Attached files
file | filename |
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EX-4 - SUBSCRIPTION AGREEMENT - Plycrete, Inc. | plycreteexhibit4.htm |
EX-3.2 - BY-LAWS - Plycrete, Inc. | plycreteexhibit32.htm |
EX-5 - OPINION OF COUNSEL AND CONSENT OF COUNSEL - Plycrete, Inc. | plycreteexhibits5.htm |
EX-23 - CONSENT OF INDEPENDENT REGISTERED CPA - Plycrete, Inc. | plycreteexhibits23.htm |
EX-3.1 - ARTICLES OF INCORPORATION - Plycrete, Inc. | plycreteexhi9bit31.htm |
EX-10 - LICENSE AGREEMENT - Plycrete, Inc. | plycreteexhibits10.htm |
U. S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
As filed
with the Securities and Exchange
Commission
on
______________ Registration
No. ______________
Plycrete,
Inc.
(Exact
name of registrant as specified in its charter)
Nevada
|
3270
|
46-0522482
|
||||
(State
or other jurisdiction
of
incorporation or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer Identification No.)
|
||||
1777,
Cedar, Mascouche (Quebèc), Canada
|
J7L 1W6
|
|||||
(Address
of registrant's principal executive offices)
|
(Zip
Code)
|
|||||
(450) 477-8161
|
||||||
(Registrant's
Telephone Number, Including Area Code)
|
Clement
Guevremont
Plycrete,
Inc.
1777,
Cedar
Mascouche
(Quebèc)
Canada
J7L 1W6
(Name,
Address and Telephone Number of Agent for Service)
Copies
of all correspondence to:
Michael
J. Muellerleile
M2 Law
Professional Corporation
500
Newport Center Drive, Suite 800
Newport
Beach, California 92660
Tel:
949.706.1470/Fax: 949.706.1475
Approximate
date of proposed sale to the public: From time to time after this registration
statement becomes effective.
If any of
the securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box.
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
_______
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ] _______
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ] _______
If the
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. £
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 definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one)
CALCULATION
OF REGISTRATION FEE
Title
of each class
of
securities
to
be registered
|
Amount
to
be
registered
|
Proposed
maximum
offering
price
per
share
|
Proposed
maximum
aggregate
offering
price
|
Amount
of
registration
fee
|
Common
Stock, $.001 par value
|
2,500,000
(1)
|
$0.30
|
$750,000
|
$53.48
|
(1)Represents
shares offered for sale by Plycrete, Inc.
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
Preliminary
Prospectus
Plycrete,
Inc., a Nevada corporation
2,500,000
Shares of Common Stock
We are
offering for sale 2,500,000 shares of our common stock in a direct public
offering. The purchase price is $0.30 per share. No underwriter is involved in
the offering and distribution of the shares. We are offering the shares without
any underwriting discounts or commissions. Our president, Clement Guevremont,
will offer and sell the shares on our behalf. If all of the shares
offered are purchased, the proceeds to us will be $750,000. There is no minimum
amount required to be raised in this offering. Subscriptions for shares of our
common stock are irrevocable once made, and funds will only be returned upon
rejection of the subscription. This is our initial public offering
and no public market currently exists for shares of our common stock. This
offering will terminate six months following the effective date of this
registration statement, and will not be extended.
Title
of securities
to
be offered
|
Number
of offered shares
|
Offering
price
per
share
|
Proceeds
|
||
Common
Stock
|
2,500,000
|
$0.30
|
$750,000
|
This
offering involves a high degree of risk. See “Risk Factors” on Pages
5 to 8 for factors to be considered before purchasing shares of our common
stock.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
information in this prospectus is not complete and may be changed. We will not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state or other jurisdiction where the offer or sale of these securities is
not permitted.
The date
of this prospectus is __________.
Subject
to completion.
2
TABLE OF
CONTENTS
Prospectus
Summary
|
4
|
|
Risk
Factors
|
5
|
|
Forward
Looking Statements
|
8
|
|
Use
of Proceeds
|
8
|
|
Determination
of Offering Price
|
9
|
|
Dilution
|
9
|
|
Selling
Security Holders
|
10
|
|
Plan
of Distribution
|
10
|
|
Legal
Proceedings
|
11
|
|
Directors,
Executive Officers, Promoters and Control Persons
|
11
|
|
Security
Ownership of Certain Beneficial Owners and Management
|
12
|
|
Description
of Securities
|
12
|
|
Interest
of Named Experts and Counsel
|
13
|
|
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
|
13
|
|
Organization
Within Last Five Years
|
13
|
|
Description
of Business
|
13
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
15
|
|
Description
of Property
|
18
|
|
Certain
Relationships and Related Transactions
|
18
|
|
Market
for Common Equity and Related Stockholder Matters
|
19
|
|
Executive
Compensation
|
20
|
|
Financial
Statements
|
22
|
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
55
|
|
Legal
Matters
|
55
|
|
Experts
|
55
|
|
Additional
Information
|
55
|
|
Indemnification
of Directors and Officers
|
56
|
|
Other
Expenses of Issuance and Distribution
|
56
|
|
Recent
Sales of Unregistered Securities
|
56
|
|
Exhibits
|
|
|
Undertakings
|
|
|
Signatures
|
|
Outside
Back Cover Page
Dealer
Prospectus Delivery Obligation
Until
_______, all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers’ obligations to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
3
Prospectus
Summary
Our
Business:
|
We
were incorporated in Nevada on August 21, 2007. Our principal business
address is 1777, Cedar, Mascouche (Quebèc), J7L 1W6. Our telephone number
is (450) 477-8161.
