UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
Commission file number: 001-33933
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Porfavor Corp. |
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(Exact Name of Registrant as Specified in its Charter) |
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Nevada |
| 88-0319470 |
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(State or Other Jurisdiction of |
| (I.R.S. Employer |
2911 N. Lamb Blvd. Las Vegas, NV 89115 |
(Address of Principal Executive Offices) |
Registrant’s telephone number, including area code:(702) 642-0988
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes No X.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No X.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer . | Accelerated Filer . |
Non-accelerated filer . | Smaller reporting company X. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X.
For the year ended December 31, 2008, the issuer had $1,061,790 in revenues.
As of March 31, 2009, the registrants common stock par value $0.001 is traded on the OTC:BB.
The number of shares outstanding of the issuer’s common stock, $.001 par value, as of March 31, 2009 was 17,500,000 shares.
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
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Porvafor Corp
Form 10-K Annual Report
Table of Contents
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PART I |
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Item 1. | Business |
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Item 1A. | Risk Factors |
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Item 1B. | Unresolved Staff Comments |
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Item 2. | Properties |
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Item 3. | Legal Proceedings |
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Item 4. | Submission of Matters to a Vote of Security Holders |
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PART II |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
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Item 6. | Selected Financial Data |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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Item 8. | Financial Statements and Supplementary Data |
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Item 9. | Change in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A(T). | Controls And Procedures |
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Item 9B. | Other Information |
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PART III |
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Item 10. | Directors, Executive Officers, and Corporate Governance |
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Item 11. | Executive Compensation |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
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Item 14. | Principal Accountant Fees and Services |
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PART IV |
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Item 15. | Exhibits and Financial Statement Schedules |
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FORWARD LOOKING STATEMENT INFORMATION
Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the a ssumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors”. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The terms “we”, “our”, “us”, or any derivative thereof, as used herein refer to Porfavor Corp
2
PART 1
BUSINESS.
Our acquisition, CBA Builders, DBA Trussco Sales is commonly known in the local market as Trussco. We are first and foremost a broker of structural wood materials. These materials include open web plated trusses, metal web-wood chord trusses, glue laminated beams, I joists, & occasionally steel bar joists. We also sell much of the associated framing anchors and hangers. In recent years we have built a substantial portion of the open web plated trusses that we sell. Our work begins when a customer delivers a set of blueprints for a given project. Projects may range in size from a 2or 3 trusses for a home addition valued at $300 to something such as Vantage One Condominium project where we provided products valued at more than $900,000. From blue prints, we determine their needs in terms of products that we sell and quote to them a price for all such materials. Probably 60% of our work is awarded on a competitive bid basis with the balance being of a negotiated nature. Once we a re awarded the contract for a project, we then provide our customer all necessary component designs and replacement plans to be approved by the structural engineer and any permitting authority. Once our customer has completed the permitting process and gives his approval to fabricate, we then place orders with our suppliers for all materials that are needed. Nearly all of our products are delivered directly from the point of manufacture to our customer’s job site. If after delivery, problems or mistakes become apparent we will send a repair crew to make any needed modifications to our product. If it is determined that the problem stems from our own mistake there is no cost to the customer for the repairs. If problems arise because of faulty or inaccurate plans we will then invoice the customer for the cost of any alterations or repairs.
The vast majority of our products are sold on a wholesale basis to framing contractors and occasionally to a general contractor. We do however provide some materials to an owner builder or to an individual doing a home remodel.
We estimate that over 95% of our sales are in Clark County Nevada, including Mesquite and Searchlight. We do provide some product to outlying areas such as Pahrump or Alamo Nevada. Occasionally we will sell products to Northern Nevada or Southern Utah.
Traditionally, a commercial framer would buy glu-lam beams from one source, plated trusses from another source and I joists from yet another source. No other supplier in the area provides the variety of structural floor and roof components that we do. Often a plated truss supplier will take in a set of plans that indicates, for example I joists as the structural floor component. Rather than bidding I joists, he will try to convert the structural components to plated trusses. This process can be time consuming and expensive for all involved and causes considerable consternation among those who now have to try to accommodate the truss supplier. We are much more likely to simply bid what is required in the plans and specifications because we sell them all.
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We began doing business as Trussco in August of 1992, selling only plated wood trusses. In April of 1993 we opened a small office at 3432 North Bruce Street Suite #7 in North Las Vegas, Nevada. We soon grew large enough that we needed a repair crew. In order to accommodate this need we began to fabricate only very small jobs so that we had men available when we needed a repair crew. Beginning in 1995 we began to import all of our plated trusses from Canada. This was made possible for two reasons. All of the trusses built in Las Vegas relied on raw lumber from Canada. At that time there was in effect a 15% tariff on raw lumber but no tariff on a finished product such as trusses. During that time the Canadian dollar was worth about $.67 US. These two factors combined to give us a very good competitive edge. Over recent years both of these advantages have been eroded to nothing and we are currently building nearly all that we sell. We found that we are achieving higher net margins by manuf acturing our own.
Over the past 3 years, we have seen I joist and glu-lam sales gain an ever increasing percentage of our sales. We began selling I joists in 1996. Since that time we have sold from a series of different suppliers. The most common reason for us to change from one supplier to another was because our supplier was bought out by one of our larger competitors.
We began selling glue-laminated beams from our current supplier in 1998 and have used them continuously since.
In recent months of very tight market conditions we have learned that we can reduce our markup substantially and still earn reasonable profit margins. Through this effort we expect to increase our market share considerably. The first and greatest physical change in our immediate future will be to increase in manufacturing capacity for the plated truss sector. This will be accomplished mostly through improved equipment and material handling systems. It is probable that yet another relocation will be required to accommodate continued growth. Our next focus will be in solidifying our position in the I joist market through either manufacturing of our own or preferably a purchase of a current supplier. Though this will not be in the immediate future we anticipate that it will be within the next 2 to 3 years. We have for many years attempted to sell steel bar joists. We have sold a limited number of jobs but have been mostly frustrated that all manufacturers currently selling into this market hire a company rep for the area effectively negating any opportunity for us to sell their product. We are currently developing plans to build our own bar joist product. This effort is somewhat stymied by the current market conditions in the steel industry. With supplies being low and prices very high, our entry into this market will be postponed until that market stabilizes.
Our customer base includes a majority of the commercial framers in the Las Vegas area. Some buy every job from Trussco and others buy occasionally. We also sell to most of the remodeling and fire repair contractors as well as some residential developers who were deemed too small to interest the large residential truss suppliers.
