |
|
|
Develop. Stage |
|
|
Total Shareholders' |
|
| |
Date
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Deficit
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
04/28/11
|
|
|
80,000 |
|
|
|
80 |
|
|
|
63,120 |
|
|
|
- |
|
|
|
|
|
|
63,200 |
|
|
Shares issued for cash
|
10/30/10
|
|
|
56,322 |
|
|
|
56 |
|
|
|
22,473 |
|
|
|
|
|
|
|
|
|
|
22,529 |
|
| |
03/16/11
|
|
|
10,000 |
|
|
|
10 |
|
|
|
5,990 |
|
|
|
|
|
|
|
|
|
|
6,000 |
|
| |
03/18/11
|
|
|
100,000 |
|
|
|
100 |
|
|
|
59,900 |
|
|
|
|
|
|
|
|
|
|
60,000 |
|
| |
03/31/11
|
|
|
14,000 |
|
|
|
14 |
|
|
|
8,386 |
|
|
|
|
|
|
|
|
|
|
8,400 |
|
| |
04/01/11
|
|
|
35,000 |
|
|
|
35 |
|
|
|
20,965 |
|
|
|
|
|
|
|
|
|
|
21,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest on related-party debt
|
|
|
|
|
|
|
|
|
|
|
|
835 |
|
|
|
|
|
|
|
|
|
|
835 |
|
|
Net loss, year ended 7/31/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(169,245 |
) |
|
|
(169,245 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, 7/31/11
|
|
|
|
24,514,282 |
|
|
|
24,514 |
|
|
|
3,932,798 |
|
|
|
- |
|
|
|
(3,962,074 |
) |
|
|
(4,762 |
) |
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Continued)
| |
|
|
Common Stock, Par Value $0.001
|
|
|
Additional
Paid In
|
|
|
Common Stock |
|
|
Develop. Stage |
|
|
Total Shareholders' |
|
| |
Date
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Deficit
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
08/12/11
|
|
|
100,000 |
|
|
|
100 |
|
|
|
59,900 |
|
|
|
|
|
|
|
|
|
60,000 |
|
| |
12/08/11
|
|
|
46,500 |
|
|
|
46 |
|
|
|
27,853 |
|
|
|
|
|
|
|
|
|
27,900 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
10/31/11
|
|
|
23,500 |
|
|
|
24 |
|
|
|
14,077 |
|
|
|
|
|
|
|
|
|
14,100 |
|
| |
03/06/12
|
|
|
25,000 |
|
|
|
25 |
|
|
|
9,975 |
|
|
|
|
|
|
|
|
|
10,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received for stock payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500 |
|
|
|
|
|
|
6,500 |
|
|
Imputed interest on related-party debt
|
|
|
|
|
|
|
|
|
|
|
|
3,729 |
|
|
|
|
|
|
|
|
|
|
3,729 |
|
|
Net loss, year ended 7/31/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(330,589 |
) |
|
|
(330,589 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, 7/31/12
|
|
|
|
24,709,282 |
|
|
|
24,709 |
|
|
|
4,048,332 |
|
|
|
6,500 |
|
|
|
(4,292,663 |
) |
|
|
(213,122 |
) |
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Continued)
| |
|
|
Common Stock, Par Value $0.001
|
|
|
Additional
Paid In
|
|
|
Common Stock |
|
|
Develop. Stage |
|
|
Total Shareholders' |
|
| |
Date
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Deficit
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
02/28/13
|
|
|
400,000 |
|
|
|
400 |
|
|
|
99,600 |
|
|
|
|
|
|
|
|
|
100,000 |
|
|
Reduction of common stock payable
|
08/28/12
|
|
|
16,250 |
|
|
|
16 |
|
|
|
6,484 |
|
|
|
(6,500 |
) |
|
|
|
|
|
- |
|
|
Director services
|
09/01/12
|
|
|
180,000 |
|
|
|
180 |
|
|
|
70,020 |
|
|
|
|
|
|
|
|
|
|
70,200 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options issued for director services
|
|
|
|
|
|
|
|
|
|
|
|
43,151 |
|
|
|
|
|
|
|
|
|
|
43,151 |
|
|
Imputed interest on related-party debt
|
|
|
|
|
|
|
|
|
|
|
|
5,917 |
|
|
|
|
|
|
|
|
|
|
5,917 |
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(300,703 |
) |
|
|
(300,703 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, 4/30/13
|
|
|
|
25,305,532 |
|
|
$ |
25,305 |
|
|
$ |
4,273,504 |
|
|
$ |
- |
|
|
$ |
(4,593,366 |
) |
|
$ |
(294,557 |
) |
The accompanying notes are an integral part of these financial statements
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
| |
|
Nine months ended
April 30,
|
|
|
From Inception (7/21/09) to
Apr 30,
|
|
| |
|
2013
|
|
|
2012
|
|
|
2013 |
|
| |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(300,703 |
) |
|
$ |
(270,863 |
) |
|
$ |
(4,593,366 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss with cash used in operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
113,351 |
|
|
|
87,900 |
|
|
|
3,984,647 |
|
|
Imputed interest
|
|
|
5,917 |
|
|
|
3,459 |
|
|
|
11,433 |