We
are a wholesaler of modular residential and commercial units and homes to
be assembled and totally composed of a new composite plysheets concrete
material, known as Plycrete. Plycrete is a reinforced multilayer
cementious structure to produce building panels with quick assembly
features and improved joint sealing. We believe that we will need to raise
a total of $150,000 to pay the costs of this offering and conduct our
proposed business activities.
|
|
Summary
financial information:
|
The
summary financial information set forth below is derived from the more
detailed financial statements appearing elsewhere in this Form S-1. We
have prepared our financial statements contained in this Form S-1 in
accordance with accounting principles generally accepted in the United
States. All information should be considered in conjunction with our
financial statements and the notes contained elsewhere in this Form
S-1.
|
Income
Statement
|
For
the Three
Months
Ended
October
31,
2009
|
For
the year
ended
July
31, 2009
|
For
the Period
from
August 21,
2007
(inception)
to
July
31, 2008
|
|||
$ | $ | $ | ||||
Revenue
|
0 | 0 | 0 | |||
Total
Operating Expenses
|
4,347 | 79,105 | 87,479 | |||
Net
Income (Loss)
|
(4,851) | (80,430) | (87,479) | |||
Net
Income (Loss) Per Share
|
(0.00) | (0.01) | (0.01) |
Balance
Sheet
|
October
31, 2009
|
July
31, 2009
|
July
31, 2008
|
|||
$ | $ | $ | ||||
Total
Assets
|
87,170 | 92,036 | 191,167 | |||
Total
Liabilities
|
51,325 | 51,325 | 70,000 | |||
Stockholders'
Equity
|
35,845 | 40,711 | 121,167 |
Number
of shares being offered:
|
We
are offering for sale 2,500,000 shares of our common stock. We will sell
the shares we are registering only to those individuals who have received
a copy of the prospectus.
|
|
Number
of shares outstanding after the offering:
|
10,450,000
shares of our common stock are currently issued and outstanding. After the
offering, there may be up to 12,950,000 shares of our common stock issued
and outstanding if all of the offered shares are sold.
|
|
Estimated
use of
proceeds:
|
We
will receive $750,000 if all of the offered shares are sold and $375,000
if half the offered shares are sold. If all of the offered shares are
purchased, we intend to use the proceeds for rent/office expenses,
computer equipment, website development expenses, wages for
employees/contractors, marketing expenses, working capital and offering
expenses. This is a best efforts offering with no minimum offering
amount. There is no guarantee that we will even raise
enough funds to cover the expenses of this offering.
|
|
4
RISK
FACTORS
In
addition to the other information in this prospectus, the following risk factors
should be considered carefully in evaluating our business before purchasing any
of our shares of common stock. A purchase of our common stock is speculative in
nature and involves a lot of risks. No purchase of our common stock should be
made by any person who is not in a position to lose the entire amount of his
investment.
Risks related to our
business:
We
may not be able to further implement our business strategy unless sufficient
funds are raised in this offering. If we do not raise at least
$150,000 we may have to cease operations, which could cause investors to lose
their investment in us.
In order
to fund our operations, we believe that we need minimum proceeds of
approximately $150,000 from this offering. We believe that $150,000 will be
sufficient to pay for the expenses of this offering and conduct our proposed
business activities. Moreover, we hope to raise $750,000, which would allow us
to implement our business plan to the full extent that we
envision. We may not realize sufficient proceeds to complete further
business development costs, or to provide adequate cash flow for planned
business activities. Our inability to raise sufficient funds in this offering
may significantly hinder our ability to continue operations. If we fail to raise
sufficient funds in this offering, investors may lose their entire cash
investment.
We
have a limited operating history upon which an evaluation of our prospects can
be made.
We were
incorporated in August 2007. Our lack of operating history makes an evaluation
of our business and prospects very difficult. Our prospects must be considered
speculative, considering the risks, expenses, and difficulties frequently
encountered in the establishment of a new business. We cannot be certain that
our business will be successful or that we will generate significant
revenues.
We are a
development stage company that is currently developing our business. To date, we
have not generated any revenues. The success of our business operations will
depend upon our ability to obtain clients and provides quality services to those
clients. We are not able to predict whether we will be able to develop our
business and generate significant revenues. If we are not able to complete the
successful development of our business plan, generate significant revenues and
attain sustainable operations, then our business will fail.
We
may not be able to compete effectively with other providers that have more
resources and experience than we have.
Our
industry is significantly competitive. We have competitors that provide some or
all of the services we provide and who are larger and have more resources than
we do. Many of our competitors have significantly greater financial, human and
marketing resources than we have. As a result, such competitors may be able to
respond more quickly to new trends and changes in customer demands. Such
competitors may also be able to devote greater resources to the development,
promotion, sale, and support of their services than we do. If we do not compete
effectively with current and future competitors, we may be unable to secure new
and renewed client contracts, or we may be required to reduce our rates in order
to complete effectively. This could result in a reduction in our revenues,
resulting in lower earnings or operating losses.
5
We
anticipate that we may need to raise additional capital to market our products
and services. Our failure to raise additional capital will significantly affect
our ability to fund our proposed marketing activities.
We are
currently not engaged in any sophisticated marketing program to market our
services because we lack sufficient capital and revenues to justify the
expenditure. We need to raise at least $150,000 to pay for the costs of this
offering and fund our proposed business activities. We believe that we will need
to raise $750,000 in this offering to fully implement our business plans.
However, we may need to spend more funds on marketing and promotion than we have
initially estimated. Therefore, if we need additional funds, we will need to
raise additional capital in addition to the funds raised in this offering. We do
not know if we will be able to acquire additional financing at commercially
reasonable rates. Our failure to obtain additional funds would significantly
limit or eliminate our ability to fund our sales and marketing
activities.
We may not have sufficient financial
resources to fund our operations if the offering is substantially undersold.
There is
no minimum offering amount for this offering. We may not sell any or all of the
offered shares. If the offering is substantially undersold, investors may lose
their entire investment because we will not have sufficient capital to fund our
operations. If we do not sell all of the offered shares, we may also be forced
to limit any proposed business activities, which will hinder our ability to
generate revenues.
Investors
in this offering will suffer immediate and substantial dilution of their
investment because they will provide 78.25% of the capital for a 19.31% equity
interest in the company.
The
initial public offering price is substantially higher than the pro forma net
tangible book value per share of our outstanding common stock. Our existing
shareholders have paid considerably less than the amount to be paid for the
common stock in this offering. As a result, assuming an initial public offering
price of $0.30 per share, investors purchasing common stock in this offering
will incur immediate dilution of $0.243 in pro forma net tangible book value per
share of common stock as of July 31, 2009, if all of the offered shares are
sold.
We may not realize sufficient
proceeds from this offering to implement our business plan, as we are offering
shares on direct participation basis, rather then using the experience of a
dealer-broker.
