UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedJune 30, 2008.
or
£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ___________________________
Commission File Number: 000-53010
PERPETUAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware | 84-1465393 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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374 East 400 South, Suite 3, Springville, Utah | 84663 |
(Address of principal executive offices) | (Zip Code) |
(801) 358-5094
(Registrant’s telephone number, including area code)
899 South Artistic Circle, Springville, Utah
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. S Yes £ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer£
Accelerated filer£
Non-accelerated filer£ (Do not check if a smaller reporting company)
Smaller reporting companyS
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). S Yes £ No
At June 30, 2008, the number of shares outstanding of the registrant’s common stock, $0.001 par value, was 11,000,000.
PERPETUAL TECHNOLOGIES, INC.
FORM 10-Q
JUNE 30, 2008
INDEX
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PART I. |
| Financial Information | 3 |
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| Item 1. | Unaudited Condensed Financial Statements | 3 |
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| Condensed Balance Sheets – June 30, 2008 (unaudited) and December 31, 2007 | 3 |
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| Unaudited Condensed Statements of Operations for the three and six months ended June 30, 2008 and 2007, and from the period of Reactivation on October 26, 2006 through June 30, 2008 | 4 |
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| Unaudited Condensed Statements of Cash Flows for the six months ended June 30, 2008 and 2007, and from the period of Reactivation on October 26, 2006 through June 30, 2008 | 5 |
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| Notes to Unaudited Condensed Financial Statements | 6 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 7 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 9 |
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| Item 4T. | Controls and procedures | 9 |
PART II. | Other Information |
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Item 1. Item 1A. Item 2. Item 3. Item 4. Item 5. Item 6. | Legal Proceedings. Risk Factors Unregistered Sales of Equity Securities and Use of Proceeds. Defaults Upon Senior Securities. Submission of Matters to a Vote of Security Holders. Other Information. Exhibits | 10 10 12 12 12 12 13 | |
| Signatures | 13 |
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PERPETUAL TECHNOLOGIES, INC.
[A Development Stage Company]
CONDENSED BALANCE SHEETS
ASSETS |
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| June 30, |
| December 31, |
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| 2008 |
| 2007 |
CURRENT ASSETS: |
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Cash | $ | 2,360 | $ | 1,994 |
Prepaid expenses |
| 4,908 |
| 4,908 |
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Total Current Assets |
| 7,268 |
| 6,902 |
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Total Assets | $ | 7,268 | $ | 6,902 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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CURRENT LIABILITIES: |
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Accounts payable | $ | 136 | $ | 2,700 |
Accrued interest on convertible notes |
| 890 |
| 490 |
Accrued interest – related party |
| 622 |
| 209 |
Stockholder advances |
| 15,000 |
| 5,000 |
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Total Current Liabilities |
| 16,648 |
| 8,399 |
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CONVERTIBLE NOTES PAYABLE |
| 10,000 |
| 10,000 |
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Total Liabilities |
| 26,648 |
| 18,399 |
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STOCKHOLDERS' EQUITY (DEFICIT): |
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Preferred stock, $0.001 par value, |
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10,000,000 shares authorized, |
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no shares issued and outstanding |
| - |
| - |
Common stock, $0.001 par value, |
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200,000,000 shares authorized, |
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11,000,000 shares issued and outstanding |
| 11,000 |
| 11,000 |
Capital in excess of par value |
| (10,000) |
| (10,000) |
Deficit accumulated during the |
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development stage |
| (20,380) |
| (12,497) |
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Total Stockholders' Equity (Deficit) |
| (19,380) |
| (11,497) |
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Total Liabilities and Stockholders’ Equity (Deficit) | $ | 7,268 | $ | 6,902 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
PERPETUAL TECHNOLOGIES, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
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| Cumulative |
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| totals from |
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| Reactivation |
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| For the Three |
| For the Six |
| on Oct. 26, | ||||
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| Months Ended |
| Months Ended |
| 2006 through | ||||
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| June 30, |
| June 30, |
| June 30, | ||||
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| 2008 |
| 2007 |
| 2008 |
| 2007 |
| 2008 |
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REVENUE | $ | - | $ | - | $ | - | $ | - | $ | - |
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EXPENSES: |
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General and administrative |
| 2,160 |
| 7,229 |
| 7,070 |
| 10,336 |
| 18,868 |
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LOSS BEFORE OTHER INCOME |
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(EXPENSE) |
| (2,160) |
| (7,229) |
| (7,070) |
| (10,336) |
| (18,868) |