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
- |
|
|
|
(1,471 |
) |
|
|
- |
|
|
Accounts payable and accrued expenses
|
|
|
(2,196 |
) |
|
|
1,849 |
|
|
|
2,896 |
|
|
Salaries payable
|
|
|
65,000 |
|
|
|
- |
|
|
|
110,000 |
|
|
Accrued expenses - related party
|
|
|
45,000 |
|
|
|
125,000 |
|
|
|
80,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(73,631 |
) |
|
|
(54,126 |
) |
|
|
(296,586 |
) |
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net cash provided by / used in investing activities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related party note payable
|
|
|
23,473 |
|
|
|
14,823 |
|
|
|
61,261 |
|
|
Principal payments on related-party note payable
|
|
|
(43,739 |
) |
|
|
- |
|
|
|
(61,261 |
) |
|
Proceeds from the sale of common stock
|
|
|
100,000 |
|
|
|
24,100 |
|
|
|
302,729 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
79,734 |
|
|
|
38,923 |
|
|
|
302,729 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE / (DECREASE) IN CASH
|
|
|
6,103 |
|
|
|
(15,203 |
) |
|
|
6,143 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period
|
|
|
40 |
|
|
|
15,238 |
|
|
|
- |
|
|
Cash at end of period
|
|
$ |
6,143 |
|
|
$ |
35 |
|
|
$ |
6,143 |
|
PRIME ESTATES AND DEVELOPMENTS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
| |
|
Nine months ended
April 30,
|
|
|
From Inception (7/21/09) to
Apr 30,
|
|
| |
|
2013
|
|
|
2012
|
|
|
2013
|
|
| |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income taxes
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS
|
|
|
|
|
|
|
Reduction of stock payable
|
|
$ |
6,500 |
|
|
$ |
- |
|
|
$ |
6,500 |
|
The accompanying notes are an integral part of these financial statements.
PRIME ESTATES & DEVELOPMENTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
APRIL 30, 2013
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
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).
In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year.
Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying financial statements have been prepared in accordance with principles generally accepted in the United States of America.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of April 30, 2013 and July 31, 2012, there were no cash equivalents.
Development Stage Enterprise
The Company complies with the accounting rules related to the characterization of the Company as development stage.
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.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment in accordance with the accounting rules related to Property, Plant and Equipment (“Codification Topic 360”). Under these rules, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized or the amount, if any, which the carrying value of the asset exceeds the fair value.
Fair Value of Financial Instruments
Financial instruments, including cash, receivables, accounts payable, and notes payable are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with market rates. No adjustments have been made in the current period.
Income Taxes
The Company accounts for income taxes under the accounting rules related to income taxes (“Codification Topic 740”). Under these rules, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. There was no current or deferred income tax expense or benefits for the periods ending April 30, 2013 and July 31, 2012.
Basic and Diluted Net Loss Per Common Share
Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the periods presented. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same due to the anti dilutive nature of potential common stock equivalents.
Stock Based Compensation
The Company accounts for stock-based employee compensation arrangements using the fair value method in accordance with the accounting provisions relating to share-based payments (“Codification Topic 718”). The company accounts for the stock options issued to non-employees in accordance with these provisions.
As is more fully discussed in Note 3, the Company issued 240,000 options as compensation to our Chief Financial Officer.
