UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2011
Commission File Number 000-53910
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)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in 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 Act Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
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. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of November 28, 2011, the registrant had 6,000,000 shares of common stock
issued and outstanding. No market value has been computed based upon the fact
that no active trading market had been established as of November 28, 2011.
PAPERWORKS, INC.
TABLE OF CONTENTS
Page No.
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Part I
Item 1. Business 3
Item 1A. Risk Factors 7
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Removed and Reserved 9
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Plan of Operation 11
Item 8. Financial Statements 14
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 21
Item 9A. Controls and Procedures 21
Part III
Item 10. Directors and Executive Officers 23
Item 11. Executive Compensation 24
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 25
Item 13. Certain Relationships and Related Transactions and
Director Independence 26
Item 14. Principal Accounting Fees and Services 26
Part IV
Item 15. Exhibits 27
Signatures 27
2
PART I
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this filing. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us as described in the "Risk Factors" section and elsewhere in
this report.
All written forward-looking statements made in connection with this Form 10-K
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 harbors 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 harbors set forth under
the Reform Act are unavailable to us.
ITEM 1. BUSINESS
GENERAL INFORMATION ABOUT OUR COMPANY
PaperWorks Inc. was incorporated in the State of Nevada on April 30, 2008. Our
primary business is online sales of custom printed stationery. Customers are
able to view various styles, formats and designs at the company web site
(www.paperworksinc.com) and order from a catalogue of ready-made and
personalized greeting cards for all occasions.
We are a development stage company and have yet to generate any revenues. Per
our business plan we anticipate sales to begin in early 2012. Currently our
President devotes approximately 10 hours a week to the company. Our business
plan as discussed in detail in the "Plan of Operation" section of this report.
We have been issued a "substantial doubt" going concern opinion from our
auditors and our only asset is our cash balance of $14,045.
Our administrative office of the company is currently located at the premises of
our President, Rhoda Rizkalla, which she provides to us on a rent free basis at
2963 E. Rose Lane, Phoenix, AZ 85016. We plan to use these offices until we
require larger space. Our fiscal year end is August 31.
PRINCIPAL PRODUCTS AND SERVICES AND THEIR MARKETS
Sales of personalized stationery has grown exponentially in North America over
the past five years. PaperWorks Inc is an online store that provides a catalogue
of designs for any occasions. Consumers can choose ready-made cards or can
create personalized cards in varying formats (fold over card, panel cards,
calling cards and the like for any occasion Engagement, Wedding Shower, Wedding,
Thank You Cards, Birth Announcements, Birthday, Anniversary, Bar Mitzvah,
Retirement, etc. and Personalized offerings: Stationery, Thank you cards, note
cards, calling cards, notepad, address labels, gift tags, gift wrap, ribbon,
invitations).
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We plan to initially sell these cards in North America and through our online
Internet store. Retail information is available at our website
www.paperworksinc.com. We have secured an extensive library of design for our
card orders as well as have the resources for select custom work if a consumer
so desires. Additionally to increase awareness we continue attending the major
consumer stationery shows in North America as well trade shows to procure
additional designs and stationery content for our web site.
We are dedicated to making ordering invitations, birth announcements, wedding
invitations and holiday cards on-line an easy and painless experience. Access to
frequently asked questions; a design suggestion link and etiquette section make
ordering easy and convenient. With the convenience of the web, online shopping
has become not only secure but perhaps the most convenient to peruse custom
website in the comfort of one's home or place of business. We will build on a
referral program to retain and expand our customer database.
Our Design Center is one of the reasons why we believe we will be the premier
online stationery store. The Design center will allow Consumers to enter text
line by line, and allows complete customization of each line of text entered.
Everything from the size, alignment, color and even the typestyle may be changed
in our Design Center.
Once a Consumer has customized the text the way she or he wants it, click the
button that says "Update Preview to Show Your Changes" and he or she sees a
preview of their selections. It is easy to continue making changes, just select
the size, alignment, color or typestyle you want to change and click the "Update
Preview to Show Your Changes" button. The preview image shown with your text on
it is just for you to be able to preview your size, alignment, typestyle and
color choices. A professional typesetter will make all the necessary adjustments
for layout, sizing and spacing.