We are
offering shares on a direct participation basis. No individual, firm, or
corporation has agreed to purchase any of the offered Shares. We cannot guaranty
that any or all of the shares will be sold. We do not plan to use a
dealer-broker, even though a dealer-broker may have more experience, resources
or contacts to more effectively achieve the sale of shares. A delay in the sale
of the shares in this offering can be expected to cause a similar delay in the
implementation of our business plan.
Our
officers and directors are engaged in other activities that could conflict with
our interests. Therefore, our officers and directors may not devote sufficient
time to our affairs, which may affect our ability to conduct marketing
activities and generate revenues.
The
individuals serving as our officers and directors have existing responsibilities
and may have additional responsibilities to provide management and services to
other entities. As a result, conflicts of interest between us and the other
activities of those entities may occur from time to time, in that our officers
and directors shall have conflicts of interest in allocating time, services, and
functions between the other business ventures in which he may be or become
involved and our affairs.
We depend on the efforts and
abilities of our management to continue operations.
Our
management is our only employees with experience relevant to business. Outside
demands on our management’s time may prevent them from devoting sufficient time
to our operations. In addition, the demands on their time will increase because
of our status as a public company. The interruption of the
services of our management could significantly hinder our operations, profits
and future development, if suitable replacements are not promptly
obtained. We do not currently have any executive compensation
agreements. We cannot guaranty that our management will remain with
us.
6
Our auditors have expressed
substantial doubt regarding our ability to continue operations as a “going
concern.” Investors may lose all of their investment if we are unable to
continue operations and generate revenues, or if we do not raise sufficient
funds in this offering.
We have
not generated any revenues from our operations. In the absence of
significant sales and profits, we will seek to raise additional funds to meet
our working capital needs principally through the additional sales of our
securities. However, we cannot guaranty that we will be able to
obtain sufficient additional funds when needed, such as the funds we are
attempting to raise in this offering, or that such funds, if available, will be
obtainable on terms satisfactory to us. If we do not raise sufficient
funds in this offering, we may not be able to continue in
business. As a result, our auditors believe that substantial doubt
exists about our ability to continue operations.
The
costs to meet our reporting requirements as a public company subject to the
Exchange Act of ’34 will be substantial and may result in us having insufficient
funds to operate our business.
We will
incur ongoing expenses associated with professional fees for accounting and
legal expenses associated with being a public company. We estimate that these
costs will range up to $50,000 per year for the next few years. Those fees will
be higher if our business volume and activity increases. Those
obligations will reduce and possibly eliminate our ability and resources to fund
our operations and may prevent us from meeting our normal business
obligations.
Risks related to owning our
common stock:
We
arbitrarily determined the offering price of the shares of common stock.
Therefore, investors may lose all or part of their investment if the offering
price is higher than the current market value of the offered
shares.
The
offering price of the shares of common stock being offered by us has been
determined primarily by our capital requirements and has no relationship to any
established criteria of value, such as book value or earnings per share.
Additionally, because we have no significant operating history and have only
generated minimal revenues to date, the price of the shares of common stock is
not based on past earnings, nor is the price of the shares indicative of current
market value for the assets owned by us. Investors could lose all or a part of
their investment if the offering price has been arbitrarily set too high. Even
if a public trading market develops for our common stock, the shares may not
attain market values commensurate with the offering price.
Our
officers, directors and principal shareholders, control our operations and
matters requiring shareholder approval.
Our
officers, directors and principal shareholders own approximately 76.55% of our
outstanding shares of common stock. Even if all the offered shares are sold,
they will still own 61.78% of our outstanding shares of common
stock. As a result, our officers, directors and principal
shareholders will have the ability to control or significantly influence all
matters requiring approval by our shareholders, including the election and
removal of directors. Such control will allow our officers, directors and
principal shareholders to control the future course of the company. Our
officers, directors and principal shareholders do not intend to purchase any of
the shares in this offering.
Investors
should not look to dividends as a source of income.
In the
interest of reinvesting initial profits back into our business, we do not intend
to pay cash dividends in the foreseeable future. Consequently, any
economic return will initially be derived, if at all, from appreciation in the
fair market value of our stock, and not as a result of dividend
payments.
Because
we may be subject to the “penny stock” rules, the level of trading activity in
our stock may be reduced which may make
it difficult for investors to sell their shares.
Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by
certain penny stock rules adopted by the Securities and Exchange Commission.
Penny stocks, like shares of our common stock, generally are equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on NASDAQ. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the broker-dealer’s
presumed control over the market, and monthly account statements showing the
market value of each penny stock held in the customer’s account. In addition,
broker-dealers who sell these securities to persons other than established
customers and “accredited investors” must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. Consequently, these
requirements may have the effect of reducing the level of trading activity, if
any, in the secondary market for a security subject to the penny stock rules,
and investors in our common stock may find it difficult to sell their
shares.
7
We
lack a public market for shares of our common stock, which may make it difficult
for investors to sell their shares.
There is
no public market for shares of our common stock. We cannot guaranty that an
active public market will develop or be sustained. Therefore, investors may not
be able to find purchasers for their shares of our common stock. Should there
develop a significant market for our shares, the market price for those shares
may be significantly affected by such factors as our financial results and
introduction of new products and services. Factors such as
announcements of new services by us or our competitors and quarter-to-quarter
variations in our results of operations, as well as market conditions in our
sector may have a significant impact on the market price of our shares. Further,
the stock market has experienced extreme volatility that has particularly
affected the market prices of stock of many companies and that often has been
unrelated or disproportionate to the operating performance of those
companies.
Forward Looking
Statements
Information
in this prospectus contains “forward looking statements” which can be identified
by the use of forward-looking words such as “believes”, “estimates”, “could”,
“possibly”, “probably”, “anticipates”, “estimates”, “projects”, “expects”,
“may”, “will”, or “should” or other variations or similar words. No
assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters
constitute cautionary statements identifying important factors with respect to
those forward-looking statements, including certain risks and uncertainties that
could cause actual results to vary materially from the future results
anticipated by those forward-looking statements. Among the key
factors that have a direct bearing on our results of operations are the costs
and effectiveness of our operating strategy. Other factors could also
cause actual results to vary materially from the future results anticipated by
those forward-looking statements.