Organizational and Offering Costs
Costs incurred to organize the Company are expensed as incurred. Offering costs incurred in connection with the Company’s common share offerings are reflected as a reduction of capital upon the receipt of the net proceeds of the offering or charged to expense if the offering is not completed. No such costs have been incurred as of April 30, 2013.
Recent Accounting Pronouncements
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income” in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 is not expected to have a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.
NOTE 2 – GOING CONCERN
These financial statements have been prepared on a going concern basis, which implies Prime Estates will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Prime Estates be unable to continue as a going concern.
The Company had incurred losses and has a working capital deficit as of April 30, 2013. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern.
The Company intends to acquire and operate commercial real estate but will require capital to do so. There is no guarantee that we will be able to raise the capital necessary to make our acquisitions or if, upon acquiring properties, we will be able to generate positive cash flows from operations. These factors raise substantial doubt regarding Prime Estates’ ability to continue as a going concern.
NOTE 3 – CAPITAL STRUCTURE
Common Stock
The Company is authorized to issue 200 million common shares. At July 31, 2012, we had 24,709,282 common shares issued and outstanding. Equity transactions for the fiscal year ended July 31, 2012 can be found in our Form 10-K annual report as of July 31, 2012 filed with the Securities and Exchange Commission filed October 26, 2012 and are incorporated herein by reference.
During the nine months ended April 30, 2013, we issued 16,250 shares to an accredited investor for $6,500. The receipt of those funds occurred during May, 2012, and was included in Common Stock Payable on the Balance Sheet as of July 31, 2012. The issuance of these shares extinguished the balance in that category as of October 31, 2012. This accredited investor was enlisted to serve as a Director on September 1, 2012.
Also during the nine months ended April 30, 2013, we issued 180,000 to a Director for services. We valued the shares at their grant date fair value, charging general and administrative expenses with $70,200.
Also during the nine months ended April 30, 2013, we issued 400,000 shares to an accredited investor for $100,000 in cash.
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 April 30, 2013, no shares have been issued.
Potentially Dilutive Securities
On January 5, 2013, we granted 240,000 options to an incoming Director. The options have an exercise period of four years with an exercise price of $0.10. We valued the options using the Black Scholes Option Pricing Model with the following inputs: stock price on measurement date: $0.18; Exercise price: $0.10; Option term: 4 years; Computed volatility: 448%. The resulting Black Scholes value was $43,151 which is included in general and administrative expenses for the nine months ended April 30, 2013.
NOTE 4 – INCOME TAXES
The Company has tax losses which may be applied against future taxable income. The potential tax benefits arising from these loss carry-forwards expire beginning in 2029 and are offset by a valuation allowance due to the uncertainty of profitable operations in the future. The estimated net tax loss carry-forward was approximately $610,000 at April 30, 2013 resulting in a potential tax benefit of approximately $237,400.
The significant components of the deferred tax asset as of April 30, 2013 and July 31, 2012 are as follows:
| |
|
4/30/13
|
|
|
7/31/12
|
|
|
Net operating loss carryforwards
|
|
|
237,400 |
|
|
|
164,333 |
|
|
Valuation allowance
|
|
|
(237,400 |
) |
|
|
(164,333 |
) |
|
Net deferred tax asset
|
|
|
- |
|
|
|
- |
|
NOTE 5 – RELATED PARTY TRANSACTIONS
During the nine months ended April 30, 2013, we received $23,473 from officers and directors in cash advances. These advances are not evidenced by a promissory note. We therefore impute interest expense to equity at the rate of 6% per annum. For the nine months ended April 30, 2013, we imputed $5,917 in interest. From inception (July 21, 2009) to April 30, 2013, we received $61,261 in advances from related parties consisting of $55,847 of cash advances and $5,414 in expenses paid on behalf of the company. Also, from inception to April 30, 2013, we imputed $11,433 in interest on these advances. During the nine months ended April 30, 2013, these advances and expenses paid on behalf of the company were repaid in full.
During the three months ended October 31, 2012, we issued 16,250 shares to an accredited investor who entered into a subscription agreement with us back in May, 2012 for $6,500. The issuance of those 16,250 shares extinguished that stock payable. On September 1, 2012, this investor became a director of the Company.
Also, on September 1, 2012, we issued an additional 180,000 shares to this director for one year of services through August 31, 2013. We valued these shares at their grant date fair, recording an increase in Additional Paid Capital of $70,200 and a charge to general and administrative expense in the same amount.