If a Consumer is not sure of the day or date of the special event falls on, we
have provided a convenient international calendar for Consumers to confirm the
correct day and date of your event. (Canada and USA holidays only to begin
with).
Our "Save for Later" feature allows Consumers to save the item he or she found
as well as save any of the customization work he or she has already completed.
Simply, click the "Save for Later" button and your item will be available to the
Consumer anytime. Each Consumer will be asked to set up an account. A monthly
newsletter with new designs or features is sent out to the database collected.
We will update our product offerings quarterly and by Special Occasion.
We are confident in the quality of our products and for any damaged goods while
in transit. Orders with misspellings will be verified by the online orders
received and archived.
DISTRIBUTION METHODS
We are marketing and promoting to a variety of targeted North America media
outlets (print and online) and through our online Internet store. We have a
supplier who is secured to design a propriety line for us and will also give us
access to post her most popular designs and products on our web site. Our
website will list in its press room various publications which have featured our
cards, stationery and custom made personalized products. We will build on this
aspect of word of mouth referrals.
All orders will be fulfilled from our website and Consumers will have a choice
of delivery methods. Delivery time is currently estimated to be within ten
business days from the date of the receipt of the order for domestic orders and
fifteen business days for international orders. We will charge each customer in
advance for the shipping costs associated with the order.
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As well we have in place a program of Internet marketing so that when key words
relating to customized/personalized stationery are used in a search engine our
web site comes up in the top three sites available to provide this service.
We believe that a high level of customer service and support is critical to
retaining and expanding a reliable, repeat customer base and for establishing
and maintaining a trusted brand name. Accordingly, while we currently do not
have the financial resources, or the need to employ any customer service
personnel, we do intend to develop a stringent customer service policy. Our
website will automatically notify Consumers of completed orders that are now in
transit. We are dedicated to providing superior customer satisfaction to secure
repeat customers.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS
We have not publicly announced any new products.
COMPETITION
We believe that our competitive strengths consist of the detailing of the
design, the quality of the materials and most importantly, the uniqueness of our
products. Although there are many companies that produce personalized
stationery, most of their products are geared towards functionality and not
elegant or modern designs. Our products can easily cross over from personal to
corporate because of the quality and design. Our target market expands to men,
women, children, families, and corporations.
SOURCES AND AVAILABILITY OF PRODUCTS
We are working with Paperqueen Fine Stationery to provide the majority of our
personalized products, which will be selling on the Internet. Paperqueen has
agreed for a fee to provide access to some of her 3rd party vendors who
specialize in personalized items such as guest towels, gift bags and candles to
name a few.
We plan to outsource all of our manufacturing to a Paperqueen Fine Stationery.
All completed product will be sent out from our offices to ensure quality and
speed of service. We recognize that, as we grow, we will require additional
contractors for manufacturing our products.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We feel that, because of the potential wide base of customers for our services,
we will not rely on one or few major customers.
PATENTS AND TRADEMARKS
We believe our products to be unique. We currently have no patents or trademarks
for our products or brand name; however, as business is established and
operations expand, we may seek such protection. Despite efforts to protect our
proprietary rights, such as our brand and product line names, since we have no
patent or trademark rights unauthorized persons may attempt to copy aspects of
our business, including our web site design, products, product information and
sales mechanics or to obtain and use information that we regard as proprietary,
such as the technology used to operate our web site and content. Any
encroachment upon our proprietary information, including the unauthorized use of
our brand name, the use of a similar name by a competing company or a lawsuit
initiated against us for infringement upon another company's proprietary
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information or improper use of their trademark, may affect our ability to create
brand name recognition, cause customer confusion and/or have a detrimental
effect on our business. Litigation or proceedings before the U.S. or
International Patent and Trademark Offices may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets and
domain name and/or to determine the validity and scope of the proprietary rights
of others. Any such litigation or adverse proceeding could result in substantial
costs and diversion of resources and could seriously harm our business
operations and/or results of operations.
NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS
We do not require any government approval for our services.
GOVERNMENT AND INDUSTRY REGULATION
We are subject to federal laws and regulations that relate directly or
indirectly to our operations including securities laws. We are also subject to
common business and tax rules and regulations pertaining to the operation of our
business.
RESEARCH AND DEVELOPMENT ACTIVITIES
Other than time spent researching our proposed business we have not spent any
funds on research and development activities to date. We do not currently plan
to spend any funds on research and development activities in the future.