We do sell some government projects but again these are sold to either a framer or a general contractor so that we have no dealings with government agency.
We sell some in almost every segment of the market. Our emphasis is in the commercial and light industrial market. However, we also sell a relatively large percentage of the remodel and fire damage market in the Las Vegas area.
After several years in the market we determined that it is nearly impossible to survive trying to bid to everyone. If all of our work is derived from the competitive bid process it is not possible to maintain sufficient margins. In observing other successful businesses in this market and others it seems clear that the toughest stage in the development of a company is between the Ma and Pa shop stage and the corporate stage. That is where we are at this moment. One of the most common and successful strategies at this stage is to become partnered (very loosely and not at all legally) with likeminded customers who are maybe too small to get good service from the more established companies yet are aggressive and growth minded. In our case we will partner with 2 or 3 framers who in turn form the same type of “partnership” with 2 or 3 general contractors, who partner with 2 or 3 developers. In this arrangement, we often have input into the budget so we do not have to bid against eve ry supplier in town. The downside to this is that if we become too attached, then we become wholly dependent upon those customers. As their business goes, so does your business. We have tried to mitigate that problem by continually bidding much other work but giving preference and occasionally price advantages to our preferred customers.
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We currently employ 6 men in the shop and 4 administrative employees. They are led by a man with many years experience in the framing and general construction area. He has great problem solving abilities. Often on a job site what appears first as a “truss problem” can be traced to another cause or solved by simple and minor framing adjustments. Our warehouseman has considerable computer skills and is very good at paperwork flow and maintenance. Our lead man on the fabrication table is well organized and efficient. Our laborers are young and eager to learn. In the office our office manager has been with us for over 13 years and throughout that time has always been very loyal and trustworthy. We have one fulltime design technician who we have trained from the beginning. She now has 2 years experience and has become quite efficient and eager to help. We also have 1 part time design technician who has many years experience and a structural engineer who wo rks on an in call basis.
Our equipment consists of 2 pull saws, 2 c-clamp presses, a wooden assembly table, a caterpillar forklift and a freightliner delivery truck. Of course there are numerous nail guns, skill saws, compressors and the like.
Our greatest strength is in the relationship that we have built over several years with a number and variety of customers. We believe that many of our customers have stayed with us because they know that they may not get the lowest price but we will be competitive and fair in all of our dealings. Every phase of the construction industry is laden with unforeseen occurrences and problems. We go to great efforts to minimize those problems regardless of their source. The last paragraph of our proposals reads in part “our desire is the most expeditious and successful competition of your project.” We work hard toward that goal. Another great strength is in the variety of products that we sell. Again no other competitor in the area offers the line of products that we do.
Our customers buying patterns generally follow the ebb and flow of the construction industry in this market. However, several of them are young and aggressive which allows them to maintain higher activity levels during a general market slow down. It seems that in the most recent slowdown, we and many of our customers had to some degree developed a false sense of security. This false sense stems from the fact that commercial construction has not slowed but probably we did not take into account the trickledown effect that could come from the housing industry, who finding themselves virtually out of work, have crowded into a much smaller commercial market. This has made our market very competitive. Though our response had been slower that probably it should have been, we have responded and are seeing good results.
It is difficult to rank us simply because we are not a lumber yard to be ranked with them nor are we simply a truss fabricator to be ranked with them. In what we do, we are the largest in the area. In terms of ranking us with truss fabricators or lumber yards we would in either case certainly rank in the lower 20% in terms of dollar volume.
We have no announcements regarding new products and services.
Our raw materials are obtained from lumber companies and metal fabricators both of which we are not dependent upon. We currently have a customer base of 15 buyers whom we have maintained for at least 4 years.
There are no trademarks, patents, franchises, concessions, royalty or labor contracts. We comply with state and local licensing requirements. There are no approvals needed from government other than building code compliance
We do not anticipate any probable government regulations in our business
We have been developing plans to build our own steel bar joist product. Because of current market conditions in the steel industry; low supplies and high pricing; we have postponed our entry into this market until that market stabilizes.
There are no approvals needed from government other than building code compliance. We do not anticipate any probable government regulations in our business
As we have been engaged in this industry and in this market since 1992. As mentioned earlier our office manager has been us for 13 years. Our foreman has 20 years experience in the industry. Through attrition and culling we have developed an excellent group of employees willing to do whatever it takes to succeed.
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We believe that our past success and future stems chiefly from three entrenched characteristics. First, aggressiveness and a willingness to adapt and overcome. Over the years we have overcome numerous market-changes, slowdowns, and adaption’s. However, it is now our expectation to become more proactive in these market changes. Second, tenacity and a willing to take the bad times with the good. Third and probably most important is just an old fashioned “have to” mentality.
We comply with the Clark County Nevada environmental laws regarding “dust permit”.
We have ten full time employees consisting of four administrative and six fabrication workers.
ITEM 1A. RISK FACTORS.
Our Independent Auditor Has Expressed Going Concern Qualification.
Our independent auditor has expressed a “going concern” qualification in the Independent Auditor’s Report on the footnotes to our consolidated financial statements. This means that there is doubt as to our ability to continue operations.
We Will Be Subject to Intense Competition.
We operate in the highly competitive Truss, Beam and Joist sector of the construction industry. We face competition from existing companies with considerably more financial and business related sources. Such competition may have an adverse effect on our profitability.
We expect to be less able than our larger competitors to handle generally increasing costs and expenses of doing business. Additionally, it is expected that there may be significant technological advances in the future and we may not have adequate resources to enable us to take advantage of such advances.
We May Encounter Unforeseen Costs.
Our estimates of the cost of and time to be consumed in the provision of various services customarily provided by like companies based upon management’s knowledge may not be accurate. There can be no assurance that analysis of the customer’s various needs, recommendations for and/or implementation of improvements, modifications, cost reductions, and consulting and specific problem-solving, will not cost significantly more than expected or even prove to be prohibitive. Further, we are unable to predict the amount of time or funding that will be consumed in our efforts to obtain the additional debt and/or equity financing required permitting us to offer a full range of services. There can be no assurance that cost overruns will not occur or that such cost overruns will not adversely affect us.
We Have Some Debt Obligations.
The Company has some short-term obligations, in the amount of $19,974 which may affect our cash flow and ability to operate as anticipated.
If Our Stock Price Drops Significantly We May Become Subject To Securities Litigation That Could Result In A Harmful Diversion Of Our Resources.
In the past, following periods of volatility in the market price of a particular company’s stock, securities class action litigation has been brought against such companies. Any litigation arising from the volatility in the price of our common stock could have an adverse effect upon our business financial condition and results of operations.