On January 5, 2013, we granted 240,000 options to an incoming Director. The options have an exercise period of four years with an exercise price of $0.10. We valued the options using the Black Scholes Option Pricing Model with the following inputs: stock price on measurement date: $0.18; Exercise price: $0.10; Option term: 4 years; Computed volatility: 448%. The resulting Black Scholes value was $43,151 which is included in general and administrative expenses for the three months ended April 30, 2013.
NOTE 6 – AGREEMENT WITH GREEN ERA LTD.
On February 17, 2011, we entered into a license agreement with GreenEra, Ltd., (“GreenEra”), a company formed under the laws of the Cyprus Republic, to acquire the rights of exploitation of a 60,000 hectares (approximately 150,000 acres) of forest land in Novo Aripuana, State of Amazones, Brazil. GreenEra acquired these rights from the landowner in 2009. These rights expire on December 28, 2044.
Explanation of additional rights and obligations associated with this agreement can be found in our 10-K annual report as of July 31, 2012, filed October 26, 2012 and are herein incorporated by reference.
As of April 30, 2013, we have accrued $125,000 of costs on this contract and have made no cash payments to GreenEra. For the nine months ended April 30, 2013, we have imputed $4,659 of interest on the unpaid balance, charging Interest Expense and increasing Additional Paid in Capital.
NOTE 7 – AGREEMENT WITH GREENBASE LTD.
On April 22, 2013, we entered into an agreement with Greenbase Ltd. (“Greenbase”), a company organized under the laws of Cyprus, and with the sellers individually, to acquire all of the issued and outstanding stock of Greenbase in exchange for 100,000,000 shares of our common stock.
We are currently performing due diligence on Greenbase and expect to close within the next ninety days.
NOTE 8 – SUBSEQUENT EVENTS
We have evaluated subsequent events through the date of issuance of the financial statements.
Item 2. Management’s Discussion and Analysis or Plan of Operation.
This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and accompanying notes and the other financial information appearing else where in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
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 such as forests. 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 over 50 properties or development projects in two countries, the USA and Greece.
|
|
·
|
The types of properties we have reviewed are residential and commercial.
|
|
·
|
Overall we have met with many real estate agents in two countries, the USA and 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 consultants that will assist the company in Management, Public Relations, Investor 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.
|
In December 2010 we started to examine the possibility of adding forests, or signing joint venture agreements with companies or individuals that own management rights of forests, in order to take advantage of the economic benefits that can derive from these forests, including the so called “carbon credits”. A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one ton of carbon dioxide or carbon dioxide equivalent. We could sell carbon credits that derive from forestry to commercial and individual customers who are interested in lowering their carbon footprint.
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.
On February 17, 2011, we entered into an agreement with GreenEra, Ltd., a company formed under the laws of the Cyprus Republic, to acquire exploitation rights for 60,000 hectares (approximately 150,000 acres) of forestland in Novo Aripuana, State of Amazonas, Brazil. This property can be developed and can probably produce carbon credits that when sold could produce profits. Any profits that gained from the development of this property or through the sale of the carbon credits will be shared 50-50 between PMLT and the owner of the forestland.
The parties agree that:
|
·
|
Prime Estates will pay GreenEra $5,000 per month for approximately 34 years beginning in April 1, 2011.
|
|
·
|
Prime Estates will obtain financing sufficient to pay for all costs associated with obtaining the carbon credits, but in no case shall these payments exceed $1.2 million dollars.
|
|
·
|
GreenEra will be the developer responsible for performing all actions necessary to obtain the credits.
|
GreenEra acquired the exclusive rights to develop and to obtain these carbon credits when it contracted with the landowner on December 28, 2009. Therefore, Prime Estates & Developments Inc. has inherited the rights and obligations of that agreement which stipulates, in part:
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The landowner has the right to veto sales of any credits under $2.00.
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If GreenEra is unable to receive a carbon credit certification until December 31, 2013, or cannot sell, convey, assign, lend or sublet, carbon credits or any other rights or products the contract is voided.
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Our Director, Mr. Panagiotis Drakopoulos is also a shareholder, but not a director or officer of GreenEra Ltd.
Since the inception of the agreement with GreenEra, we have taken the following steps to implement our business plan:
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We have researched the potential of the carbon credit business, especially for carbon credits that could derive from the preservation of forests;
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We track and analyze the carbon credit market on a daily basis in order to develop a sound understanding of the potential for generating income and the associated risks of the market.