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OTHER INCOME (EXPENSE): |
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Interest Expense |
| (200) |
| (9) |
| (400) |
| (156) |
| (890) |
Interest Expense – related party |
| (260) |
| (100) |
| (413) |
| (9) |
| (622) |
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Total Other Income (Expense) |
| (460) |
| (109) |
| (813) |
| (165) |
| (1,512) |
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LOSS BEFORE INCOME |
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TAXES |
| (2,620) |
| (7,338) |
| (7,883) |
| (10,501) |
| (20,380) |
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INCOME TAXES |
| - |
| - |
| - |
| - |
| - |
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NET LOSS | $ | (2,620) | $ | (7,338) | $ | (7,883) | $ | (10,501) | $ | (20,380) |
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LOSS PER COMMON SHARE: | $ | (.00) | $ | (.00) | $ | (.00) | $ | (.00) |
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WEIGHTED AVERAGE |
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NUMBER OF SHARES |
| 11,000,000 |
| 11,000,000 |
| 11,000,00 |
| 11,000,000 |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
4
PERPETUAL TECHNOLOGIES, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
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| Cumulative |
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| totals from |
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| Reactivation |
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| For the Six |
| on Oct. 26, | ||
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| Months Ended |
| 2006 through | ||
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| June 30, |
| June 30, | ||
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| 2008 |
| 2007 |
| 2008 |
Cash Flows from Operating Activities: |
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Net loss | $ | (7,883) | $ | (10,501) | $ | (20,380) |
Adjustments to reconcile net loss to net cash |
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provided (used) by operating activities: |
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Changes in assets and liabilities: |
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Decrease (increase) in prepaid expense |
| - |
| - |
| (4,908) |
Increase (decrease) in accounts payable |
| (2,564) |
| - |
| 136 |
Increase in accrued interest |
| 400 |
| 156 |
| 890 |
Increase in accrued interest – related party |
| 413 |
| 9 |
| 622 |
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Net Cash Provided (Used) by Operating Activities |
| (9,634) |
| (10,336) |
| (23,640) |
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Cash Flows from Investing Activities |
| - |
| - |
| - |
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Net Cash (Used) by Investing Activities |
| - |
| - |
| - |
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Cash Flows from Financing Activities: |
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Stockholder advances |
| 10,000 |
| 5,000 |
| 15,000 |
Convertible notes payable |
| - |
| 5,000 |
| 10,000 |
Proceeds from common stock issuances |
| - |
| - |
| 1,000 |
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Net Cash Provided by Financing Activities |
| 10,000 |
| 10,000 |
| 26,000 |
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Net Increase (Decrease) in Cash |
| 366 |
| (336) |
| 2,360 |
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Cash at Beginning of Period |
| 1,994 |
| 400 |
| - |
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Cash at End of Period | $ | 2,360 | $ | 64 | $ | 2,360 |
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Supplemental Disclosures of Cash Flows Information: |
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Cash paid during the period for: |
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Interest | $ | - | $ | - | $ | - |
Income taxes | $ | - | $ | - | $ | - |
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the six months ended June 30, 2008:
None
For the six months ended June 30, 2007:
None
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
PERPETUAL TECHNOLOGIES, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Condensed Financial Statements -The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2008 and 2007 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2007 audited financial statements. The results of operations for the periods ended June 30, 2008 and 2007 are not necessarily indicative of the ope rating results for the full year.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has a working capital deficit of $9,380 as of June 30, 2008, has incurred net losses of $7,883 and $10,501 during the six months ended June 30, 2008 and 2007, respectively, has negative cash flows from operating activities, and has no revenue-generating activities. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans, advances, or through additional sales of common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 3 – RELATED PARTY TRANSACTIONS
Advances from a Stockholder – In June 2007, and in February and May 2008, an officer/stockholder of the Company advanced a total of $15,000 to the Company. The advances are due on demand and bear interest at 8% per annum. At June 30, 2008 the accrued interest on the advances totaled $622.
NOTE 4 – CONVERTIBLE NOTES PAYABLE
In February 2007, the Company issued two convertible promissory notes for $2,500 each. In August 2007, the Company issued an additional two convertible promissory notes for $2,500 each. At June 30, 2008, the balance of the combined notes was $10,000 plus accrued interest. The notes bear interest at 8% per annum and the principal balance plus accrued interest on the notes are convertible into 250,000 shares of common stock each, or a total of 1,000,000 shares. The principal amount of the debt (or payment of stock) together with interest on the unpaid principal balance is due February and August 2010 (thirty-six months from the date of the notes). At June 30, 2008 and December 31, 2007, accrued interest on the notes totaled $890 and $490, respectively.