Use of
Proceeds
We will
receive up to $750,000 if all of the shares of common stock offered by us at
$0.30 per share are purchased. We cannot guaranty that we will sell any or all
of the shares being offered by us. This is a best efforts offering
with no minimum offering amount. The table below estimates our use of proceeds,
given the varying levels of success of the offering. None of the
proceeds will be used to reimburse the expenses that were previously paid by our
president including office rent or compensation for services provided prior to
the offering.
Offered
Shares Sold
|
Offering
Proceeds
|
Approximate
Offering
Expenses(1)
|
Total
Net Offering
Proceeds
|
Principal
Uses of Net Proceeds
|
||
500,000
shares (20%)
|
$150,000
|
$24,000
|
$126,000
|
Rent/Office
Expenses: $12,000
Computer
Equipment: $7,500
Website
Development: $12,500
Employees/Contractors:
$25,000
Marketing/Printing: $5,000
Working
Capital: $64,000
|
||
1,500,000
shares (60%)
|
$450,000
|
$24,000
|
$426,000
|
Rent/Office
Expenses: $12,000
Computer
Equipment: $7,500
Website
Development: $12,500
Employees/Contractors:
$40,000
Marketing/Printing: $8,000
Working
Capital: $346,000
|
||
2,500,000
shares (maximum)
|
$750,000
|
$24,000
|
$726,000
|
Rent/Office
Expenses: $12,000
Computer
Equipment: $15,000
Website
Development: $12,500
Employees/Contractors:
$100,000
Marketing/Printing: $25,000
Working
Capital: $561,500
|
(1) Offering
expenses have been rounded to $24,000.
8
Working
capital will be used to pay general administrative expenses, legal expenses and
accounting expenses for the next twelve months. Those expenses may increase if
we are able to grow our operations and marketing
activities. Marketing expenses primarily include costs
associated with travel and entertainment expenses to meet potential clients for
our services. Marketing expenses also includes development, preparation and
printing of marketing materials, such as brochures and
catalogs. Funds projected above as allocated to the hiring of
employees and independent contractors, are those who would be engaged to help
conduct our business operations, and exclude compensation that would be paid to
Clement Guevremont, our president. The funds from this offering will
not be used to pay Mr. Guevremont for any services related to activities
undertaken to further the success of this offering, whether provided prior to,
during, or subsequent to the offering.
None of
the proceeds will be used to reimburse the expenses that were previously paid by
our president including office rent or compensation for services provided prior
to the offering. If the offering proceeds are insufficient to pay the
offering expenses in full, then we intend to pay those expenses from our current
cash reserves.
Determination of Offering
Price
Factors Used to Determine Share
Price. The offering price of the 2,500,000 shares of common
stock being offered by us has been determined primarily by our capital
requirements and has no relationship to any established criteria of value, such
as book value or earnings per share. Additionally, because we have no
significant operating history and have only generated limited revenues to date,
the price of the shares of common stock is not based on past earnings, nor is
the price of the shares indicative of current market value for the assets owned
by us. No valuation or appraisal has been prepared for our business and
potential business expansion.
Dilution
We intend
to sell 2,500,000 shares of our common stock. We were initially capitalized by
the sale of our common stock. The following table sets forth the number of
shares of common stock purchased from us, the total consideration paid and the
price per share. The table assumes all 2,500,000 shares of common stock will be
sold. The founding shareholders are Clement Guevremont, Madeleine Houle and
Alain Houle.
Shares
Issued
|
Total
Consideration
|
Price
Per
Share
|
|||
Number
|
Percent
|
Amount
|
Percent
|
||
Founding
Shareholders(1)
|
8,450,000
Shares
|
65.25%
|
$8,450
|
0.8%
|
$0.001
|
Private
Shareholders(2)
|
2,000,000
Shares
|
15.44%
|
$200,000
|
20.87%
|
$0.10
|
Purchasers
of Shares
|
2,500,000
Shares
|
19.31%
|
$750,000
|
78.25%
|
$0.30
|
Total
|
12,950,000
Shares
|
100%
|
$958,450
|
100%
|
(1)
|
The
founding shareholders were issued 8,450,000 shares of our common stock in
exchange for services valued at $8,450, or $0.001 per
share.
|
(2)
|
The
private shareholders purchased 2,000,000 shares of our common stock in
exchange for $200,000, or $0.10 per
share.
|
9
The
following table sets forth the difference between the offering price of the
shares of our common stock being offered by us, the net tangible book value per
share, and the net tangible book value per share after giving effect to the
offering by us, assuming that 100% and 50% of the offered shares are sold. Net
tangible book value per share represents the amount of total tangible assets
less total liabilities divided by the number of shares outstanding as of July
31, 2009. Totals may vary due to rounding.
100%
of offered
shares
are sold
|
50%
of offered
shares
are sold
|
|||
Offering
Price
|
$0.30
per
share
|
$0.30
per
share
|
||
Net
tangible book value at 07/31/09
|
$0.003
per
share
|
$0.003
per
share
|
||
Net
tangible book value after giving effect to the offering
|
$0.06
per
share
|
$0.036
per
share
|
||
Increase
in net tangible book value per share attributable to cash payments made by
new investors
|
$0.057
per
share
|
$0.033
per
share
|
||
Per
Share Dilution to New Investors
|
$0.243
per
share
|
$0.267
per
share
|
||
Percent
Dilution to New Investors
|
81%
|
89%
|
Selling Security
Holder
There are
no selling security holders in this offering.
Plan of
Distribution
Primary Offering. We are
offering for sale 2,500,000 shares of our common stock in a direct public
offering on a best efforts basis with no minimum. There is no minimum
amount that must be sold, and we will receive any proceeds from this offering
immediately upon the acceptance of subscription agreements we
receive. We will accept or reject any subscription agreement within
ten days of receipt, and any checks submitted with rejected subscription
agreements will be returned promptly.
We have
not conducted any discussions or negotiations for the sale of all or any portion
of those 2,500,000 shares of our common stock. There is no minimum number of
shares that must be purchased by each prospective purchaser and the maximum
number of shares we will sell is 2,500,000. We will not pay any commissions or
other fees, directly or indirectly to any person or firm in connection with
solicitation of sales of the common stock. We will not conduct any
aspect of this offering online, nor is any such online offering
contemplated. This offering will terminate six months following the
effective date of this registration statement.