ENVIRONMENTAL LAWS
Our operations are not subject to any Environmental Laws.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
We currently have one employee who acts as our executive officer, namely, Rhoda
Rizkalla. Rhoda is devoted to our business and currently is responsible for
sourcing suppliers for materials and contract manufacturers to produce our
cards. We will need to hire a full time employee (part-time initially to assist
in the monitoring and fulfillment of order) once revenue allows.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules for
a small business issuer under the Securities Exchange Act of 1934. We are
subject to disclosure filing requirements including filing Form 10K annually and
Form 10Q quarterly. In addition, we will file Form 8K and other proxy and
information statements from time to time as required. We do not intend to
voluntarily file the above reports in the event that our obligation to file such
reports is suspended under the Exchange Act. The public may read and copy any
materials that we file with the Securities and Exchange Commission, ("SEC"), at
the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
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ITEM 1A. RISK FACTORS
RHODA RIZKALLA, THE SOLE OFFICER AND DIRECTOR OF THE COMPANY, CURRENTLY DEVOTES
APPROXIMATELY 10 HOURS PER WEEK TO COMPANY MATTERS. SHE DOES NOT HAVE ANY PUBLIC
COMPANY EXPERIENCE AND IS INVOLVED IN OTHER BUSINESS ACTIVITIES. THE COMPANY'S
NEEDS COULD EXCEED THE AMOUNT OF TIME OR LEVEL OF EXPERIENCE SHE MAY HAVE. THIS
COULD RESULT IN HER INABILITY TO PROPERLY MANAGE COMPANY AFFAIRS, RESULTING IN
OUR REMAINING A START-UP COMPANY WITH NO REVENUES OR PROFITS.
Our business plan does not provide for the hiring of any additional employees
until sales will support the expense. Until that time the responsibility of
developing the company's business, and fulfilling the reporting requirements of
a public company all fall upon Ms. Rizkalla. While her business experience
includes management and marketing, she does not have experience in a public
company setting, including serving as a principal accounting officer or
principal financial officer. We have not formulated a plan to resolve any
possible conflict of interest with her other business activities. In the event
she is unable to fulfill any aspect of her duties to the company we may
experience a shortfall or complete lack of sales resulting in little or no
profits and eventual closure of the business.
SINCE WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED NO REVENUES AND LACK AN
OPERATING HISTORY, AN INVESTMENT IN OUR SHARES IS HIGHLY RISKY.
Our company was incorporated in April 2008; we have recently commenced our
business operations but we have not yet realized any revenues. We have a limited
operating history upon which an evaluation of our future prospects can be made.
Based upon current plans, we expect to incur operating losses in future periods
as we incur significant expenses associated with the development stage of our
business. Further, we cannot guarantee that we will be successful in realizing
revenues or in achieving or sustaining positive cash flow at any time in the
future. Any such failure could result in the possible closure of our business or
force us to seek additional capital through loans or additional sales of our
equity securities to continue business operations, which would dilute the value
of our shares.
WE CANNOT PREDICT WHEN OR IF WE WILL PRODUCE REVENUES, WHICH COULD RESULT IN A
TOTAL LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS.
We have not yet generated any revenues from operations. The timing of the
completion of the milestones needed to continue operations is contingent on our
ability to offer a product to the public and generate revenues. There can be no
assurance that we will generate revenues or that revenues will be sufficient to
maintain our business.
OUR CONTINUED OPERATIONS DEPEND ON THE PUBLIC'S ACCEPTANCE OF OUR CUSTOM PRINTED
STATIONERY AND GREETING CARDS. IF THE PUBLIC DOESN'T FIND OUR PRODUCTS DESIRABLE
AND SUITABLE FOR PURCHASE AND WE CANNOT ESTABLISH A CUSTOMER BASE, WE MAY NOT BE
ABLE TO GENERATE ANY REVENUES, WHICH WOULD RESULT IN A FAILURE OF OUR BUSINESS
AND A LOSS OF ANY INVESTMENT YOU MAKE IN OUR SHARES.
The ability to develop custom printed stationery and greeting cards that the
public finds desirable and willing to purchase is critically important to our
success. We cannot be certain that the products that we are offering will be
appealing to public and as a result there may not be any demand for these
products and our sales could be limited and we may never realize any revenues.
