UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 31, 2009
Commission file number 333-155966
PAPERWORKS, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
2963 E. Rose Lane
Phoenix, AZ 85016
(Address of principal executive offices, including zip code)
1-800-854-0654
(Telephone number, including area code)
Rhoda Rizkalla
2963 E. Rose Lane
Phoenix, AZ 85016
Telephone & Facsimile 1-800-854-0654
(Name, address and telephone number of agent for service)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer, "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
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 [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,000,000 shares as of July 13, 2009
ITEM 1. FINANCIAL STATEMENTS.
PAPERWORKS INC.
Balance Sheets
(A Development Stage Company)
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
May 31, August 31,
2009 2008
-------- --------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 10,703 $ 14,990
-------- --------
TOTAL ASSTS $ 10,703 $ 14,990
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ -- $ 861
Loans from shareholders 7,600 --
-------- --------
TOTAL CURRENT LIABILITIES 7,600 861
-------- --------
STOCKHOLDERS' EQUITY
Capital stock
Authorized 75,000,000 ordinary voting shares at $0.001 per share
Issued and outstanding:
3,000,000 common shares at par value 3,000 3,000
Additional paid in capital 12,000 12,000
-------- --------
15,000 15,000
Deficit accumulated during the development stage (11,897) (871)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 3,103 14,129
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,703 $ 14,990
======== ========
Approved on behalf of the board
_______________________________, Director
_______________________________, Director
2
PAPERWORKS INC.
Statements of Income
(A Development Stage Company)
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Accumulated From
Three Months Nine Months Inception Date of
Ended Ended April 30, 2008 to
May 31, May 31, May 31,
2009 2009 2009
---------- ---------- ----------
\GENERAL AND ADMINISTRATIVE EXPENSES
Bank charges and interest $ 75 $ 266 $ 276
Filing and transfer agent fee 325 845 845
Office expenses -- 68 929
Professional fees 1,118 9,243 9,243
Travel expenses 604 604 604
---------- ---------- ----------
Total general and administrative expenses 2,122 11,026 11,897
---------- ---------- ----------
Net loss $ (2,122) $ (11,026) $ (11,897)
========== ========== ==========
EARNINGS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE OUTSTANDING SHARES 3,000,000 3,000,000
========== ==========
3
PAPERWORKS INC.
Statement of Stockholders' Equity
(A Development Stage Company)
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Deficit
Accumulated Total
Price Number of Additional Total During the Stock-
Per Common Par Paid-in Capital Development holders'
Share Shares Value Capital Stock Stage Equity
----- ------ ----- ------- ----- ----- ------
Balance, April 30, 2008 -- $ -- $ -- $ -- $ -- $ --
August 31, 2008
Subscribed for cash $0.005 3,000,000 3,000 12,000 15,000 -- 15,000
Net loss (871) (871)
--------- ------ ------- ------- -------- --------
Balance, August 31, 2008 3,000,000 3,000 12,000 15,000 (871) 14,129
Net loss (11,026) (11,026)
--------- ------ ------- ------- -------- --------
Balance, May 31, 2009 3,000,000 $3,000 $12,000 $15,000 $(11,897) $ 3,103
========= ====== ======= ======= ======== ========
4
PAPERWORKS INC.
Statements of Cash Flows
(A Development Stage Company)
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Accumulated From
Three Months Nine Months Inception Date of
Ended Ended April 30, 2008 to
May 31, May 31, May 31,
2009 2009 2009
-------- -------- --------
CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES
Net loss for the period $ (2,122) $(11,026) $(11,897)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Changes in operating assets and liabilities
Accounts payable (861) (861) --
-------- -------- --------
Net cash (used in) operating activities (2,983) (11,887) (11,897)
-------- -------- --------
FINANCING ACTIVITIES
Loans from related party 7,600 7,600 7,600
Shares subscribed for cash -- -- 15,000
-------- -------- --------
Net cash provided by financing activities 7,600 7,600 22,600
-------- -------- --------
INVESTING ACTIVITIES -- -- --
-------- -------- --------
Net cash used for investing activities -- -- --
-------- -------- --------
Cash increase during the period 4,617 (4,287) 10,703
Cash beginning of the period 6,086 14,990 --
-------- -------- --------
Cash end of the period $ 10,703 $ 10,703 $ 10,703
======== ======== ========
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PAPERWORKS INC.
