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 NOVEMBER 30, 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 January 5,
2010
ITEM 1. FINANCIAL STATEMENTS
PAPERWORKS INC.
Balance Sheets
(A Development Stage Company)
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
November 30, August 31,
2009 2009
-------- --------
Unaudited Audited
ASSETS
CURRENT ASSETS
Cash $ 43,359 $ 46,413
-------- --------
TOTAL ASSETS $ 43,359 $ 46,413
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ -- $ --
-------- --------
TOTAL CURRENT LIABILITIES -- --
-------- --------
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 6,000 6,000
Additional paid in capital 54,000 54,000
-------- --------
60,000 60,000
Deficit accumulated during the development stage (16,641) (13,587)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 43,359 46,413
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,359 $ 46,413
======== ========
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 Three Months Inception Date of
Ended Ended April 30, 2008 to
November 30, November 30, November 30,
2009 2008 2009
---------- ---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
Bank charges and interest $ 104 $ 40 $ 495
Filing and transfer agent fee -- -- 1,205
Office expenses -- 3,650 930
Professional fees 2,950 -- 13,943
Travel expenses -- -- 68
---------- ---------- ----------
Total general and administrative expenses 3,054 3,690 16,641
---------- ---------- ----------
Net loss $ (3,054) $ (3,690) $ (16,641)
========== ========== ==========
EARNINGS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE OUTSTANDING SHARES 3,000,000 3,000,000
========== ==========
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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
July 13, 2009
Subscribed for cash $0.015 3,000,000 3,000 42,000 45,000 45,000
Net loss (12,716) (12,716)
--------- ------ ------- ------- -------- --------
Balance, August 31, 2009 6,000,000 6,000 54,000 60,000 (13,587) 46,413
Net loss (3,054) (3,054)
--------- ------ ------- ------- -------- --------
Balance, November 30, 2009 6,000,000 $6,000 $54,000 $60,000 $(16,641) $ 43,359
========= ====== ======= ======= ======== ========
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PAPERWORKS INC.
Statements of Cash Flows
(A Development Stage Company)
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Accumulated From
Three Months Three Months Inception Date of
Ended Ended April 30, 2008 to
November 30, November 30, November 30,
2009 2008 2009
-------- -------- --------
CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES
Net loss for the period $ (3,054) $ (3,690) $(16,641)
Adjustments to reconcile net loss to net cash
Provided by (used in) operating activities
Changes in operating assets and liabilities
Accounts payable -- -- --
-------- -------- --------
Net cash (used in) operating activities (3,054) (3,690) (16,641)
-------- -------- --------
FINANCING ACTIVITIES
Loans from related party -- -- --
Shares subscribed for cash -- -- 60,000
-------- -------- --------
Net cash provided by financing activities -- -- 60,000
-------- -------- --------
INVESTING ACTIVITIES -- -- --
-------- -------- --------
Net cash used for investing activities -- -- --
-------- -------- --------
Cash increase during the period (3,054) (3,690) 43,359
Cash beginning of the period 46,413 14,990 --
-------- -------- --------
Cash end of the period $ 43,359 $ 11,300 $ 43,359
======== ======== ========
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PAPERWORKS INC.
Notes to Financial Statements
November 30, 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 $16,641 as at November 30, 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 November 30, 2009, a full deferred tax asset valuation allowance has
been provided and no deferred tax asset has been recorded.
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PAPERWORKS INC.
Notes to Financial Statements
November 30, 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 November 30,
2009 there were no outstanding stock options or warrants.
4. INCOME TAXES
As of November 30, 2009, the Company had net operating loss carry forwards
of approximately $16,641 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 $16,641 in
miscellaneous expenses through November 30, 2009.
We incurred operating expenses of $3,054 and $3,690 for the three month periods
ended November 30, 2009 and 2008, respectively. 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 November 30, 2009. For detailed
financial information, see the financial statements included in this report.