In addition, there are no assurances that if we alter or change our products in
the future that the public's demand for these new offering will develop and this
could adversely affect our business and any possible revenues.
7
THE LOSS OF THE SERVICES OF RHODA RIZKALLA COULD SEVERELY IMPACT OUR BUSINESS
OPERATIONS AND FUTURE DEVELOPMENT OF OUR PRODUCTS, WHICH COULD RESULT IN A LOSS
OF REVENUES.
Our performance is substantially dependent upon the professional expertise of
our President, Rhoda Rizkalla. Ms. Rizkalla has extensive marketing expertise
and we are dependent on her abilities to develop and market our products. If she
were unable to perform her duties, this could have an adverse effect on our
business operations, financial condition and operating results if we are unable
to replace her with another individual qualified to develop and market our
products. The loss of her services could result in a loss of revenues, which
could result in a reduction of the value of our shares.
THE STATIONERY AND GREETING CARD INDUSTRY IS HIGHLY COMPETITIVE. IF WE CAN NOT
DEVELOP AND MARKET A DESIRABLE OFFERING OF PRODUCTS THAT THE PUBLIC IS WILLING
PURCHASE, WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY, OUR BUSINESS MAY BE
ADVERSELY AFFECTED AND WE MAY NEVER BE ABLE TO GENERATE ANY REVENUES.
The stationery and greeting card industry is intensely competitive. We will
compete against a number of large well-established companies with greater name
recognition, a more comprehensive offering of products, and with substantially
larger resources than ours; including financial and marketing. In addition to
these large competitors there are numerous smaller operations that have
developed and are marketing custom products. Our competitors include, by way of
example, Hallmark, American Greetings, FineStationery.com, iomoi.com. There can
be no assurance that we can compete successfully in this complex and changing
market. If we cannot successfully compete in this highly competitive industry,
we may never be able to generate revenues or become profitable.
THERE ARE NO SUBSTANTIAL BARRIERS TO ENTRY INTO THE INDUSTRY AND BECAUSE WE DO
NOT CURRENTLY HAVE ANY COPYRIGHT PROTECTION FOR OUR PROPOSED PRODUCTS, THERE IS
NO GUARANTEE SOMEONE ELSE WILL NOT DUPLICATE OUR IDEAS AND BRING THEM TO MARKET
BEFORE WE DO, WHICH COULD SEVERELY LIMIT OUR PROPOSED SALES AND REVENUES.
We believe our ideas for our stationery and greeting cards are unique and
desirable; however, we currently have no copyright for our products or brand
name. As business operations become established, we may seek such protection;
however, we currently have no plans to do so. Since we have no copyright
protection unauthorized persons may attempt to copy aspects of our business,
including our web site design or functionality, products or marketing materials.
Any encroachment upon our corporate information, including the unauthorized use
of our brand name, the use of a similar name by a competing company or a lawsuit
initiated against us for infringement upon another company's proprietary
information or improper use of their copyright, may affect our ability to create
brand name recognition, cause customer confusion and/or have a detrimental
effect on our business. Litigation or proceedings before the U.S. or
International Patent and Trademark Offices may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets and
domain name and/or to determine the validity and scope of the proprietary rights
of others. Any such infringement, litigation or adverse proceeding could result
in substantial costs and diversion of resources and could seriously harm our
business operations and/or results of operations.
THE TRADING IN OUR SHARES IS REGULATED BY SECURITIES AND EXCHANGE COMMISSION
RULE 15g-9 WHICH ESTABLISHED THE DEFINITION OF A "PENNY STOCK." THE EFFECTIVE
RESULT OF THIS BEING FEWER PURCHASERS QUALIFIED BY THEIR BROKERS TO PURCHASE OUR
SHARES, AND THEREFORE A LESS LIQUID MARKET FOR OUR INVESTORS TO SELL THEIR
SHARES.