Notes to Financial Statements
May 31, 2009
(A Development Stage Company)
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
1. NATURE AND CONTINUANCE OF OPERATIONS
PaperWorks Inc. ("the Company") was incorporated under the laws of State of
Nevada, U.S. on April 30, 2008, with an authorized capital of 75,000,000
common shares with a par value of $0.001. The Company's year end is the end
of August. The Company is in the development stage of its business. During
the period ended August 31, 2008, the Company commenced operations by
issuing shares.
These financial statements have been prepared on a going concern basis
which assumes the Company will be able to realize its assets and discharge
its liabilities in the normal course of business for the foreseeable
future. The Company has incurred losses since inception resulting in an
accumulated deficit of $11,897 as at May 31, 2009 and further losses are
anticipated in the development of its business raising substantial doubt
about the Company's ability to continue as a going concern. The ability to
continue as a going concern is dependent upon the Company generating
profitable operations in the future and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from
normal business operations when they come due. Management intends to
finance operating costs over the next twelve months with existing cash on
hand and loans from directors and or private placement of common stock.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of
America and are presented in US dollars.
Development Stage Company
The Company complies with the Financial Accounting Standards Board
Statement No. 7, its characterization of the Company as a development stage
enterprise.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion the Company
is not exposed to significant interest, currency or credit risks arising
from these financial instruments.
Income Taxes
The Company follows the liability method of accounting for income taxes.
Under this method, deferred income tax assets and liabilities are
recognized for the estimated tax consequences attributable to differences
between the financial statement carrying values and their respective income
tax basis (temporary differences). The effect on deferred income tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
At May 31, 2009, a full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
6
PAPERWORKS INC.
Notes to Financial Statements
May 31, 2009
(A Development Stage Company)
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.
Earning Per Share
The Company computes loss per share in accordance with SFAS No. 128,
"Earnings per Share" which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. Basic loss
per share is computed by dividing net loss available to common shareholders
by the weighted average number of outstanding common shares during the
period. Diluted loss per share gives effect to all dilutive potential
common shares outstanding during the period. Dilutive loss per share
excludes all potential common shares if their effect is anti-dilutive.
The Company has no potential dilutive instruments and accordingly basic
loss and diluted loss per share are equal.
Stock-based Compensation
The Company accounts for employee and non-employee stock awards under SFAS
123(r), whereby equity instruments issued to employees for services are
recorded based on the fair value of the instrument issued and those issued
to non-employees are recorded based on the fair value of the consideration
received or the fair value of the equity instrument, whichever is more
reliably measurable.
3. COMMON STOCK
The total number of common shares authorized that may be issued by the
Company is 75,000,000 shares with a par value of one tenth of one cent
($0.001) per share and no other class of shares is authorized.
During the period ended August 31, 2008, the Company issued 3,000,000
shares of common stock for total cash proceeds of $15,000. At May 31, 2009
there were no outstanding stock options or warrants.
4. INCOME TAXES
As of May 31, 2009, the Company had net operating loss carry forwards of
approximately $11,897 that may be available to reduce future years' taxable
income through 2028. Future tax benefits which may arise as a result of
these losses have not been recognized in these financial statements, as
their realization is determined not likely to occur and accordingly, the
Company has recorded a valuation allowance for the deferred tax asset
relating to these tax loss carry-forwards.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this Form 10-Q that are not historical facts
are "forward-looking statements" which can be identified by the use of
terminology such as "estimates," "projects," "plans," "believes," "expects,"
"anticipates," "intends," or the negative or other variations, or by discussions
of strategy that involve risks and uncertainties. We urge you to be cautious of
the forward-looking statements, that such statements, which are contained in
this Form 10-Q, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events.
All written forward-looking statements made in connection with this Form 10-Q
that are attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
The safe harbours of forward-looking statements provided by the Securities
Litigation Reform Act of 1995 are unavailable to issuers not subject to the
reporting requirements set forth under Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended. As we have not registered our securities
pursuant to Section 12 of the Exchange Act, such safe harbours set forth under
the Reform Act are unavailable to us.
RESULTS OF OPERATIONS
We have generated no revenue since inception and have incurred $11,897 in
miscellaneous expenses through May 31, 2009.