NOTE 5 - INCOME TAXES
The Company has available at June 30, 2008, net operating loss carryforwards of approximately $20,380 which may be applied against future taxable income and which expire in 2027 and 2028. The net deferred tax assets are approximately $3,000 and $1,950 as of June 30, 2008 and December 31, 2007, respectively, with an offsetting valuation allowance of the same amount. The change in the valuation allowance for the six-month period ended June 30, 2008 is approximately $1,050.
6
Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation
Forward-Looking Statement Notice
This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Description of Business.
The Company was organized as Molokai Enterprises, Inc., on November 27, 1996 under the laws of the State of Colorado. The Company changed its domicile from Colorado to Delaware by merging with and into Perpetual Technologies, Inc., a Delaware corporation organized for that purpose on March 15, 2007, during April 2007.
The Company was reactivated on October 26, 2006 through a major sale of 10,000,000 shares of the Company’s common stock for $1,000. Prior to the Company’s reactivation the Company had been dormant.
The Company has remained non-operational from reactivation and management has initiated preparations to become a public shell and seek new business opportunities. The Company plans to acquire, or merge with, a targeted operating business that is seeking public company status.
We have now focused our efforts on seeking a business opportunity. The Company will attempt to locate and negotiate with a business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a foreign or domestic private company to become a reporting (“public”) company whose securities are qualified for trading in the United States secondary market.
Sources of Opportunities
We anticipate that business opportunities may arise from various sources, including officers and directors, professional advisers, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.
We will seek potential business opportunities from all known sources, but will rely principally on the personal contacts of our officers and directors as well as indirect associations between them and other business and professional people. Although we do not anticipate engaging professional firms specializing in business acquisitions or reorganizations, we may retain such firms if management deems it in our best interests. In some instances, we may publish notices or advertisements seeking a potential business opportunity in financial or trade publications.
7
Criteria
We will not restrict our search to any particular business, industry or geographical location. We may acquire a business opportunity in any stage of development. This includes opportunities involving “start up” or new companies. In seeking a business venture, management will base their decisions on the business objective of seeking long-term capital appreciation in the real value of our company. We will not be controlled by an attempt to take advantage of an anticipated or perceived appeal of a specific industry, management group, or product.
In analyzing prospective business opportunities, management will consider the following factors:
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available technical, financial and managerial resources;
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working capital and other financial requirements;
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the history of operations, if any;
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prospects for the future;
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the nature of present and expected competition;
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the quality and experience of management services which may be available and the depth of the management;
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the potential for further research, development or exploration;
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the potential for growth and expansion;
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the potential for profit; and
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the perceived public recognition or acceptance of products, services, trade or service marks, name identification, and other relevant factors.
Generally, our management will analyze all available factors and make a determination based upon a composite of available facts, without relying on any single factor.
Methods of Participation of Acquisition
Management will review specific businesses and then select the most suitable opportunities based on legal structure or method of participation. Such structures and methods may include, but are not limited to, leases, purchase and sale agreements, licenses, joint ventures, other contractual arrangements, and may involve a reorganization, merger or consolidation transactions. Management may act directly or indirectly through an interest in a partnership, corporation, or other form of organization.
Procedures
As part of our investigation of business opportunities, officers and directors may meet personally with management and key personnel of the firm sponsoring the business opportunity. We may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and conduct other reasonable measures.
We will generally ask to be provided with written materials regarding the business opportunity. These materials may include the following:
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descriptions of product, service and company history;
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management resumes;
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financial information;
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available projections with related assumptions upon which they are based;
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an explanation of proprietary products and services;
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evidence of existing patents, trademarks or service marks or rights thereto;
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present and proposed forms of compensation to management;
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a description of transactions between the prospective entity and its affiliates;
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relevant analysis of risks and competitive conditions;
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a financial plan of operation and estimated capital requirements; and
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other information deemed relevant.
8
Competition
We expect to encounter substantial competition in our efforts to acquire a business opportunity. The primary competition is from other companies organized and funded for similar purposes, small venture capital partnerships and corporations, small business investment companies and wealthy individuals.
Employees
We do not currently have any employees but rely upon the efforts of our officer and director to conduct our business. We do not have any employment or compensation agreements in place with our officer and director although they are reimbursed for expenditures advanced on our behalf.