Balance Sheet Data: 11/30/2009
------------------- ----------
Cash $43,359
Total assets $43,359
Total liabilities $ 0
Shareholders' equity $43,359
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Cash provided by financing activities from inception through November 30, 2009
was $60,000 consisting of $15,000 from the sale of our common stock to our
director who purchased 3,000,000 shares of our common stock at $0.005 per share
on August 31, 2008 and on July 13, 2009, management completed its S-1 registered
offering by selling 3,000,000 common shares at $.015 per share to raise capital
of $45,000.
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 $43,359 cash in the bank which comprises our total assets.
Management believes that the current cash is sufficient to fund operations for
the next twelve months. 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
Production of samples and market testing Website and online store Sourcing of
suppliers Participation at specific trade shows
Development of wholesale catalogue of stationery collection Stationary Trunk
Shows Implementation of specific marketing plans
The following criteria for the milestones are based on estimates derived from
research and marketing data accumulated by our directors. They are estimates
only. The number of employees, number of stationery collections we plan to have
manufactured for our inventory and the other projected milestones are
approximations only and subject to adjustment based on costs and needs.
DECEMBER 2009:
We will research additional stationery segments in North America. These segments
will include wholesale and corporate accounts as well as consumer opportunities
to sell direct. We will be selling seasonal cards and will be adding seasonal
inventory to our website and offer a seasonal catalogue (Valentines, Easter,
Passover)
Major accounts to be targeted: AJ's, Papyrus, The Paper Place, Haus Modern
Living etc.
JANUARY 2010:
We will begin to launch our new offering of stationery. Markets to be tested
will be Phoenix, Los Angeles and Palm Springs. The goal will be to offer private
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trunk shows where cards can be purchased direct. These cards will only be ready
made occasion cards (not personalized) in gift sets of 6 cards each.
We will either host an event in Los Angeles and Phoenix in January.
We will also target gift shops in major chains like Fairmont, High-end Yoga
studios, Luxury gift stores in the United States.
FEBRUARY 2010:
Depending on order/production requirements a production assistant will need to
be hired. We may also hire an administrative clerk to help with general office
duties including taking and filling orders, ordering supplies and basic
bookkeeping. We will produce occasion cards to fill orders from trunk shows and
begin producing inventory for additional seasonal art for upcoming months.
We will utilize search engine optimization services (SEO) to assist in getting
traction to the web site when consumers search for personalized stationery.
We will start a media relations campaign in local magazines and papers and will
attempt to have some magazines feature our products by sending samples.
Website to be updated with new inventory and we will add a media room.
MARCH & APRIL 2010:
We will produce inventory for seasonal gift shows including the New York Gift
Show. We will mail out brochures/catalogues to contacts from retail trade shows
to promote last minute Christmas orders.
MAY 2010:
We will optimize our website with keywords and links. We will continue to
produce stationery for stores and internet sales for the upcoming 2011 Christmas
season.
We will attend the major stationery show in New York City to gain more wholesale
business.
JUNE, JULY AND AUGUST 2010:
We will work with local media for special occasion opportunities such as
wedding/engagement procurement business.
A media push will take place at this time for fall editorial placements to
assist in holiday occasion wholesale business.
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FALL 2010:
We will host booths at spring gift shows open to retail trade in Los Angeles,
Phoenix and possibly Seattle. We will secure booths at local artist/craft
markets, Phoenix, Scottsdale, Dallas, Los Angeles and possibly Denver. We will
continue to develop new occasion cards and production will be on an on-going
basis to fill demand and build a supply inventory.
HOLIDAY 2010:
Gift shows
Expand retail outlets in Canada and US
We will continue to host booths at retail trade gift shows in the US. We will
expand to retail outlets in the US and abroad, by contracting a sales agent
and/or by attending large retail gift shows in US. Our internet store will be a
focus of marketing effort.
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 November 30, 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 November 30, 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.
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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 January 5, 2010.
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
January 5, 2010 By: /s/ Rhoda Rizkalla
------------------------------------
Rhoda Rizkalla, Director, President,
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
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