Our
officers and directors do not have any agreement or plan to purchase any shares
in this offering. Clement Guevremont, our president, will participate
in the offer and sale of our shares of common stock, and rely on the safe harbor
from broker-dealer registration set out in Rule 3a4-1 under the Securities
Exchange Act of 1934. Although Mr. Guevremont is an associated person
of the company as that term is defined in Rule 3a4-l under the Exchange Act, he
believes he will not be deemed to be a broker for the following
reasons:
·
|
Mr.
Guevremont is not subject to a statutory disqualification as that term is
defined in Section 3(a)(39) of the Exchange Act at the time of his
participation in the sale of our
securities.
|
·
|
Mr.
Guevremont will not be compensated for his participation in the sale of
company securities by the payment of commission or other remuneration
based either directly or indirectly on transactions in
securities.
|
·
|
Mr.
Guevremont is not an associated person of a broker or dealer at the time
of participation in the sale of company
securities.
|
Mr.
Guevremont will restrict his participation to the following
activities:
·
|
preparing
any written communication or delivering any communication through the
mails or other means that does not involve oral solicitation by the
president of a potential purchaser;
|
·
|
responding
to inquiries of potential purchasers in communication initiated by the
potential purchasers, provided, however, that the content of responses are
limited to information contained in a registration statement filed under
the Securities Act or other offering
document;
|
·
|
performing
ministerial and clerical work involved in effecting any
transaction.
|
We have
not retained a broker for the sale of securities being offered. In the event we
retain a broker who may be deemed an underwriter, an amendment to the
registration statement will be filed.
10
The
shares of common stock being offered by us have not been registered for sale
under the securities laws of any state as of the date of this prospectus. We
intend to register or qualify the offered shares in the following states:
Colorado.
Under the
Securities Exchange Act of 1934 and the regulations thereunder, any person
engaged in a distribution of the shares of our common stock offered by this
prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable “cooling off” periods prior to
the commencement of such distribution.
Legal
Proceedings
There are
no legal actions pending against us nor are any legal actions contemplated by us
at this time.
Directors, Executive
Officers, Promoters and Control Persons
Executive Officers and
Directors. Our directors and principal executive officers are as
specified on the following table:
Name
|
Age
|
Position
|
||
Clement
Guevremont
|
62
|
President
and a Director
|
||
Madeleine
Houle
|
65
|
Chief
Financial Officer, Secretary and a Director
|
Clement Guevremont. Mr.
Guevremont has been our President and one of our directors since our inception.
From 2005 to the present, Mr. Guevremont has been operating Clem-G Plycrete Inc.
which produces modular residential and commercial units to be assembled and
totally composed of a new composite plysheets concrete material. Concurrently,
Mr. Guevremont administrated the Research & Development project on cement
composite materials and modular structures for residential construction. From
1995 to 2005, Mr. Guevremont operated Innovex Ecologic Constructions Inc., which
builds superior insulated new ecologically designed houses. Over the last 30
years, Mr. Guevremont has been studying Industrial designing at the Sallette
Academy of Design of Montreal and studied at the University of Montreal HEC
(Hautes Etudes Commerciales). Mr. Guevremont has not been a director of any
other reporting company.
Madeleine Houle. Ms. Houle has
been our Chief Financial Officer, Secretary and one of our directors since our
inception. From
2004 to the present, Ms. Houle has been the owner of EDL International Inc.,
which designs training programs for Education, Personal Development &
Leadership. From 1993 to 2004, Ms. Houle operated Full Potential In Action, which designed courses for
maximum development of human potential and applications for individuals in
organizations. Over the last twenty years, Ms. Houle has earned several
certificates for management and team leadership, empowerment and organizational
development. In addition, Ms. Houle earned a degree from Montreal Quebec
University in 1988. Ms. Houle is not an officer or director of any
other reporting company.
All
directors hold office until the completion of their term of office, which is not
longer than one year, or until their successors have been elected. All
officers are appointed annually by the board of directors and, subject to
employment agreements (which do not currently exist) serve at the discretion of
the board. Currently, directors receive no compensation.
Clement
Guevremont is the common law spouse of Madeleine Houle. There are no orders,
judgments, or decrees of any governmental agency or administrator, or of any
court of competent jurisdiction, revoking or suspending for cause any license,
permit or other authority to engage in the securities business or in the sale of
a particular security or temporarily or permanently restraining any of our
officers or directors from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
such person of any felony or misdemeanor involving a security, or any aspect of
the securities business or of theft or of any felony. Nor are any of the
officers or directors of any corporation or entity affiliated with us so
enjoined.
11
Security Ownership of
Certain Beneficial Owners and Management
The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 1, 2010, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
Title
of
Class
|
Name
and Address of
Beneficial
Owner
|
Amount
and
Nature
of
Beneficial
Owner
|
Percent
of Class
if
No Shares are
Sold
|
Percent
of Class
if
1,000,000
Shares
are Sold
|
Percent
of Class if
2,500,000
Shares
are
Sold
|
Common
Stock
|
Clement
Guevremont
1777,
Cedar
Mascouche
(Quebèc)
Canada
J7L 1W6
|
8,000,000
shares(1)
president,
director
|
76.55%
|
69.86%
|
61.78%
|
Common
Stock
|
Madeleine
Houle
1777,
Cedar
Mascouche
(Quebèc)
Canada
J7L 1W6
|
8,000,000
shares(1)
chief
financial officer, secretary, director
|
76.55%
|
69.86%
|
61.78%
|
Common
Stock
|
All
directors and named executive officers as a group
|
8,000,000
shares
|
76.55%
|
69.86%
|
61.78%
|
(1)
Clement Guevremont, our president and director, who owns 6,000,000 shares, is
the common law spouse of Madeleine Houle, our chief financial officer, secretary
and director, who owns 2,000,000 shares. Therefore, each beneficially owns
8,000,000 shares of common stock, which equals approximately 76.55% of our
issued and outstanding common stock.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in
Control. Our management is not aware
of any arrangements which may result in a change in control.
Committees. Our Board of
Directors does not currently have a compensation committee or nominating and
corporate governance committee because, due to the Board of Director’s
composition and our relatively limited operations, the Board of Directors
believes it is able to effectively manage the issues normally considered by such
committees. Our Board of Directors may undertake a review of the need for these
committees in the future.
Audit Committee and Financial Expert. Presently, the Board of
Directors acts as the audit committee. The Board of Directors does not have an
audit committee financial expert. The Board of Directors has not yet recruited
an audit committee financial expert to join the board of directors because we
have only recently commenced a significant level of financial
operations.