Our shares are defined as a penny stock under the Securities and Exchange Act of
1934, and rules of the Commission. The Exchange Act and such penny stock rules
generally impose additional sales practice and disclosure requirements on
broker-dealers who sell our securities to persons other than certain accredited
investors who are, generally, institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000 or annual income exceeding
8
$200,000, or $300,000 jointly with spouse), or in transactions not recommended
by the broker-dealer. For transactions covered by the penny stock rules, a
broker-dealer must make a suitability determination for each purchaser and
receive the purchaser's written agreement prior to the sale. In addition, the
broker-dealer must make certain mandated disclosures in penny stock
transactions, including the actual sale or purchase price and actual bid and
offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may make it difficult to resell
any of our shares, if at all.
WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE,
WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
Our shares are currently quoted on the OTC Electronic Bulletin Board. To be
eligible for quotation on the OTCBB, issuers must remain current in their
filings with the SEC. Securities quoted on the OTCBB that become delinquent in
their required filings will be removed following a 30 or 60 day grace period if
they do not make their required filing during that time. In order for us to
remain in compliance we will require future revenues to cover the cost of these
filings, which could comprise a substantial portion of our available cash
resources. If we are unable to generate sufficient revenues to remain in
compliance it may be difficult for investors to resell any shares they may
purchase, if at all.
OUR DIRECTOR CONTINUES TO EXERCISE SIGNIFICANT CONTROL OVER OUR OPERATIONS,
WHICH MEANS MINORITY SHAREHOLDERS WOULD HAVE NO CONTROL OVER CERTAIN MATTERS
REQUIRING STOCKHOLDER APPROVAL THAT COULD AFFECT THEIR ABILITY TO EVER RESELL
ANY SHARES.
Our executive officer and director owns 50% of our common stock. She has a
significant influence in determining the outcome of all corporate transactions,
including the election of directors, approval of significant corporate
transactions, changes in control of the company or other matters that could
affect the ability of other shareholders to resell their shares. Her interests
may differ from the interests of the other stockholders and thus result in
corporate decisions that are disadvantageous to other shareholders.
ITEM 2. PROPERTIES
We do not currently own any property. Our operations are currently being
conducted out of the premises of our President, Rhoda Rizkella on a rent free
basis during our development stage. The office is at 2963 E. Rose Lane, Phoenix,
AZ. We consider our current principal office space arrangement adequate and will
reassess our needs based upon the future growth of the company.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings, and we are not aware of
any pending or potential legal actions.
ITEM 4. [REMOVED & RESERVED]
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is currently listed for quotation on the Over-the-Counter
Bulletin Board under the symbol "PPKS".
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. Our shares will remain penny stocks for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his/her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in us will be subject to
Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document, which:
a. contains a description of the nature and level of risk in the market
for penny stock in both public offerings and secondary trading;
b. contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
Securities Act of 1934, as amended;
c. contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the
significance of the spread between the bid and ask price;
d. contains a toll-free telephone number for inquiries on disciplinary
actions;
e. defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
f. contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, to the customer:
a. the bid and offer quotations for the penny stock;
b. the compensation of the broker-dealer and its salesperson in the
transaction;
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c. the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
d. monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any equity compensation plans.
SECTION 16(a)
Based solely upon a review of Form 3 and 4 furnished by us under Rule 16a-3(d)
of the Securities Exchange Act of 1934, we are not aware of any individual who
failed to file a required report on a timely basis required by Section 16(a) of
the Securities Exchange Act of 1934.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
There were no purchases of shares of our common stock by us or any affiliated
purchasers during the year ended August 31, 2011.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
We are still in our development stage and have generated no revenue to date. We
incurred operating expenses of $10,584 and $21,784 for the years ended August
31, 2011 and 2010, respectively. These expenses consisted of general and
administrative expenses. At August 31, 2011, we had cash on hand of $14,045 and
no outstanding liabilities.
Cash provided by financing activities from inception through August 31, 2011 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.
The following table provides selected financial data about our company for the
period from the date of incorporation through August 31, 2011 and 2010.
11
Balance Sheet Data: 8/31/11 8/31/10
------------------- ------- -------
Cash $14,045 24,629
Total assets $14,045 24,629
Total liabilities $ 0 0
Shareholders' equity $14,045 24,629
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 $14,045 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.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
PLAN OF OPERATION
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
We held a small stationery show in Los Angeles in April 2010. During May 2010 we
contracted a third party to optimize our website with keywords and links. We
completed sample kits to show stationery for stores and internet sales for the
upcoming 2011 Christmas season. We designed new business cards.