Six Month Periods Ended June 30, 2008 and 2007
We have at June 30, 2008, $2,360 available cash on hand, prepaid expenses of $4,908, and have a cumulative loss since entering the development stage of $20,380. We did not generate any revenues for the six month periods ending June 30, 2008 and 2007, and for the period from reactivation on October 26, 2006 through June 30, 2008, we have had no operations. For the six months ending June 30, 2008, net loss was $7,883 compared to $10,501 for the same period in 2007. Expenses during the six months ended June 30, 2008, consisted of $7,070 in general and administrative expense, and $0 in depreciation and amortization. Expenses during the comparable period in 2007 consisted of $0 in depreciation and amortization and $10,336 in general and administrative expenses. Interest expense totaled $813 and $165 for the six months ended June 30, 2008 and 2007, respectively.
As of June 30, 2008 our total assets were $7,268 consisting of cash of $2,360 and prepaid expenses of $4,908. Total liabilities at June 30, 2008 are $26,648 consisting of $136 in accounts payable, $1,512 in accrued interest, $10,000 in convertible notes payable, and $15,000 in stockholder advances.
Liquidity and Capital Resources
At June 30, 2008, we had $2,360 in cash and have had no revenues since reactivation on October 26, 2006. We estimate that general and administrative expenses for the next twelve months will be approximately $18,000. At June 30, 2008 we also had total liabilities of $26,647. As a result, we will need to generate up to $45,000 to pay our debts and meet our ongoing financial needs. Since inception we have primarily financed our operations through the sale of common stock. In order to raise the necessary capital to maintain our reporting company status, we may sell additional stock, arrange debt financing or seek additional advances from our officers or shareholders. We do not have any commitments for financing.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required by smaller reporting companies.
Item 4T. Controls and Procedures.
(a)
Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our president and our chief financial officer, carried out an evaluation of the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the "Evaluation Date"). Based upon that evaluation, our president and our chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to our management, including our president and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
9
(b)
Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 1A.Risk Factors. Not required by a smaller reporting company.
The Company's business is subject to numerous risk factors, including the following.
The Company has had very limited operating history and no revenues or earnings from operations. The Company has no significant assets or financial resources. The Company will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in the Company incurring a net operating loss which will increase continuously until the Company can consummate a business combination with a target company. There is no assurance that the Company can identify such a target company and consummate such a business combination.
Our proposed business plan is speculative in nature. The success of the Company's proposed plan of operation will depend to a great extent on the operations, financial condition and management of the identified target company. While management will prefer business combinations with entities having established operating histories, there can be no assurance that the Company will be successful in locating candidates meeting such criteria. In the event the Company completes a business combination, of which there can be no assurance, the success of the Company's operations will be dependent upon management of the target company and numerous other factors beyond the Company's control.
The Company is and will continue to be an insignificant participant in the business of seeking mergers with and acquisitions of business entities. A large number of established and well-financed entities, including venture capital firms, are active in mergers and acquisitions of companies which may be merger or acquisition target candidates for the Company. Nearly all such entities have significantly greater financial resources, technical expertise and managerial capabilities than the Company and, consequently, the Company will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover, the Company will also compete with numerous other small public companies in seeking merger or acquisition candidates.
The Company has no current arrangement, agreement or understanding with respect to engaging in a merger with or acquisition of a specific business entity. There can be no assurance that the Company will be successful in identifying and evaluating suitable business opportunities or in concluding a business combination. Management has not identified any particular industry or specific business within an industry for evaluation by the Company. There is no assurance that the Company will be able to negotiate a business combination on terms favorable to the Company. The Company has not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria which it will require a target company to have achieved, or without which the Company would not consider a business combination with such business entity. Accordingly, the Company may enter into a business combination with a business entity having no significant operating history, losses, limited or no potential for immediate earnings, limited assets, negative net worth or other negative characteristics.
Our management has limited time to devote to our business. While seeking a business combination, management anticipates devoting only a limited amount of time per month to the business of the Company. The Company's sole officer has not entered into a written employment agreement with the Company and he is not expected to do so in the foreseeable future. The Company has not obtained key man life insurance on its officer and director. Notwithstanding the combined limited experience and time commitment of management, loss of the services of this individual would adversely affect development of the Company's business and its likelihood of continuing operations.
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The Company's officer and director participates in other business ventures which may compete directly with the Company. Additional conflicts of interest and non-arms length transactions may also arise in the future. Management has adopted certain policies involving possible conflicts of interest, including prohibiting any of the following transactions involving management, promoters, stockholders or their affiliates: (i) any lending by the Company to such persons; or (ii) the payment of any finder's fees to such persons.
Reporting requirements may delay or preclude an acquisition. Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") requires companies subject thereto to provide certain information about significant acquisitions including certified financial statements for the company acquired covering one or two years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target companies to prepare such financial statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
The Company has neither conducted, nor have others made available to it, market research indicating that demand exists for the transactions contemplated by the Company. Even in the event demand exists for a merger or acquisition of the type contemplated by the Company, there is no assurance the Company will be successful in completing any such business combination.