State Blue Sky Regulations May Make It Difficult For You To Resell Your Stock.
To ensure that state laws are not violated through the resale of our securities, we will not register the transfer of any of our securities unless we are satisfied that the transfer doesn’t violate any state laws.
Our Common Stock Currently Is And May Continue To Be Subject To Additional Regulations Applicable To Lower Priced Securities.
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Our common stock may be subject to a number of regulations that can affect its price and your ability to sell it. For example, Rule 15g-9 under the Exchange Act may apply to our common stock. This rule imposes sales practice requirements on broker-dealers that sell low priced securities to persons other than established customers and institutional accredited investors. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction.
In addition, under United States securities regulations, our common stock consists of “penny stocks.” Penny stocks, in general, are equity securities with a price of less than $5.00 per share other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market. For any transaction involving a penny stock, unless exempt, the penny stock rules require the delivery, prior to the transaction, of a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer must also disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. Consequently, the penny stock rules may restrict the ability of broker-dealers to sell our common stock. The penny stock rules will not apply if the market price o f our common stock is $5.00 or greater. These requirements may reduce the level of trading activity in any secondary market for our common stock and may adversely affect the ability of broker-dealers to sell our securities.
Some Of Our Current Shareholders Will Become Eligible In The Future To Sell Their Stock, Which May Adversely Affect The Market Price Of Your Stock.
Common stock owned by our present shareholders, officers and directors have shares that are deemed “restricted securities” as that term is defined under the Securities Act of 1933, as amended (the “Securities Act”). In the future they may sell their securities under Rule 144 which provides, in essence, that a person having held restricted securities for a period of one (1) year may sell every three (3) months, in brokerage transactions and/or market maker transactions, an amount equal to the greater of (a) one percent (1%) of the Company’s issued and outstanding common stock or (b) the average weekly trading volume of the common stock during the four calendar weeks prior to the sale. Rule 144 also permits, under certain circumstances, the sale of common stock without any quantity limitations by a person who is not an affiliate of the Company, and who has satisfied a two (2) year holding period.
We Do Not Anticipate Paying Any Dividends or Interest Payments in the Foreseeable Future.
We have not paid any dividends since our Company’s inception and we do not anticipate paying any dividends on our common stock in the foreseeable future. We anticipate that earnings, if any, which may be generated from operations will be used to finance our continued operations and growth. If you anticipate the immediate need of dividends from your investments you should consider not purchasing any of our shares.
We Rely On Key Executives
Our ability to succeed is substantially dependent on the performance of its officers and Directors. Our success also depends on our ability to attract, hire, retain and motivate future Officers and key employees. The loss of the services of any of these executive Officers or other key employees could have a material adverse effect on our business prospects, financial condition and result of operation.
We have not entered into employment agreements with any of our Officers and Directors, and currently have no “Key Man” life insurance policies. Our future success may also depend on our ability to indentify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing and customer personnel.
Competition for such personnel is intense and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel. The failure to attract and retain the necessary technical, managerial, marketing and customer service personnel could have material adverse effect on our business prospects, financial condition and results of operations.
There are no independent directors to provide management oversight.
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Management Will Have Significant Control Over Our Decision Regarding Our Business.
Under the terms of our Articles of Incorporation filed with the Secretary of State of Nevada with respect to the rights, preferences and limitations of Common Shares, each common shareholder is entitled to vote on any matters presented to our stockholders. 95% of our common stock is held by one individual, and as such he is able to control the affairs of the Company regardless of the votes of the remaining holders of the Company’s common stock.
UNRESOLVED STAFF COMMENTS.
None.
We lease an 8000 square foot building on one half acre of land. The space consists of our offices, fabrication area and storage space. We have an option to purchase the property.
None.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Information. Our Common Stock is currently trading on the OTC:BB, there has been no active trading in our common stock. No assurance can be given that any active market for our Common Stock will ever develop.
(b) Holders. As of March 31, 2009, there were 32 record holders of all of our issued and outstanding shares of Common Stock.
(c) Dividend Policy
We have not declared or paid any cash dividends on our Common Stock and do not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on our earnings, if any, our capital requirements and financial condition and such other factors as the Board of Directors may consider.
SELECTED FINANCIAL DATA.
As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this item.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company of its management and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Actual results may materially differ from any forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures and constantly changing technology and market acceptance of the Company's products and services. The Company undertakes no obligation to publicly release t he result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Plan of operation for the next twelve months
Over the next twelve months, we expect to face strong competition from well-established companies and small independent operations. Accordingly, we expect to compete on the basis of price (or the value to the customer of the service performed) and, on the basis of our established reputation among customers as a quality provider and our locality of operation. Without a strong performance in the growth process, we expect to be less able than our larger competitors to handle generally increasing costs and expenses of doing business. Additionally, it is expected that there may be significant technological advances in the future and we may not have adequate resources without a strong public response anticipated to enable us to take advantage of such advances.
We have been under financial pressure from 2005 to the present. We have experienced a decrease in business due to the overall slowdown in the construction industry caused by the financial crises of the housing industry. This could continue through 2008 and possibly 2009 as predicted by the real estate industry. It is anticipated that a recovery will occur during 2009.
Our net sales for 2006 over 2005 had increased by $1,785,596, but there will probably be a decrease in sales for 2007 over 2006 by approximately $1,000,000.
Our Las Vegas construction market is not as seriously affected as the rest of the country, because over 30 billion dollars is committed to the expansion of Las Vegas, Casino/Hotel and commercial construction. We have now and believe in the immediate future, that we can obtain a portion of that business that will enable us to operate through the real estate crisis.
We believe we can sustain our plan of operation for the next twelve months with cash flow from our current clients. Given that this client base has been slightly expanding, we expect that this expansion will provide additional cash flow.
Additionally, we intend to actively search for a suitable business from among our smaller competitors as an acquisition. We anticipate the terms of any acquisitions will require a combination of cash and stock.
Being a public company will position us with the ability to raise capital and issue shares for acquisitions and growth opportunities and as a way to increase cash flow without increasing debt.
We are negotiating the increase of present bank line of credit. In addition, we expect we can obtain personal and business loans should a shortfall occur within the next 12 months.
Our key success and critical factors for the next year are in order of importance;
1.
Continue our expansion-marketing plan.
2.
Increase our customer base.
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Use financial control and cash flow planning.
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Use the advantage of economics of scale.