We attended the major stationery show in New York City to gain more wholesale
business. We also had discussions with other paper vendors and suppliers to add
to our online store. Samples of various cards and invitations are being sent to
the office for consideration along with pricing.
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.
SPRING - 2011:
We worked with our designer for new creative for the 2011 Holiday and Special
Occasion catalogue. We are in the process of completing all images and pricing
for a new online catalogue that will feature the new designs and card
12
collections. We are looking into retail shops that will allow us to set up
temporary pop-up shops for the holiday season. We are looking to find other
online retailers that would like to distribute the line on their websites in
North America.
We continue to work with our supplier to launch new personalized post-it notes
and writing collections like notes cards, calling cards and personalized ribbon.
We have sourced a supplier now for these post-its and personalized ribbon.
SUMMER 2011:
Our Card Designer attended the Stationery Show in New York in May and reported
that attendance was lower than last year. She also reported that no new
inventory or trends appears to stand out at the show. We will be focusing on
special occasion cards and looking for niche stores to hold the new card racks.
We are pricing out card racks that can be placed on a consignment basis at new
retail locations for them to gauge interest in our products
FALL & WINTER 2011/2012:
We believe this will be a new format to sell smaller quantities to store who are
still recovering from the poor economy. We are also looking into vendors that
can assist up with better prices for paper.
In light of buyers telling us that this area has declined significantly we are
looking at stationery items for the professional community: personalized
notepads and personalized post it notes for the professional with a price range
of $30-40. We are in discussion with our designer and paper supplier to
determine prices.
We are also looking at creating a sample box of items to sell to small stores.
13
ITEM 8. FINANCIAL STATEMENTS
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Paperworks, Inc.
Phoenix, Arizona
I have audited the accompanying balance sheets of Paperworks, Inc. (a
development stage company) as of August 31, 2011 and 2010 and the related
statements of income, stockholders' equity and cash flows for the years then
ended, and for the period from April 30, 2008 (inception) through August 31,
2011. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Paperworks, Inc. as of August 31,
2011 and 2010 and the results of its operations and its cash flows for the years
then ended, and for the period from April 30, 2008 (inception) through August
31, 2011 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 1 to the
financial statements the Company has suffered losses from operations that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
October 24, 2011 -----------------------------------
RONALD R. CHADWICK, P.C.
14
PAPERWORKS INC.
Balance Sheets
(A Development Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
August 31, August 31,
2011 2010
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 14,045 $ 24,629
-------- --------
TOTAL ASSTS $ 14,045 $ 24,629
======== ========
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:
6,000,000 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 (45,955) (35,371)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 14,045 24,629
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,045 $ 24,629
======== ========
Approved on behalf of the board
_______________________________, Director
_______________________________, Director
15
PAPERWORKS INC.
Statements of Income
(A Development Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
Accumulated
From Inception
Date of
Year Ended Year Ended April 30, 2008 to
August 31, August 31, August 31,
2011 2010 2011
---------- ---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
Bank charges and interest $ 439 $ 495 $ 1,325
Filing and transfer agent fee 985 4,083 6,273
Office expenses 2,210 7,818 10,958
Professional fees 6,950 6,735 24,678
Travel expenses -- 2,653 2,721
---------- ---------- ----------
Total general and administrative expenses 10,584 21,784 45,955
---------- ---------- ----------
Net loss $ (10,584) $ (21,784) $ (45,955)
========== ========== ==========
EARNINGS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE OUTSTANDING SHARES 6,000,000 6,000,000
========== ==========
16
PAPERWORKS INC.
Statement of Stockholders' Equity
(A Development Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
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 (21,784) (21,784)
--------- ------ ------- ------- -------- --------
Balance, August 31, 2010 6,000,000 6,000 54,000 60,000 (35,371) 24,629
--------- ------ ------- ------- -------- --------
Net loss (10,584) (10,584)
--------- ------ ------- ------- -------- --------
Balance, August 31, 2011 6,000,000 $6,000 $54,000 $60,000 $(45,955) $ 14,045
========= ====== ======= ======= ======== ========
17
PAPERWORKS INC.