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We have contacted companies specializing in the field of forest development and carbon credit issuance, in order to conduct Project Development Design (PDD) studies.
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We are regularly engaged in efforts to receive debt or equity financing for this project.
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We continue to seek out relationships with other companies in order to develop collaborations that may minimize risk in our forestland project and/or will provide our company with income.
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Until the day of this filing there have been no other developments concerning the agreement with GreenEra Ltd.
In August 18, 2011, we signed a JV with Pelion Exclusive. Pelion Exclusive will actively seek and propose investment opportunities especially in the area of distressed residential and commercial real estate properties for merger and/or acquisition. Pelion Exclusive may also assist Prime in the financing and development of real estate projects. It may also perform property management, asset management and propose possible buyers for the ultimate disposition of the properties. The JV with Pelion Exclusive continues to be valid until August 17, 2013.
During the first three months of 2012, we had been involved in discussions with Mave Sa, a Greek logistics company that holds real estate assets, concerning a potential business combination. However, as of the date of this report, we have not entered into any formal oral or written memorandum of understanding, letter of intent or similar non-binding understanding and have not entered into any oral or written binding agreement, commitment or understanding concerning this potential business combination. There is no assurance that we will ever enter into any formal written memorandum of understanding, letter of intent or similar non-binding understanding or any formal binding agreement, commitment or understanding concerning this potential business combination.
Since November 2012 we have focused on locating real estate opportunities in the Chicago metropolitan area. We examined many possible investments. We selected 2 residential and 7 commercial properties as the focus of our efforts.
The value of these real estate assets ranges from $282,000 to $3,750,000. Most of these properties are already leased to credible tenants and, if acquired, would provide us with a relatively stable stream of revenue and cash flow. To facilitate acquisition of these real estate assets we took the following steps:
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We contacted accredited investors and funds for equity financing
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We contacted financial institutions in order to secure debt financing
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Until the day of this filing we have not been able to raise funds toward acquisition of these properties, but we continue to work on securing the funds to do so.
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.
A Share Exchange Agreement (the "Agreement") was made and entered into as of the 22nd day of April, 2013, between Prime Estates & Developments, Inc., a Nevada corporation ("Buyer") and Greenbase Ltd, organized under the laws of Cyprus ("Company") and Dimitrios Goulielmos and Evangelia Theocharidou (individually a “Seller” and jointly “Sellers”).
The Buyer agreed to acquire all issued and outstanding shares of common stock of Company from the Sellers, and the Sellers agreed to have all issued and outstanding shares of common stock of Company acquired by the Buyer solely for the purpose of having a wholly-owned subsidiary with operations in Cyprus, on the terms and conditions set forth in this Agreement by way of an exchange of shares (the “Exchange”).
Subject to all the terms and conditions of the Agreement, at the Closing, the Sellers agreed to receive from the Buyer, and Buyer agrees to issue to the Sellers, the sole shareholders of the Company, an aggregate of 100,000,000 Shares of Common Stock of the Buyer (“Buyer Shares”) (the “Share Consideration”) in exchange for the transfer of 2,000 shares aggregate of the Common Stock of the Company (“Company Shares”), owned as set forth on the signature page to this Agreement, which shares constitute all the issued and outstanding shares or rights to acquire issued and outstanding shares of Company, to the Buyer. Each Company Share that is issued and outstanding immediately before the Closing shall entitle the holder thereof to receive 50,000 Buyer’s Shares.
The Agreement provides that at closing, all actions necessary for the following changes of officers and directors of Buyer shall have occurred:
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Dimitris Goulielmos new CEO and Director of PMLT
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Panagiotis Drakopoulos new CFO (change from existing CEO)
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The existing CFO of PMLT, Mr. Konstantinos Vassilopoulos will become the new Secretary.
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The existing Secretary of PMLT, Mr. Panagiotis Tolis will resign.
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The Board of Directors of Greenbase Ltd [Eleni Paphiti, Charalambos Angelides] will remain as it is and all other directors of Buyer will remain.
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The Agreement is subject to certain conditions which need to be satisfied prior to closing, as further set forth in the Agreement.
The agreement is filed as an exhibit to Form 8-K on April 25, 2013, and should be referred to in its entirety for complete information concerning this agreement.