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We expect some changes in our operation over the next 12 months. From a purely operational point of view, we should have no problem in satisfying our cash need indefinitely. However, in our efforts to purchase the facility that we are currently occupying and expand our operation we will have cash needs. The largest single issue we believe is in raising funds for a 20% down payment on the property. Although, it will place us in a very tight cash flow situation, it may still be possible to finance the down payment from our own operation.
We are currently engaged in an effort to design wood purlin trusses that would allow us to compete directly against steel bar joists. This involves creating an attachment mechanism at each end of the truss that can be welded to steel beams or girders. Our engineer has developed a preliminary design which we will begin testing soon. Success in this will result in increased sales.
We expect to purchase more efficient plant equipment and delivery equipment. In doing this, we don’t expect that there will be a significant increase in the number of employees that we will have.
There are no causes for any material changes at this time.
There are no seasonal aspects that could have a negative material effect on our financial condition or results of operation.
The major trend in our industry in this market is the continuous growth of the numbers of tourists’ conventioneers and new residents (approximately 6000 per month).
RESULTS OF OPERATIONS
The Company incurred a net loss of $15,813 for the year ended December 31, 2008, as compared to a net loss of $ (191,174) for 2007.
Liquidity and Capital Resources
For the most recent fiscal year, 2008, the Company incurred a loss in the amount of $15,813 and $(191,174) for 2007.
(iii) The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. There is no assurance that the Company will be able to raise sufficient funding to enhance the Company's financial resources sufficiently to generate volume for the Company, or to engage in any significant research and development, or purchase plant or significant equipment.
Commitments
We do not have any commitments which are required to be disclosed in tabular form as of December 31, 2008.
Off-Balance Sheet Arrangements
As of December 31, 2008, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the index to the Financial Statements below, beginning on page F-1.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A(T).
CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our president and chief financial officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in 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, the president and 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 chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b)Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our management has concluded that, as of December 31, 2008, our internal control over financial reporting is effective based on these criteria. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.”
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
None.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Executive Officers and Directors as of Dec. 31, 2008
Name |
| Age |
| Title |
|
|
|
|
|
Boyd V. Applegate |
| 56 |
| CEO, President, Director. |
Christine M. Applegate |
| 54 |
| CFO, Secretary, Treasurer, Director |
Our officers and directors are elected to hold office until the next annual meeting of shareholders and until their respective successors have been elected and qualified, or until prior resignation or removal.
12
Business Experience
Boyd V. Applegate, CEO, President, Director. He began his working career as an equipment operator, a Realtor and real estate investor for over 8 years and a small project contractor for over 6 years. He then worked as a truss salesman for over 4 years. In 1992, he opened the current operation, CBA Builders (DBA Trussco) and in 1998 opened a retail building supply store in Overton, Nevada which was closed in 2002 in order to concentrate on Trussco. In addition to Mr. Applegate’s education and experience in sales, management and administration, he also became a draftsman specializing in Truss development and design.
Christine M. Applegate, CFO, Secretary, Treasurer, Director, has been an active partner in all his business affairs for 30 of the 36 years they have been married
Compensation and Audit Committees
As we only have one board member and given our limited operations, we do not have separate or independent audit or compensation committees. Our Board of Directors has determined that it does not have an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K. In addition, we have not adopted any procedures by which our shareholders may recommend nominees to our Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of our Common Stock (collectively, the “Reporting Persons”) to report their ownership of and transactions in our Common Stock to the SEC. Copies of these reports are also required to be supplied to us. To our knowledge, during the fiscal year ended December 31, 2008 the Reporting Persons complied with all applicable Section 16(a) reporting requirements.
Code of Ethics
We have not adopted a Code of Ethics given our limited operations. We expect that our Board of Directors following a merger or other acquisition transaction will adopt a Code of Ethics.
ITEM 11.
EXECUTIVE COMPENSATION.
The following is our executive compensation as of Dec. 31, 2008.
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|
|
|
|
|
| Period ending |
|
|
|
| Dec. 31, 2008 |
| Annual |
|
|
|
| Compensation |
Name and Principal Position (1) |
| Salary (2) |
| Bonus (3) |
|
|
|
|
|
Boyd V. Applegate – CEO/Pres/Dir. |
| $0 |
| None |
Christine M. Applegate – CFO/Sec/Treas/Dir. |
| $0 |
| None |
Stock Options: We have not granted any stock options and do not have any stock option plans in effect as of the date of this prospectus. In the future, we may grant stock options to its officers, directors, employees or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees with pension, stock appreciation rights, long-term incentive or other plans and has no intention of implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.
13
The following shows the amounts, which we expects to pay to our officers during the twelve-month period ending December 31, 2009, and the time, which our executive officers plan to devote to our business.
|
| Proposed |
| Time to be devoted |
Name |
| Compensation |
| To Our Business |
Boyd V. ApplegateCEO/Pres/Dir |
| $20,000* |
| 65 hours per week |
Christine M. Applegate CFO/Sec/Treas/Dir. |
| $50,000* |
| 30 hours per week |
*To be paid as money is available. |
|
|
|
|
We do not have any employment agreements with our officers or employees.
We do not maintain any key man insurance on the life or in the event of disability of any of our officers.
Director Compensation
We do not currently pay any cash fees to our sole director, nor do we pay director’s expenses in attending board meetings.
Employment Agreements
We are not a party to any employment agreements.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of February 20, 2009 regarding the number and percentage of our Common Stock (being our only voting securities) beneficially owned by each officer, director, each person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by us to own 5% or more of our outstanding common stock.
Name and address |
| Position |
| Amount |
| Percent held |
| Class |
|
|
|
|
|
|
|
|
|
Boyd V. Applegate |
| Pres/Dir |
| 16,625,000 shares |
| 95% |
| Common |
2911 N. Lamb Blvd. |
|
|
|
|
|
|
|
|
Las Vegas, NV 89115 |
|
|
|
|
|
|
|
|
Unless otherwise indicated, we have been advised that all individuals or entities listed have the sole power to vote and dispose of the number of shares set forth opposite their names. For purposes of computing the number and percentage of shares beneficially owned by a security holder, any shares which such person has the right to acquire within 60 days of February 20, 2009 are deemed to be outstanding, but those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other security holder.
We currently do not maintain any equity compensation plans.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Our Board of Directors consist solely of Boyd Appelgate and Christina Appelgate. They are not independent as such term is defined by a national securities exchange or an inter-dealer quotation system.
Various related party transactions are reported throughout the notes to our financial statements and should be considered incorporated by reference herein.
14
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Blackwing Group LLC is our independent registered public accounting firm.