Code
of Ethics. We do not currently
have a Code
of
Ethics that applies to all employees,
including our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. We plan to adopt a Code of Ethics.
Description of
Securities
We were
authorized to issue 75,000,000 shares of $.001 par value common
stock. As of February 2, 2010, there were 10,450,000 shares of our
common stock were issued and outstanding.
Each
shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The
holders of our common stock are entitled to one vote for each share of record on
all matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of the directors. In the event of our liquidation, dissolution or
winding up, the holders of common stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of our
liabilities and after provision has been made for each class of stock, if any,
having any preference in relation to our common stock. Holders of shares of our
common stock have no conversion, preemptive or other subscription rights, and
there are no redemption provisions applicable to our common stock.
12
Dividend Policy. We have never
declared or paid a cash dividend on our capital stock. We do not expect to pay
cash dividends on our common stock in the foreseeable future. We currently
intend to retain our earnings, if any, for use in our business. Any dividends
declared in the future will be at the discretion of our board of
directors.
Our
Articles of Incorporation and our Bylaws do not contain any provisions which
were included to delay, defer, discourage or prevent a change in
control.
Interest of Named Experts
and Counsel
No
“expert” or our “counsel” was hired on a contingent basis, or will receive a
direct or indirect interest in us, or was a promoter, underwriter, voting
trustee, director, officer, or employee of the company, at any time prior to the
filing of this registration statement.
Disclosure of Commission
Position on Indemnification for Securities Act Liabilities
Article
Twelfth of our Articles of Incorporation provides, among other things, that our
officers and directors shall not be personally liable to us or our shareholders
for monetary damages for breach of fiduciary duty as an officer or a director,
except for liability:
·
|
for
acts or omissions not in good faith or which involve intentional
misconduct, fraud or a knowing violation of law;
or
|
·
|
for
unlawful payments of dividends or unlawful stock purchase or redemption by
us.
|
Article V
of our Bylaws also provides that our officers and directors shall be indemnified
and held harmless by us to the fullest extent permitted by the provisions of
Section 78.7502 of the Nevada Revised Statutes.
Accordingly,
our directors may have no liability to our shareholders for any mistakes or
errors of judgment or for any act of omission, unless as provided under the
Nevada Revised Statutes, the act or omission involves intentional misconduct,
fraud, or a knowing violation of law or results in unlawful distributions to our
shareholders as provided.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in that act and is, therefore, unenforceable.
Organization Within Last
Five Years
Transactions with Promoters.
Clement Guevremont and Madeleine Houle were our promoters and serve as
our officers and directors. In August 2007, we issued 6,000,000 shares of our
common stock to Clement Guevremont and 2,000,000 shares of our common stock to
Madeleine Houle, who were our founders and were our officers and directors at
inception. These shares were issued in exchange for services valued at $8,000,
or $0.001 per share.
Description of
Business
Our Background. We were
incorporated in Nevada on August 21, 2007.
Our Business. We are a
wholesaler of modular residential and commercial units and homes to be assembled
and totally composed of a new composite plysheets concrete material, known as
Plycrete. Plycrete is a reinforced multilayer cement structure to produce
building panels with quick assembly features and improved joint
sealing.
13
Our Supplier. Our supplier for
the building panels to be used is Clem-G Plycrete, Inc., or Clem-G, a private
company controlled by Clement Guèvremont, our president and director. Clem-G has
developed panels and methods more particularly concerned with wall surface
building panels with quick assembly features and improved joint sealing and
method of installation hereof.
On May
14, 2008, we entered into a License Agreement with Clem-G, or License Agreement.
The Agreement is for an initial term of ten years from May 14, 2008 to May 14,
2018. Under the terms of the Agreement, we acquired the license and trademark
rights to market and sell certain technology that relates to building panels and
methods, more particularly concerned with wall surface building panels with
quick assembly features and improved joint sealing, and method of installation
known as CLEM-G, and certain technology that relates to cement structures and
methods for fabrication thereof, more particularly concerned with a reinforced
multilayer cement structure and a method of manufacture known as PLYCRETE. A
patent for each of these methods was filed in the United States and are pending.
We acquired these rights for $100,000. We paid the initial payment of $30,000,
with the remaining payment of $70,000 was paid in 2009. A copy of the
Agreement is included in this Registration Statement as Exhibit 10.1 and is
incorporated herein by reference. This brief description of the
Agreement is not intended to be complete and is qualified in its entirety by
reference to the full text of the Agreement.
We may
need to develop relationships with additional suppliers so that we will have
complementary suppliers in the event that our current supplier is unable to meet
our customers’ requirements. We also plan to enter arrangements with other
suppliers to diversify our products
offerings. .
Our Target Markets and Marketing
Strategy. Our target market is the one for contractors
specialized in modular homes in Canada. We hope to extend our operations in the
United States, and to that extent, we have initiated talks with various
contractors in the United States. We intend to aggressively market and promote
the Plycrete brand. We intend to provide E-Based educational seminars in modular
home assembly, using Plycrete. We also plan to attend trade conventions that
take place in the market areas where we currently expect to enter. We may also
place advertisements and promotional pieces in trade journals.
Growth Strategy. Considering
transportation costs of the product, our expansion strategy will have to follow
that of Clem-G and the introduction of manufacturing plants in several provinces
in the province of Quebec, in the rest of Canada, and then in the United States,
the principle being direct delivery from the closest factory to the customer,
without going through additional intermediaries. All intermediate wholesalers
and retailers are to be replaced by an internet web site point of
sale.
We also
intend to explore the possibility of entering into a joint venture with a third
party, which would build a portfolio of 1000 residential units to be
manufactured with Plycrete, which we believe would create demand for our product
as well as demonstrate our product in use.
Our Website. Our
website www.plycreteworld.com
is under construction and will provide information on the products
sold by us as well as online seminars on how to use the product. Our website
will also provide a description of our business together with our contact
information including our address, telephone number and email address. We also
hope to use our website to sell our products as well as create brand
awareness.