Statements of Cash Flows
(A Development Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
Accumulated
From Inception
Date of
Year Ended Year Ended April 30, 2008 to
August 31, August 31, August 31,
2011 2010 2011
-------- -------- --------
CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES
Net loss for the period $(10,584) $(21,784) $(45,955)
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 (10,584) (21,784) (45,955)
-------- -------- --------
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 (10,584) (21,784) 14,045
Cash beginning of the period 24,629 46,413 --
-------- -------- --------
Cash end of the period $ 14,045 $ 24,629 $ 14,045
======== ======== ========
18
PAPERWORKS INC.
Notes to Financial Statements
August 31, 2011
(A Development Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
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 $45,955 as at August 31, 2011 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 ASC 915, 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 August 31, 2011, a full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
19
PAPERWORKS INC.
Notes to Financial Statements
August 31, 2011
(A Development Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earning Per Share
The Company computes loss per share in accordance with ASC 105, "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 ASC
718, 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 August 31,
2011 there were no outstanding stock options or warrants.
4. INCOME TAXES
As of August 31, 2011, the Company had net operating loss carry forwards of
approximately $45,955 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.
20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEM 9A. 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 annual report on Form 10-K, 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 August 31, 2011.
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 such that the material information required to be included in our
Securities and Exchange Commission reports is accumulated and communicated to
our management, including our principal executive and financial officer,
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms relating to our company,
particularly during the period when this report was being prepared.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures
that: (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness
of any system of internal control, and accordingly, even effective internal
control can provide only reasonable assurance with respect to financial
statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective
in future periods because of changes in conditions or due to deterioration in
the degree of compliance with our established policies and procedures.
21
A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in there being a more than remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.
Under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, management conducted an evaluation of the
effectiveness of our internal control over financial reporting, as of the
Evaluation Date, based on the framework set forth in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on its evaluation under this framework, management
concluded that our internal control over financial reporting was not effective
as of the Evaluation Date.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of Evaluation Date and identified the following material
weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite
expertise in the key functional areas of finance and accounting.
INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to
properly implement control procedures.
LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS:
We do not have a functioning audit committee or outside directors on the
Company's Board of Directors, resulting in ineffective oversight in the
establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue
to use third party specialists to address shortfalls in staffing and to assist
the Company with accounting and finance responsibilities, (2) increase the
frequency of independent reconciliations of significant accounts which will
mitigate the lack of segregation of duties until there are sufficient personnel
and (3) may consider appointing outside directors and audit committee members in
the future.
Due to the nature of this material weakness, there is a more than remote
likelihood that misstatements which could be material to the annual or interim
financial statements could occur that would not be prevented or detected.
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 the 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.
CHANGES IN INTERNAL CONTROLS
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 year ended
August 31, 2011, 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.
22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Directors of the corporation are elected by the stockholders to a term of one
year and serve until a successor is elected and qualified. Officers of the
corporation are appointed by the Board of Directors to a term of one year and
serves until a successor is duly appointed and qualified, or until he or she is
removed from office. The Board of Directors has no nominating, auditing or
compensation committees.
The name, address, age and position of our officer and director is set forth
below:
Name and Address Age Position(s)
---------------- --- -----------
Rhoda Rizkalla 45 President, Secretary,
2963 E. Rose Lane Chief Financial Officer,
Phoenix, AZ 85016 Chief Executive Officer,
Sole Director
The person named above has held his offices/positions since the inception of our
Company and is expected to hold said offices/positions until the next annual
meeting of our stockholders. The officer and director is our only officer,
director, promoter and control person.
BACKGROUND INFORMATION ABOUT OUR OFFICER AND DIRECTOR
Rhoda Rizkalla has been president and CEO and Chairman of the Board of Directors
of the company since inception. She is the President/Owner of The Marquis Group,
LLC which she founded in October 1989, a boutique public relations firm
specializing in consumer media relations, marketing and special event management
for lifestyle-oriented clients in Canada and the United States. Among them
Dermalogica, Better Life Brands, Brian Jessel BMW, Vida Wellness Spas, and
Genuine Health. The Marquis Group opened its second office in Scottsdale,
Arizona in May 2000 and currently has on its roster various national accounts.
Prior to forming Marquis she attended The University of British Columbia's
Bachelor of Arts Program from 1984 through to 1989. Rhoda is very involved in
her community and is active resident of Phoenix, Arizona. She sits on various
charitable committees in both Canada and the United States.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
We intend to ensure to the best of our ability that all Section 16(a) filing
requirements applicable to our officers, directors and greater than ten percent
beneficial owners are complied with in a timely fashion.