The Company's proposed operations, even if successful, will in all likelihood result in the Company engaging in a business combination with only one business entity. Consequently, the Company's activities will be limited to those engaged in by the business entity which the Company merges with or acquires. The Company’s inability to diversify its activities into a number of areas may subject the Company to economic fluctuations within a particular business or industry and therefore increase the risks associated with the Company's operations.
Potential for being classified an Investment Company. Although the Company will be subject to regulation under the Exchange Act, management believes the Company will not be subject to regulation under the Investment Company Act of 1940, insofar as the Company will not be engaged in the business of investing or trading in securities. In the event the Company engages in business combinations which result in the Company holding passive investment interests in a number of entities, the Company could be subject to regulation under the Investment Company Act of 1940. In such event, the Company would be required to register as an investment company and could be expected to incur significant registration and compliance costs. The Company has obtained no formal determination from the Securities and Exchange Commission as to the status of the Company under the Investment Company Act of 1940 and, consequently, any violation of such A ct could subject the Company to material adverse consequences.
A business combination involving the issuance of the Company's common stock will, in all likelihood, result in shareholders of a target company obtaining a controlling interest in the Company. Any such business combination may require stockholders of the Company to sell or transfer all or a portion of the Company's common stock held by them. The resulting change in control of the Company will likely result in removal of the present officer and director of the Company and a corresponding reduction in or elimination of his participation in the future affairs of the Company. Currently, there are no pending acquisitions, business combinations or mergers.
The Company's primary plan of operation is based upon a business combination with a business entity which, in all likelihood, will result in the Company issuing securities to shareholders of such business entity. The issuance of previously authorized and unissued common stock of the Company would result in reduction in percentage of shares owned by the present stockholders of the Company and would most likely result in a change in control or management of the Company.
Federal and state tax consequences will, in all likelihood, be major considerations in any business combination the Company may undertake. Currently, such transactions may be structured so as to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. The Company intends to structure any business combination so as to minimize the federal and state tax consequences to both the Company and the target company; however, there can be no assurance that such business combination will meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes which may have an adverse effect on both parties to the transaction.
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Management of the Company will request that any potential business opportunity provide audited financial statements. One or more attractive business opportunities may choose to forego the possibility of a business combination with the Company rather than incur the expenses associated with preparing audited financial statements. In such case, the Company may choose to obtain certain assurances as to the target company's assets, liabilities, revenues and expenses prior to consummating a business combination, with further assurances that audited financial statements would be provided after closing of such a transaction. Closing documents relative thereto may include representations that the audited financial statements will not materially differ from the representations included in such closing documents.
Our stock will become subject to the Penny Stock rules, which impose significant restrictions on the Broker-Dealers and may affect the resale of our stock. Our stock will become subject to PennyStock trading rules, and investors will experience resale restrictions and a lack of liquidity. A penny stock is generally a stock that:
- is not listed on a national securities exchange or Nasdaq;
- is listed in "pink sheets" or on the NASD OTC Bulletin Board;
- has a price per share of less than $5.00; and
- is issued by a company with net tangible assets less than $5 million.
The penny stock trading rules impose additional duties and responsibilities upon broker-dealers and salespersons effecting purchase and sale transactions in common stock and other equity securities, including:
- determination of the purchaser's investment suitability;
- delivery of certain information and disclosures to the purchaser; and
- receipt of a specific purchase agreement from the purchaser prior to effecting the purchase transaction.
Due to the Penny Stock rules, many broker-dealers will not effect transactions in penny stocks except on an unsolicited basis. When our common stock becomes subject to the penny stock trading rules,
- such rules may materially limit or restrict the ability to resell our common stock; and
- the liquidity typically associated with other publicly traded equity securities may not exist.
It is possible that a liquid market for our stock will never develop and you will not be able to sell your stock. There is no assurance a market will be made in our stock. If no market exists, you will not be able to sell your shares publicly, making your investment of little or no value.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders.None.
Item 5. Other Information.None.
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Item 6. Exhibits
Copies of the following documents are included as exhibits to this report.
SEC Ref. No. | Title of Document |
31.1 | Certification of the Principal Executive Officer / Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
32.1 | Certification of the Principal Executive Officer / Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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.
PERPETUAL TECHNOLOGIES, INC.
(Registrant)
Date: August 5, 2008
/s/ Joseph Nemelka
Joseph Nemelka
Chief Executive Officer and
Chief Financial Officer
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