Our Competition. The
construction industry is significantly competitive. We have competitors that
have been providing traditional modular homes for many years and have more
resources then we do. Many of those competitors have significantly greater
financial, human and marketing resources than we have. As a result, these
competitors may be able to devote greater resources to the development,
promotion, sale and support of their products than we do. If we do not compete
effectively with current and future competitors, we may be unable to secure
client contracts, or we may be required to reduce our rates in order to compete
effectively. This could result in a reduction in our revenues, resulting in
lower earnings or operating losses.
Many of
our competitors have substantially greater financial, technical, managerial,
marketing and other resources than we do and they may compete more effectively
than we can. We anticipate that competition will increase in the future. We may
not successfully compete in any market in which we conduct or may conduct
operations.
We
believe our product is unique in terms of eco-responsibility, energy efficiency
and flammability. We have spent a significant amount of time and energy
researching and conducting studies and test of our product. In addition, our
patented assembly method reduces significantly the use of skilled workers in the
construction of a home. In addition, we have spent significant resources in
trying to make our assembly methods as user friendly as possible. We hope that
provides us with a competitive advantage for us over our competitors. In
addition, our ability to compete effectively will be dependent on our management
establishing close relationships with a number of key contractors to constantly
work with the client to improve our products and methods.
14
Government Regulation. Through
the laws and regulations of Canada and the provincial governments of Quebec and
Ontario, our products and services are subject to material regulation by
governmental agencies responsible for and construction and commerce industries.
As such, business and company registrations, production license, and our
products are certified and must be in compliance with the laws and regulations
of provincial and other local governments and industry agencies. We believe that
we are in conformity with all applicable laws of Quebec and
Ontario.
We are
also subject to federal, state and local laws and regulations generally applied
to businesses, such as payroll taxes on the state and federal levels. We believe
that we are in conformity with all applicable laws in Nevada and the United
States.
Our Research and Development.
Our research and development has been conducted in cooperation with the civil
engineering department of the University of Shrebrooke, Quebec, Canada and under
the supervision of Clem-G. To finalize the product and subsequently maintain a
competitive advantage in the marketplace as well as keep pace with developments,
we believe we will need to continue to engage in research and
development.
Intellectual Property. We do
not presently own any copyrights, patents, trademarks, licenses, concessions or
royalties, and we may rely on certain proprietary technologies, trade secrets,
and know-how that are not patentable.
As
discussed herein, in May 2008, we acquired from Clem-G, a private company
controlled by Clement Guèvremont, our president and director, an exclusive
license for the distribution and commercialization of the product. The license
is for an initial term of ten years from May 14, 2008 to May 14, 2018. Clem-G
has filed patents in the United States for both the raw material used and the
method of assembly.
We own
the Internet domain name “www.plycreteworld.com”
Under current domain name registration practices, no one else can obtain an
identical domain name, but someone might obtain a similar name, or the identical
name with a different suffix, such as “.org”, or with a country designation. The
regulation of domain names in the United States and in foreign countries is
subject to change, and we could be unable to prevent third parties from
acquiring domain names that infringe or otherwise decrease the value of our
domain names.
Employees. As of this date, we
have no salaried employees. We anticipate that we will be using the services of
independent contractors as consultants to support our expansion and business
development.
Facilities. Our executive,
administrative and operating offices are located at 1777, Cedar Avenue,
Mascouche, Quebec, J7L 1W6. Clément Guèvremont, our president, chief executive
officer and director provides approximately 200 square feet of office and
showroom space at no charge. Our financial statements reflect the fair market
value of that space which is approximately $250.00 per month.
Management's Discussion and
Analysis of Financial Condition and Results of Operations
Critical Accounting Policy and
Estimates. Our Management’s Discussion and Analysis of Financial
Condition and Results of Operations section discusses our financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, management evaluates its estimates and
judgments, including those related to revenue recognition, accrued expenses,
financing operations, and contingencies and litigation. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. The most
significant accounting estimates inherent in the preparation of our financial
statements include estimates as to the appropriate carrying value of certain
assets and liabilities which are not readily apparent from other sources. In
addition, these accounting policies are described at relevant sections in this
discussion and analysis and in the notes to the financial statements included in
this Registration Statement on Form S-1.
The
following discussion of our financial condition and results of operations should
be read in conjunction with our audited financial statements for the year ended
July 31, 2009, and the period from August 21, 2007 (inception) to July 31, 2008,
together with notes thereto, and our financial statements for the period ended
October 31, 2009, both of which are included in this Registration Statement on
Form S-1.
15
For the three months ended
October 31, 2009, as compared to the three months ended October 31,
2008.
Results
of Operations.
Revenues. We had no revenues
for the three months ended October 31, 2009, as compared to no revenues
generated during the three months ended October 31, 2008. We hope to
generate revenues as we continue operations and implement our business
plan.
Operating Expenses. For the
three months ended October 31, 2009, our total operating expenses were $4,347,
as compared to total operating expenses of $17,516 for the three months ended
October 31, 2008. The decrease in total operating expenses for the three months
ended October 31, 2009, is primarily due to decreases in professional fees,
consulting fees and general and administrative expenses from the comparable
period.
Net Loss. For the
three months ended October 31, 2009, our net loss was $4,851, as compared to the
net loss of $17,524 for the three months ended October 31, 2008. The
decrease in the net loss between the comparable periods is due primarily to the
decrease in operating expenses, as discussed above.
Liquidity and Capital
Resources. On August 21, 2007, we issued 8,450,000 shares of common stock
to our founders in exchange for services valued at $8,450, or $0.001 per
share. During the period April 1, 2008 through June 30, 2008, we sold
2,000,000 shares of common stock in exchange for $200,000, or $.10 per share. We
intend to use those proceeds to pay for the development of our products,
overhead expenses and working capital. We were advanced $40,000 from three (3)
individuals for amounts ranging between $5,000 and $20,000 during the year ended
July 31, 2009. All of these loans accrue interest at 5% per annum.
As of
October 31, 2009, we had liabilities of $51,325, of which $11,325 were
represented by accounts payable and accrued expenses and $40,000 were
represented by short term notes payable from three individuals. We had no other
long term liabilities, commitments or contingencies.
During
2010, we expect to incur significant accounting costs associated with the audit
of our financial statements. We expect that the legal and accounting costs of
becoming a public company will continue to impact our liquidity and we may need
to obtain funds to pay those expenses. Other than the anticipated increases in
legal and accounting costs due to the reporting requirements of becoming a
reporting company, we are not aware of any other known trends, events or
uncertainties, which may affect our future liquidity.