We incurred operating expenses of $2,122 for the three month period ended May
31, 2009. These expenses consisted of general operating expenses incurred in
connection with the day to day operation of our business and the preparation and
filing of our periodic reports.
The following table provides selected financial data about our company for the
period from the date of incorporation through May 31, 2009. For detailed
financial information, see the financial statements included in this report.
Balance Sheet Data: 5/31/2009
------------------- ---------
Cash $10,703
Total assets $10,703
Total liabilities $ 7,600
Shareholders' equity $ 3,103
8
Other than the shares being offered in our current offering pursuant to our
Registration Statement on Form S-1 that became effective on January 15, 2009, no
other source of capital has been has been identified or sought. If we experience
a shortfall in operating capital prior to funding from the proceeds of the
offering, our director has verbally agreed to advance the company funds to
complete the registration process.
Our auditors have expressed their doubt about our ability to continue as a going
concern unless we are able to generate profitable operations.
LIQUIDITY AND CAPITAL RESOURCES
We currently have $10,703 cash in the bank which comprises our total assets with
$7,600 in outstanding liabilities, comprised solely of a loan from our director.
Management believes that the current cash is not sufficient to fund operations
for the next twelve months and we will require the funds from our current
offering to sustain operations, there is no guarantee that we will be successful
in completing the offering. We currently have no plans to hire additional
employees in the next twelve months unless sales are sufficient to cover the
cost.
PLAN OF OPERATION
PROPOSED MILESTONES TO IMPLEMENT BUSINESS OPERATIONS
The following milestones are estimates only. The working capital requirements
and the projected milestones are approximations only and subject to adjustment
based on costs and needs. Our 12 month budget is based on minimum operations
which will be completely funded by the $45,000 raised through our current
offering. If we begin to generate profits we will increase our sales activity
accordingly. We estimate sales to begin in August 2009 and reach a level to
sustain daily operations by July 2010. Because our business is client-driven,
our revenue requirements will be reviewed and adjusted based on sales. The costs
associated with operating as a public company are included in our budget.
Management will be responsible for the preparation of the required documents to
keep the costs to a minimum. We plan to complete our milestones as follows:
APRIL - JUNE 2009
Complete our offering. We have hired a website designer to expand the
preliminary website at www.paperworksinc.com as well as provide search engine
optimization for our website domain (estimated cost $3,000). We have been
advised by the designer that as of the date of this filing the project is 50%
complete. Contact all wholesale stationery outlets to see if they would like to
have their product featured on the website. Paperqueen Stationery which is
personalized will be our key featured stationery line.
JULY-OCTOBER 2009
We plan to start marketing seasonal holiday items on the website for holiday
2009. As well we will be hosting a few regional trunk shows to market pre sales
for holiday.
9
NOV - DEC 2009
Coordinating bookings and packages for upcoming peak season; inclusive of
January through April.
JAN-MAR, 2010
We will be attending both a trade and consumer show to build our customer base
and online shopping business. (Estimated Cost $5,000)
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 4. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management maintains "disclosure controls and procedures," as such term is
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed in PaperWorks' Exchange Act reports is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
In connection with the preparation of this quarterly report on Form 10-Q, an
evaluation was carried out by management, with the participation of the Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of May 31, 2009.
Based on that evaluation, management concluded, as of the end of the period
covered by this report, that PaperWorks' disclosure controls and procedures were
effective in recording, processing, summarizing, and reporting information
required to be disclosed, within the time periods specified in the Securities
and Exchange Commission's rules and forms.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
As of the end of the period covered by this report, there have been no changes
in PaperWorks' internal controls over financial reporting during the quarter
ended May 31, 2009, that materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting subsequent to
the date of management's last evaluation.
10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS.
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our Registration Statement on
Form S-1, filed under SEC File Number 333-155966, at the SEC website at
www.sec.gov:
Exhibit No. Description
- ----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Certification pursuant to Rule 13a-14(a) under the Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Exchange Act of 1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on July 13, 2009.
PaperWorks, Inc., Registrant
By: /s/ Rhoda Rizkalla
------------------------------------
Rhoda Rizkalla, Director, President,
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
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.
PaperWorks, Inc., Registrant
July 13, 2009 By: /s/ Rhoda Rizkalla
------------------------------------
Rhoda Rizkalla, Director, President,
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
11