We are currently performing due diligence on Greenbase and expect to close within the next ninety days.
Results of Operations
Nine months ended April 30, 2013 versus 2012
We incurred $294,785 of general and administrative expenses for the nine months ended April 30, 2013 versus $267,404 for the same period in 2012. The change from 2012 to 2013 is an offset of increases in certain expenditures and decreases in others. The principal increase over the previous year is Directors’ salaries, representing a $113,351 increase over the previous year. This is due to having more directors than we had during the nine months ended April 30, 2012. The principal decreases are legal expenses (a $46,000 reduction in the current year versus the previous year), a non-cash issuance for consulting (a $27,900 reduction in the current year versus the previous year) and cash promotional expenses during the nine months ended April 30, 2012 ($15,000) that we did not incur in the current year.
Our interest expense for the nine months ended April 30, 2013 versus 2012 witnessed an increase from $3,459 to $5,918. This is principally due to higher related-party debt levels.
Three Months Ended April 30, 2013 versus 2012
We incurred $56,023 of general and administrative expenses for the three months ended April 30, 2013 versus $52,825 for the same period in 2012. The change is mostly due to travel costs associated with our negotiations with Greenbase Ltd. (see Note 7 to the financial statements).
Our interest expense for the three months ended April 30, 2013 versus 2012 witnessed an increase from $1,739 to $2,019, principally due to higher related-party debt levels.
Liquidity and Capital Resources
We will need to secure a minimum of $150,000 in funds to finance our business in the next 12 months, in addition to the funds which will be used to stay public, which funds will be used as set forth below. However in order to become profitable we may still need to secure additional debt or equity funding. We hope to be able to raise additional funds from an offering of our stock in the future. However, this offering may not occur, or if it occurs, may not raise the required funding. We do not have any plans or specific agreements for new sources of funding, except for the anticipated loans from management as described below. We plan to acquire real estate assets or companies that own real estate assets and could offer liquidity to our company but until the date of this filing we have not completed any such transaction and we are not sure that there will ever close such an acquisition. We are also involved in preliminary discussions concerning joint venture or similar agreements to become involved in solar parks in Europe but we are not sure if we will ever conclude to a closing agreement with these parties. Currently we are performing due diligence on Greenbase in connection with our Share Exchange Agreement described above. Greenbase’s main current owner, Mr. Goulielmos, has advised us that he shares the same interest with current management for the possible involvement of the Company in solar park projects operated in Europe, although we have not pursued this past preliminary discussions as described above.Our independent auditor’s report expresses substantial doubt about our ability to continue as a going concern. At April 30, 2013, we had only $6,143 in cash in our bank account. We anticipate our monthly burn rate for the next 12 months to be approximately $17,000 per month, including the maximum estimated $50,000 costs of staying public as described herein.
Until we generate operating revenues or receive other financing, all our costs, which we will incur irrespective of our business development activities, including bank service fees and those costs associated with SEC requirements associated with staying public, estimated to be less than $ 50,000 annually, will be funded as a loan from our officers and directors with no interest, to the extent that funds are available to do so. Our Officers and Directors are not obligated to provide these or any other funds although they have indicated that they currently intend to do so and that they have sufficient liquid assets to meet all of these anticipated future obligations if we do not generate operating revenues or secure other funding. There is no dollar limit to the amount they have agreed to provide. For the nine months ended April 30, 2013, our directors loaned the Company $24,473.
Additionally, since our inception, we have raised $302,729 for operations through the sale of our stock under transactions exempt from registration under Regulation S (see Note 3 to the financial statements).
If we fail to meet these requirements, we may lose the qualification and our securities would no longer trade on the Over-the-Counter Market that we trade. Further, if we fail to meet these obligations and as a consequence we fail to satisfy our SEC reporting obligations, investors will now own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.
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. Although we shall do our best to secure additional financing, 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:
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From today until the end of June, 2013 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 current cash will satisfy our cash requirements only until we finish our efforts for additional financing at the end of June, 2013. If we are not be able to raise any additional funds by the end of June, 2013 we do not anticipate having 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.
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By the end of July, 2013 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 collaborate 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.
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Moreover, by the end of July, 2013 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.