Audit Fees
The aggregate fees billed by Blackwing Group LLC for professional services rendered for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q or services that are normally provided in connection with statutory and regulatory filings were $1,500 and $ 1,500 for the fiscal years ended December 31, 2008 and 2007, respectively.
Audit-Related Fees
There were no fees billed by Blackwing Group LLC for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements for the fiscal years ended December 31, 2008 and 2007, respectively.
Tax Fees
The aggregate fees billed by Blackwing Group LLC for professional services for tax compliance, tax advice, and tax planning were $0 and $0 for the fiscal years ended December 31, 2008 and 2007, respectively.All Other Fees
There were no fees billed by Blackwing Group LLC for other products and services for the fiscal years ended December 31, 2008 and 2007, respectively.
Pre-Approval Policy
We do not currently have a standing audit committee. The above services were approved by our Board of Directors.
PART IV
Item 15.Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Report:
1.Financial Statements. The following financial statements and the report of our independent registered public accounting firm, are filed herewith.
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|
|
| • | Report of Independent Registered Public Accounting Firm (Blackwing Group-2008 and 2007) |
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|
|
| • | Balance Sheets at December 31, 2008 and 2007 |
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|
|
| • | Statements of Operations for the years ended December 31, 2008 and 2007 |
|
|
|
| • | Statements of Changes in Stockholders Equity for the period from April 30, 1996 (Date of Inception) to December 31, 2008 |
|
|
|
| • | Statements of Cash Flows for the years ended December 31, 2008 and 2007 |
|
|
|
| • | Notes to Financial Statements |
2.Financial Statement Schedules.
Schedules are omitted because the information required is not applicable or the required information is shown in the financial statements or notes thereto.
15
3.Exhibits Incorporated by Reference or Filed with this Report.
Exhibit |
| Description |
|
|
|
31.1 |
| Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002* |
|
|
|
31.2 |
| Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002* |
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|
|
32.1 |
| Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.* |
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|
|
32.2 |
| Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.* |
___________________
*Included herewith
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
| Porfavor Corp |
|
|
Date: April 14, 2009 |
|
|
|
| By:/s/ Boyd Applegate |
| Boyd Applegate, President |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
Date: April 14, 2009 |
|
|
|
|
|
|
| By:/s/ Boyd Applegate |
|
| Boyd Applegate, President and Director |
|
| (Principal Executive Officer) |
|
|
|
Date: April 14, 2009 |
|
|
|
|
|
|
| By:/s/ Christine Applegate |
|
| Christine Applegate, Chief Financial Officer |
|
| (Principal Financial and Accounting Officer) |
16
PORFAVOR CORP
CONSOLIDATED AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDING DECEMBER 31, 2008 AND 2007
THE BLACKWING GROUP, LLC
18921G E VALLEY VIEW PARKWAY #325
INDEPENDENCE, MO 64055
F-1
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT..........................................................................
F-3
FINANCIAL STATEMENTS
Consolidated Balance Sheets ….............................................................................
F-4
Consolidated Statements of Operations .................................................................
F-5
Consolidated Statements of Cash Flows …............................................................
F-6
Consolidated Statements of Stockholders’ Equity..................................................
F-7
Notes to Financial Statements ........................................................………………
F-8 – F-15
F-2
THE BLACKWING GROUP, LLC
18921G E VALLEY VIEW PARKWAY #325
INDEPENDENCE, MO 64055
816-813-0098
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Porfavor Corporation
2919 N Lamb Blvd
Las Vegas, NV 89115
We have audited the accompanying balance sheets of Porfavor Corporation as of December 31, 2008 and 2007, and the related statements of income and changes in member’s equity, and cash flows for the period then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits, these financial statements referred to above present fairly, in all material respects, the financial position of Porfavor Corporation as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the periods then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note G to the financial statements, the Company is an Exploration company facing competition from existing companies with considerably more financial resources and business connections. As of the date of this report, the Company may require additional capital for operational activities and the Company’s ability to raise capital through future issuances of common stock is unknown. Obtaining additional financing and attaining profitable operations are necessary for the Company to continue operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern as of the date of this report. The audited financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties. Management's plans regarding those matters also are described in Note G.
/s/ The Blackwing Group, LLC
The Blackwing Group, LLC
Issuing Office: Independence, MO
April 13, 2009
F-3
PORFAVOR CORPORATION | |||||
BALANCE SHEET | |||||
AS OF DECEMBER 31, 2008 AND 2007 | |||||
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|
ASSETS | December 31, |
| December 31, | ||
|
|
| 2008 |
| 2007 |
Current Assets |
|
|
|
| |
| Business Checking | $ | 36,931 | $ | - |
| Accounts Receivable |
| 12,219 |
| 30,360 |
| Prepaid Insurance |
| 5,709 |
| 17,127 |
| Inventory |
| 29,658 |
| 43,515 |
Total Current Assets |
| 84,517 |
| 91,002 | |
|
|
|
|
|
|
Fixed Assets |
|
|
|
| |
| Office Equipment |
| 9,109 |
| 9,109 |
| Office Furniture |
| 4,950 |
| 4,950 |
| Shop Tools |
| 12,140 |
| 12,140 |
| Vehicles |
| 46,825 |
| 46,825 |
|
|
| 73,024 |
| 73,024 |
| Accumulated Depreciation |
| (69,201) |
| (64,648) |
Total Fixed Assets |
| 3,823 |
| 8,376 | |
|
|
|
|
|
|
Total Assets | $ | 88,340 | $ | 99,378 | |
|
|
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|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
| ||
|
|
|
|
|
|
Current Liabilities |
|
|
|
| |
| Checking Account Deficit | $ | - | $ | 1,790 |
| Accounts Payable |
| 1,162 |
| 6,918 |
| Sales Tax Payable |
| 18,812 |
| 30,358 |
Total Current Liabilities |
| 19,974 |
| 39,066 | |
|
|
|
|
|
|
Long Term Liabilities |
|
|
|
| |
| Loans From Shareholders |
| 287,743 |
| 325,535 |
| Note Payable |
| 100,819 |
| 70,786 |
Total Long Term Liabilities |
| 388,562 |
| 396,321 | |
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
| |
|
|
|
|
|
|
| *Capital Stock 17,500,000 Issued |
| 25,000 |