CODE OF ETHICS
We do not currently have a code of ethics, because we have only limited business
operations and only one officer and director, we believe a code of ethics would
have limited utility. We intend to adopt such a code of ethics as our business
operations expand and we have more directors, officers and employees.
23
ITEM 11. EXECUTIVE COMPENSATION
Currently, our officer and director receives no compensation for her services
during the development stage of our business operations. She is reimbursed for
any out-of-pocket expenses that she incurs on our behalf. In the future, we may
approve payment of salaries for officers and directors, but currently, no such
plans have been approved. We also do not currently have any benefits, such as
health or life insurance, available to our employees.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
Rhoda Rizkalla, 2011 0 0 0 0 0 0 0 0
President, 2010 0 0 0 0 0 0 0 0
CEO, CFO 2009 0 0 0 0 0 0 0 0
and Director
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
----------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Rhoda 0 0 0 0 0 0 0 0 0
Rizkalla
24
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Rhoda Rizkalla 0 0 0 0 0 0 0
OPTION GRANTS. There have been no individual grants of stock options to purchase
our common stock made to the executive officer named in the Summary Compensation
Table.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE. There have been no
stock options exercised by the executive officer named in the Summary
Compensation Table.
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS. There have been no awards made to a
named executive officer in the last completed fiscal year under any LTIP.
COMPENSATION OF DIRECTORS
Directors are permitted to receive fixed fees and other compensation for their
services as directors. The Board of Directors has the authority to fix the
compensation of directors. No amounts have been paid to, or accrued to, our
director in such capacity.
EMPLOYMENT AGREEMENTS
We do not have any employment agreements in place with our sole officer and
director.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this report, the total number
of shares owned beneficially by our director, officers and key employees,
individually and as a group, and the present owners of 5% or more of our total
outstanding shares. The stockholder listed below has direct ownership of her
shares and possesses sole voting and dispositive power with respect to the
shares.
Name and
Address of Number of Percentage
Beneficial Owner Shares of Ownership
---------------- ------ ------------
Rhoda Rizkalla 3,000,000 50%
2963 E. Rose Lane
Phoenix, AZ 85016
All Officers and
Directors as a Group 3,000,000 50%
25
FUTURE SALES BY OFFICER & DIRECTOR
A total of 3,000,000 shares have been issued to our sole officer and director
and are restricted securities, as that term is defined in Rule 144 of the Rules
and Regulations of the SEC promulgated under the Act. Under Rule 144, such
shares can be publicly sold, subject to volume restrictions and certain
restrictions on the manner of sale, commencing one year after their acquisition.
Any sale of shares held by this stockholder (after applicable restrictions
expire) may have a depressive effect on the price of our common stock in any
market that may develop, of which there can be no assurance.
Our sole officer and director does not have any current plans to sell her shares
once all condition of Rule 144 are met.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Rhoda Rizkalla is our sole officer and director. We are currently operating out
of the premises of Ms. Rizkalla, the officer and director of our Company, on a
rent-free basis for administrative purposes. There is no written agreement or
other material terms or arrangements relating to said arrangement.
On April 30, 2008 the Company issued a total of 3,000,000 shares of common stock
to Ms. Rizkalla for cash at $0.005 per share for a total of $15,000.
We do not currently have any conflicts of interest by or among our current
officer, director, key employee or advisors. We have not yet formulated a policy
for handling conflicts of interest; however, we intend to do so prior to hiring
any additional employees.
We do not currently have an independent director serving on the Board of
Directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The total fees charged to the company for audit services, including quarterly
reviews, were $7,750, audit-related services were $Nil, tax services were $Nil
and other services were $Nil during the year ended August 31, 2011.
The total fees charged to the company for audit services, including quarterly
reviews, were $7,750, audit-related services were $Nil, tax services were $Nil
and other services were $Nil during the year ended August 31, 2010.
26
PART IV
ITEM 15. 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 November 28, 2011.
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
November 28, 2011 By: /s/ Rhoda Rizkalla
-----------------------------------------
Rhoda Rizkalla, Director, President,
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
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