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In addition, by the end of July 2013, assuming that funding has been secured and due diligence on the property has been completed, we 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 the year. The estimated due diligence cost for the acquisition of these additional three properties is about $9,000. Among the properties that we intend to buy are those 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 2013, we will invest about $8,000,000 in real estate assets. Specifically, we plan to invest a portion of these funds, no more than $1,200,000, in order to possibly develop the forest that we have acquired its rights in the Amazonas, Brazil. 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 2014.
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As soon as we succeed with the above-mentioned targets we intend to continue our business with more efforts to raise additional funds in order to be able to acquire more real estate assets.
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In the following 12 months we estimate that we will need to raise at least $220,000 in order to be able to cover our operational expenses. Overall the estimated operational expenses for the coming 12 months are $220,000. This amount is the result of the following estimated costs: Private Placement $6,000, freelancers $2,000, due diligence on our first property $3,000, due diligence on the next three properties $9,000, staying public $50,000, salaries $90,000 and costs associated with the agreement with GreenEra $60,000. We anticipate raising additional funds by selling shares of our company.
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So far, we have tried to raise via Private Placements the needed funds to implement our business plan but we have succeeded to raise only a small portion of our target. These funds were able to pay some of our operational expenses; the rest was covered by loans from our directors. We plan to arrange more meetings with broker/dealer firms and more accredited investors and funds in order to increase our chances of fund raising via equity financing.
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Moreover, the last four months we contacted two banks and other funds trying to receive debt financing. So far we have not managed to receive a loan. However, we are currently in discussions with various funds that are offering debt financing and we will do our best to secure it. In addition, in January 2012 we hired a new CFO, who we believe will enhance our efforts for financing. We plan to locate more funds that are willing to offer financing to companies similar to our profile.
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On April 22, 2013, we entered into an agreement with Greenbase Ltd. (“Greenbase”), a company organized under the laws of Cyprus, and with the sellers individually, to acquire all of the issued and outstanding stock of Greenbase in exchange for 100,000,000 shares of our common stock.
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We are currently performing due diligence on Greenbase and expect to close within the next ninety days.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
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Not applicable.
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Item 4. Controls and Procedures.
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Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended April 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II — OTHER INFORMATION
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Item 1. Legal Proceedings.
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None.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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(a) Unregistered Sales of Equity Securities.
During the Nine months ended April 30, 2013, we issued 16,250 shares to an accredited investor who entered into a subscription agreement with us in May, 2012 for $6,500.
Also, on September 1, 2012, we issued an additional 180,000 shares to a director for one year of services through August 31, 2013.
Also, on February 28, 2013, we issued 400,000 shares to an accredited investor in exchange for $100,000 in cash.
As all of the investors in the transactions set forth above were not US citizens or residents, we relied upon Regulation S for the issuance of these securities.
We believed that Regulation S was available because:
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None of these issuances involved underwriters, underwriting discounts or commissions;
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We placed Regulation S required restrictive legends on all certificates issued;
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No offers or sales of stock under the Regulation S offering were made to persons in the United States;
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No direct selling efforts of the Regulation S offering were made in the United States.
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In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:
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Access to all our books and records.
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Access to all material contracts and documents relating to our operations.
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The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.
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Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.
(b) Use of Proceeds.
The Registrant did not sell any registered securities during the nine months ended April 30, 2013.
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Item 3. Defaults Upon Senior Securities
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None.
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Item 4. Mine Safety Disclosures.
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None.
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Item 5. Other Information.
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Not applicable.
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Exhibit No.
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Document Description
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31.1
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Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Exhibit 101
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Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**
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101.INS
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XBRL Instance Document**
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101.SCH
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XBRL Taxonomy Extension Schema Document**
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document**
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document**
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document**
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document**
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______________
* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Prime Estates & Developments, Inc. |
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May 13, 2013
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By:
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/s/ Panagiotis Drakopoulos |
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Panagiotis Drakopoulos |
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Principal Executive Officer |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SIGNATURE
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NAME
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TITLE
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DATE
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/s/ Panagiotis Drakopoulos
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Panagiotis Drakopoulos
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Principal Executive Officer, Director
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5/13/13
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/s/ Konstantinos Vassilopoulos
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Konstantinos Vassilopoulos
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Chief Financial Officer, Director
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5/13/13
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/s/ Panagiotis Tolis
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Panagiotis Tolis |
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Secretary, Director |
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5/13/13 |
26