| 25,000 |
| Additional Paid In Capital |
| 428,342 |
| 428,342 |
| Retained Earnings |
| (773,538) |
| (789,351) |
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
| (320,196) |
| (336,009) | |
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity | $ | 88,340 | $ | 99,378 | |
F-4
PORFAVOR CORPORATION | ||||||
STATEMENTS OF OPERATIONS | ||||||
FOR THE YEARS ENDED DECEMBER 31, 2008, AND 2007 | ||||||
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|
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| December 31, |
| December 31, |
|
|
|
| 2008 |
| 2007 |
|
|
|
|
|
|
|
|
Total Income | $ | 1,061,790 | $ | 2,926,507 |
| |
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|
|
|
Cost of Goods Sold |
|
|
|
|
| |
| Material Purchases |
| 600,037 |
| 2,224,566 |
|
| Manufacturing Wages |
| 135,069 |
| 279,253 |
|
Total Cost of Sales |
| 735,106 |
| 2,503,819 |
| |
|
|
|
|
|
|
|
Gross Margin |
| 326,684 |
| 422,688 |
| |
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
| |
| Officers' Salaries |
| 60,800 |
| 83,200 |
|
| Office Salaries |
| 21,852 |
| 21,536 |
|
| Rent |
| 57,822 |
| 76,226 |
|
| Sales Tax |
| 36,181 |
| 197,158 |
|
| Depreciation |
| 4,552 |
| 3,991 |
|
| Insurance |
| 28,943 |
| 72,561 |
|
| Auto and Truck |
| 19,667 |
| 30,555 |
|
| Advertising |
| 174 |
| 972 |
|
| Bank Charges |
| 575 |
| 422 |
|
| Postage |
| 83 |
| 879 |
|
| Interest |
| 2,374 |
| 3,146 |
|
| Licenses and Permits |
| 1,585 |
| 6,405 |
|
| Meals and Entertainment |
| 6,110 |
| 3,108 |
|
| Office Expenses |
| 9,755 |
| 20,221 |
|
| Office Supplies |
| 2,547 |
| 3,555 |
|
| Payroll Taxes |
| 17,993 |
| 31,983 |
|
| Professional Books |
| 102 |
| 435 |
|
| Professional Education |
| - |
| 1,785 |
|
| Professional Fees |
| 7,023 |
| 3,688 |
|
| Small Tools |
| 56 |
| - |
|
| Telephone |
| 9,863 |
| 8,209 |
|
| Utilities |
| 2,061 |
| 20,204 |
|
| Dues and Subscriptions |
| 4 |
| - |
|
| Travel |
| 19,363 |
| 20,379 |
|
| Repairs and Maintenance |
| 262 |
| 519 |
|
| Workmans Comp |
| 1,124 |
| 2,725 |
|
| General and Administrative |
| 100,721 |
| 159,190 |
|
Total Operating Expenses |
| 310,871 |
| 613,862 |
| |
|
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|
|
Net Income (Loss) | $ | 15,813 | $ | (191,174) |
| |
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|
|
Net Income (Loss) per share | $ | 0.00 | $ | (0.01) |
| |
|
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|
|
Weighted Average Number of Shares Outstanding |
| 17,500,000 |
| 17,500,000 |
| |
F-5
PORFAVOR CORPORATION | |||||
STATEMENTS OF CASH FLOWS | |||||
FOR THE YEARS ENDED DECEMBER 31, 2008, AND 2007 | |||||
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CASH FLOWS FROM OPERATING ACTIVITIES |
| December 31, |
| December 31, | |
|
|
| 2008 |
| 2007 |
Net income | $ | 15,813 | $ | (191,174) | |
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|
|
|
|
|
Adjustments to reconcile net income to net cash provided |
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|
|
| |
by operating activities |
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|
|
| |
| Depreciation |
| 4,552 |
| 3,991 |
| Increase (decrease) in: |
|
|
|
|
| Accounts Receivable |
| 18,141 |
| (5,460) |
| Escrow Deposit |
| - |
| 75,922 |
| Increase (decrease) in: |
|
|
|
|
| Prepaid Insurance |
| 11,418 |
| (1,753) |
| Inventory |
| 13,857 |
| 2,308 |
| Accounts Payable |
| (5,756) |
| 598 |
| Sales Tax Payable |
| (11,545) |
| (3,596) |
| Net Cash Provided (Used) By Operating Activities |
| 46,480 |
| (119,164) |
|
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CASH FLOWS FROM INVESTING ACTIVITIES |
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|
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| |
|
|
|
|
|
|
| Acquisition of Fixed Assets |
| - |
| - |
| Net Cash (Used) By Investing Activities |
| - |
| - |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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| |
|
|
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|
|
|
| Cash Deficit |
| (1,790) |
| 1,790 |
| Loans From Shareholders |
| (37,792) |
| 25,443 |
| Note Payable |
| 30,033 |
| 70,786 |
| Net Cash (Used) By Financing Activities |
| (9,549) |
| 98,019 |
|
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|
|
|
| NET INCREASE (DECREASE) IN CASH |
| 36,931 |
| (21,145) |
|
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|
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CASH AT BEGINNING OF PERIOD |
| - |
| 21,145 | |
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|
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CASH AT END OF PERIOD | $ | 36,931 | $ | - | |
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Cash Paid for Interest | $ | 2,374 | $ | 3,146 | |
F-6
PORFAVOR CORPORATION | |||||||||||||
STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||
ACCUMULATED FOR THE PERIOD FROM DATE OF INCEPTION | |||||||||||||
ON APRIL 30, 1996 TO DECEMBER 31, 2007 | |||||||||||||
(Expressed in US Dollars) | |||||||||||||
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Capital Stock | Number of |
|
|
| Additional |
|
|
|
|
| Total | ||
Issued | Common |
| Par |
| Paid In |
| Profit |
| Deficit |
| Stockholders' | ||
(no par value) | Shares |
| Value |
| Capital |
| Accumulated |
| Accumulated |
| Equity (Deficit) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- at December 8, 1999 | 17,500,000 |
| 0.001428 |
| - |
|
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|
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| 25,000 | ||
|
|
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|
|
|
|
|
|
|
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|
|
- at December 31, 2005 | 17,500,000 |
| 0.001428 |
| 428,342 |
| - |
| (496,479) |
| (43,137) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss for the year ending December 31, 2006 |
|
|
|
|
|
|
|
| (101,698) |
| (101,698) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2006 | 17,500,000 |
| 0.001428 |
| 428,342 |
| - |
| (598,177) |
| (144,835) | ||
|
|
|
|
|
|
|
|
|
|
|
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Net Loss for the year ending December 31, 2007 |
|
|
|
|
|
|
|
| (191,174) |
| (191,174) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2007 | 17,500,000 |
| 0.001428 |
| 428,342 |
| - |
| (789,351) |
| (336,009) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the year ending December 31, 2008 |
|
|
|
|
|
|
|
| 15,813 |
| 15,813 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2008 | 17,500,000 |
| 0.001428 |
| 428,342 |
| - |
| (773,538) |
| (320,196) | ||
|
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F-7
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies of Porfavor Corp (the Company) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity. The Company has not realized revenues from its planned principal business purpose and is considered to be in its development state in accordance with SFAS 7, “Accounting and Reporting by Development State Enterprises.” This statement has been added to assure stockholders that the disclosures in this submittal are complete.
Organization, Nature of Business and Trade Name
Jubilee Trading, Inc. was incorporated in the State of Nevada on April 3, 1996. On August 4, 1996 Alfonzo Hernandez, Sr. and 27 friends purchased Twenty-five Thousand (25,000) shares at no par value of the corporation (100%) for payment of Five Thousand Dollars ($5,000) in order to open and operate a Mexican Seafood Restaurant named “La Perla” in Los Angeles, California. The restaurant plans did not materialize and the corporation lay dormant.
On March 3, 2002, the name of the corporation was changed to Porfavor Corp and our articles of incorporation were changed to increase the Directors to three and to increase the authorized shares from Twenty-five Thousand (25,000) shares of common stock at no par value to Fifty Million (50,000,000) shares of common stock at $.001 par value.
A forward split of Thirty-five shares to One (35:1) was authorized resulting in Eight Hundred Seventy-five Thousand (875,000) shares of common stock issued to Thirty-one (31) shareholders. The Company planned to open and operate a Sports Bar and restaurant in Los Angeles, California. These plans also did not materialize and once again the company lay dormant.
On October 5, 2007, Porfavor Corp made an acquisition of CBA Builders, a Nevada Corp by exchanging Sixteen Million Six Hundred Twenty-five Thousand (16,625,000) shares of common stock (95%) of Porfavor Corp for Fifty Thousand (50,000) shares of commons stock (100%) of CBA Builders, DBA Trussco Sales issued and outstanding common stock.
CBA Builders was incorporated in the State of Nevada on October 10, 1987. CBA Builders was established as a construction company for the purposes of designing and manufacturing structural wood materials.
The financials include the accounts of Porfavor Corp and CBA Builders up until October 5, 2007 each of these companies were separate and distinct. On October 5, 2007, Porfavor Corp acquired CBA Builders as a wholly owned subsidiary. CBA Builders’ primary business is the designing and manufacturing of structural wood materials.
F-8
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Organization, Nature of Business and Trade Name (continued)
Prior to October 5, 2007, CBA Builders had been a privately owned and operated business with well-established relationships in the Las Vegas Metropolitan area. It was incorporated in October 10, 1987 and founded by Boyd Applegate who at that time had several years experience in designing and manufacturing structural wood materials.
Basis of Presentation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of t he company for the respective periods being presented.
Activity reflected in these consolidated financial statements is from the activity in acquired company CBA Builders.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.
Depreciation is computed for financial statement purposes on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:
Estimated |
|
Useful Lives |
|
Office Equipment | 5-10 years |
Office Furniture | 5-7 years |
Shop Tools | 5-7 years |
Vehicles | 5-10 years |
F-9
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property and Equipment (continued)
For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. For audit purposes, depreciation is computed under the straight-line method.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents.
Revenue and Cost Recognition
The Company reports income and expenses on the accrual basis of accounting, whereby income is recorded when it is earned and expenses recorded when they are incurred. In this specific industry revenue from jobs is recorded upon completion of construction contract. Payment is due as specified in the contract.
Job costs include all direct materials, and labor costs and those indirect costs related to production. Selling, general and administrative costs are charged to expense as incurred.
Cost of Goods Sold
Job costs include all direct materials, and labor costs and those indirect costs related to production. Selling, general and administrative costs are charged to expense as incurred. No depreciation is allocated to cost of goods since the use of the fixed assets cannot be differentiated between office use and the construction process.
Advertising
Expenses related to specific jobs are allocated and classified as costs of goods sold. Expenses not related to specific jobs are recorded as general and administrative expenses. Advertising expense for the years ended December 31, 2008 and 2007 totaled $174, and $972, respectively.
Use of Estimates
The preparation of financial statements in accounting principles generally accepted in the United States of America 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. A change in managements’ estimates or assumptions could have a material impact on Porfavor Corp’s financial condition
F-10
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates (continued)
and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. Porfavor Corp’s financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
Principles of Consolidation
These consolidated financial statements are presented based on the generally accepted accounting principle of acquisition. An acquisition of a company occurs when one enterprise pays cash, or issues stock or debt for all or part of the voting stock of another enterprise. The acquired enterprise remains intact as a separate legal entity. The parent-subsidiary relationship is accounted for as a purchase, and it is referred to as an acquisition. Consolidated statements present the results of operations and the financial position of a parent company and its subsidiaries essentially as if the group were a single enterprise with one or more branches or divisions.
Common Stock
The Company has authorized common stock and has not authorized any other form of stock including preferred stock.
Inventory Valuation
We value our inventory at the lower of cost or market. Market is determined based on net realizable value. Cost is determined on a “first-in, first-out” basis, which approximates actual cost. We have no policy for a reserve for excess and obsolete inventory based on forecasted demand since inventory generally does not become obsolete. Inventory items are generally ordered on a just-in-time basis to minimize inventory due to limited stock space.
NOTE B – ACQUISITION
An acquisition of a company occurs when one enterprise pays cash, or issues stock or debt for all or part of the voting stock of another enterprise. The acquired enterprise remains intact as a separate legal entity. The parent-subsidiary relationship is accounted for as a purchase, and it is referred to as an acquisition.
CBA Builders originally authorized and issued Fifty Thousand (50,000) shares of common stock, which was issued to one (1) shareholder. In an acquisition the stock disclosures are presented by retroactively stating the equity accounts as of the earliest period presented to give effect to the new capital structure subsequent to the acquisition.
F-11
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE B – ACQUISITION (continued)
Therefore, the equity section of the financial statements presented reports the total number of shares issued as of September 30, 2007 as Seventeen Million Five Hundred Thousand (17,500,000) shares of common stock.
On October 9, 2007 for the purpose of the merger an additional Sixteen Million Six Hundred Twenty-five Thousand shares of common stock were authorized and issued. The merger agreement stipulated that Boyd Applegate would exchange Fifty Thousand (50,000) shares, representing One Hundred Percent (100%) of the issued and outstanding shares of CBA Builders common stock, including its processes and assets; for Sixteen Million Six Hundred Twenty-five Thousand (16,625,000) shares of stock of Porfavor Corp. Upon the finalization of this transaction per the agreement, CBA Builders would become a wholly owned subsidiary of Porfavor Corp.
Per the acquisition agreement, on October 9, 2007, CBA Builders transferred Fifty Thousand (50,000) shares of the stock representing One Hundred Percent (100%) of the authorized and outstanding shares of CBA Builders. Porfavor Corp issued Sixteen Million Six Hundred Twenty-Five Thousand Five Hundred (16,625,500) shares of common stock representing Eighty Percent (95%) of the authorized issued and outstanding shares of Porfavor Corp in exchange for the Fifty Thousand (50,000) shares of common stock of CBA Builders.
As part of the acquisition CBA Builders exchanged assets valued at $124,487 for Sixteen Million Six Hundred Twenty-Five Thousand Five Hundred (16,625,500) shares of Porfavor Corp at a value of .007488 per share. At the time of the acquisition,
Porfavor Corp, had no assets; therefore the Eight Hundred Seventy Four Thousand Five Hundred (874,500) shares of Porfavor Corp still issued and outstanding had no value at the time of the trade. The resulting increase in shares caused a decrease in the value of the newly issued Sixteen Million Six Hundred Twenty-Five Thousand Five Hundred (16,625,500) shares to .007114 cents per share. This resulted in a dilution of .000374 cents per share equal to a .04995 percent dilution.
NOTE C – LIQUIDITY AND RESOURCES
The Company currently has a payable on the books for funds borrowed from the majority shareholder. There have been no formal loan terms agreed upon by the Board. The loan is listed as a long-term liability due to the fact that the loan cannot be repaid within a twelve-month period.
The ability of the Company to satisfy its obligations depends in part upon its ability to maintain a profitable level of operations, securing short and long-term financing to continue development of its services, and the growth of its customer base. There is no assurance that short and long-term financing can be obtained to fulfill the Company’s capital needs.
F-12
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE D – PROPERTY AND EQUIPMENT
The carrying values of fixed assets as of December 31, 2008 and 2007, were as follows:
|
| 2008 |
| 2007 |
Office Equipment | $ | 9,109 | $ | 9,109 |
Office Furniture |
| 4,950 |
| 4,950 |
Shop Tools |
| 12,140 |
| 12,140 |
Vehicles |
| 46,825 |
| 46,825 |
|
| 73,024 |
| 73,024 |
Accumulated Depreciation |
| (69,201) |
| (64,648) |
| $ | 3,823 | $ | 8,376 |
Depreciation for the periods ended December 31, 2008 and 2007 is $4,553 and $3,991.
NOTE E – INCOME TAXES
The Company (Porfavor Corp) filed organization paperwork with the State of Nevada. At the time of filing Porfavor Corp elected and filed to be a C Corporation.
The acquired company, CBA Builders filed organization paperwork with the State of Nevada. At the time of filing CBA Builders elected and filed to be Sub Chapter S Corporations. This election allows all income taxes to be the responsibility of the Shareholders of Corporation not the corporation. Therefore, no provision for income tax was made prior to the acquisition.
The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” (“SFAS 109”). Under the asset and liability method of SFAS 109, 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 bases. Deferred tax asset 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. Under SFAS 109, the effect on deferred tax asset and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. Valuation allowances are establi shed, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Due to the inherent uncertainty in forecasts and future events and operating results, the Company has provided for a valuation allowance in an amount equal to gross deferred tax assets resulting in no net deferred tax assets or liabilities for the periods audited.
F-13
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE F – LINE OF CREDIT
The majority shareholder, Boyd Applegate, has been approved for a $75,000 revolving line of credit in connection with the existing bank accounts for CBA Builders. The credit limit of the line is $75,000 with a variable annual percentage rate of 4.75% above prime. The revolving line of credit has been used exclusively for the purpose of financing the cash flow needs of the Company. Therefore, the Board has agreed that the Company should record the debt on the books and provide for the payments to be met through Company funds. Monthly payments are required if there is an outstanding balance for a minimum of the finance charges. The balance as of September 30, 2007 is $70,786.
NOTE G – GOING CONCERN
Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.
Management expects to face strong competition from well-established companies and small independent companies. Accordingly, the Company expects to compete on the basis of price (or the value to the customer of the services performed) and, on the basis of their established reputation among customers as a quality provider of management services and our locality of operation. Without a strong performance in the growth process Management expects to be less able than our larger competitors to handle generally increasing costs and expenses of doing business. Additionally, it is expected that there may be significant technological advances in the future and Management may not have adequate resources without the strong public response anticipated to enable the Company to take advantage of such advances.
NOTE H – NET INCOME (LOSS) PER COMMON SHARE
Net loss per share is calculated in accordance with SFAS No. 128, “Earnings Per Share.” The weighted –average number of common shares outstanding during each period is used to compute basic loss per share. Basic net loss per common share is based on the weighted-average number of share of common stock of Seventeen Million Five Hundred Thousand (17,500,000) outstanding in the periods ending December 31, 2006 and September 30, 2007.
Number of shares | Net Income (Loss) | Year | Net Income (Loss) Per Share |
17,500,000 | $15,813 | 2008 | .0009 |
17,500,000 | ($224,336) | 2007 | (.0128) |
F-14
PORFAVOR CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE I – ACCOUNTS RECEIVABLE
Accounts receivable is defined as amounts due from customers for goods and services provided in the normal course of business operations. Accounts receivable for Porfavor Corp is the total unpaid invoices on the books at any given time. Currently Porfavor Corp does not have an allowance for doubtful accounts due to the fact that none of the receivables on the books have been deemed uncollectible.
The receivables that total the amount on the balance sheet are from invoices issued to long time customers that are considered good credit risks and have a history of paying invoices within thirty days (30) of the due date. Therefore we have determined through analysis of past historical experience for this Company the allowance for bad debt should be one half of one percent (.5%) of the receivables listed on the books.
NOTE J – EQUITY
Only one class of stock has been authorized and issued by Porfavor Corp. Per financial statement presentation requirements the value of the Seventeen Million Five Hundred Thousand (17,500,000) shares of common stock presented are $25,000 as of December 31, 2008 and 2007.
Additional paid in capital has been recorded at the amount of $428,342 as of December 31, 2008 and 2007. Additional paid in capital amounts arise from additional amounts paid by shareholders in the purchase of the original shares of CBA Builders. These funds were used in the cash flow of the business.
NOTE K – PREPAID EXPENSES
Prepaid expenses are prepayments made to secure the use of assets or the receipts of services at a future date. The amounts listed on the financial statements presented as prepaid assets are for insurance contracts that overlap the years presented.
F-15