For the year ended July 31,
2009, as compared to the period from August 21, 2007 (inception) to July 31,
2008.
Results
of Operations.
Revenues. We had no revenues
for the nine months ended July 31, 2009, as compared to no revenues generated
during the period from August 21, 2007 (inception) to July 31,
2008. We hope to generate revenues as we continue operations and
implement our business plan.
Operating Expenses. For the
year ended July 31, 2009, our total operating expenses were $79,105, as compared
to total operating expenses of $87,479 for the period from August 21, 2007
(inception) to July 31, 2008. The decrease in total operating expenses is
primarily due to the decrease in consulting fees, which decreased from $8,450
for the period from August 21, 2007 (inception) to July 31, 2008, to $0 for the
year ended July 31, 2009. Those consulting fees resulted from 8,450,000 shares
of common stock that were issued to our founders in exchange for services valued
at $8,450, or $0.001 per share.
16
Net Loss. For the
year ended July 31, 2009, our net loss was $80,430 after interest expense of
$1,325. This is in comparison to the period from August 21, 2007
(inception) to July 31, 2008, where our net loss was $87,479. The
decrease in our net loss between the two periods was due to the decrease in
consulting fees incurred during the period from August 21, 2007 (inception) to
July 31, 2008, as discussed above.
Liquidity and Capital
Resources. On August 21, 2007, we issued 8,450,000 shares of common stock
to our founders in exchange for services valued at $8,450, or $0.001 per
share. During the period April 1, 2008 through June 30, 2008, we sold
2,000,000 shares of common stock in exchange for $200,000, or $.10 per share. We
intend to use those proceeds to pay for the development of our products,
overhead expenses and working capital. We were advanced $40,000 from three (3)
individuals for amounts ranging between $5,000 and $20,000 during the year ended
July 31, 2009. All of these loans accrue interest at 5% per annum. Interest
expense for the year ended July 31, 2009 was $1,325.
As of
July 31, 2009, we had liabilities of $51,325, of which $11,325 were represented
by accounts payable and accrued expenses and $40,000 were represented by short
term notes payable from three individuals. We had no other long term
liabilities, commitments or contingencies.
During
2010, we expect to incur significant accounting costs associated with the audit
of our financial statements. We expect that the legal and accounting costs of
becoming a public company will continue to impact our liquidity and we may need
to obtain funds to pay those expenses. Other than the anticipated increases in
legal and accounting costs due to the reporting requirements of becoming a
reporting company, we are not aware of any other known trends, events or
uncertainties, which may affect our future liquidity.
Our Plan of Operation for the Next
Twelve Months. To effectuate our business plan during the next
twelve months, we must raise at least $150,000 in this offering and begin to
market and promote our services. With the proceeds from this offering, we intend
to purchase computer equipment, complete development of our website and conduct
market research and begin marketing our services to potential clients. We are
developing sales and marketing materials including brochures describing the
services that we provide so that we can provide a professional appearance to
potential clients.
During
the next three to six months, our primary objective is to complete the offering
and begin to obtain clients so that we generate revenues to support our
operations. During the next six to twelve months, we hope to expand our
operations and service several accounts. We believe that the size of our
operations may vary depending on the amount of funds raised in this offering. If
we are able to sell all of the shares in this offering, we believe that the size
of our operations will increase because we will be able to increase our
marketing activities. If we do not raise any funds in this offering, we may not
have adequate funds to market our services. We need to raise at least
$150,000 to pay for the costs of this offering and fund our proposed business
activities. We believe that we will need to raise $750,000 in this offering to
fully implement our business plans. However, we may need to spend more funds on
marketing and promotion than we have initially estimated. Our failure to market
and promote our services will hinder our ability to increase the size of our
operations and generate additional revenues. If we are not able to generate
additional revenues that cover our estimated operating costs, our business may
ultimately fail.
We have
cash and cash equivalents of $49 as of October 31, 2009. In the opinion of
management, available funds will not satisfy our working capital requirements to
operate at our current level of activity for the next twelve
months. Those funds do not include any funds raised in this offering.
We will not be able to implement our business plan in the manner we envision
unless we raise funds from this offering. Our forecast for the period
for which our financial resources will be adequate to support our operations
involves risks and uncertainties and actual results could fail as a result of a
number of factors. In order to expand our operations, we do not currently
anticipate that we will need to raise additional capital in addition to the
funds raised in this offering. If we do not raise at least $150,000
from this offering, then we may not be able to pay for the expenses of this
offering, fund our operations, finish the development of our website, conduct
marketing activities and expand our operations. This offering is a
best efforts offering with no minimum. We will have access to these
funds as soon as they are received.
We are
not currently conducting any research and development activities other than the
development of our website, which we expect the total cost to be approximately
$12,500. We do not anticipate conducting such activities in the near
future. In the event that we expand our customer base, then we may need to hire
additional employees or independent contractors as well as purchase or lease
additional equipment. Our management believes that we do not require the
services of independent contractors to operate at our current level of
activity. However, if our level of operations increases beyond the
level that our current staff can provide, then we may need to supplement our
staff in this manner.
Off-Balance Sheet
Arrangements. We have no off-balance sheet
arrangements.
17
Description of
Property
Property held by us. As of
October 31, 2009, we held no real property. We do not presently own
any interests in real estate.
Our Facilities. Our executive,
administrative and operating offices are located at 1777, Cedar Avenue,
Mascouche, Quebec, J7L 1W6. Clément Guèvremont, our president, chief executive
officer and director provides approximately 200 square feet of office and
showroom space at no charge. Our financial statements reflect the fair market
value of that space which is approximately $250.00 per month. We do not have a
written lease or sublease agreement with Mr. Guèvremont. Mr. Guèvremont does not
expect to be paid or reimbursed for providing office facilities. We
believe that our facilities are adequate for our needs and that additional
suitable space will be available on acceptable terms as required. We do not own
any real estate.
Certain Relationships and
Related Transactions
Certain Relationships. Clément
Guèvremont, our president and director, is the common law spouse of
Madeleine Houle, our chief financial officer, secretary and
director.
Related
party transactions.
In August
2007, we issued 6,000,000 shares of our common stock to Clément Guèvremont, our
president and director, and 2,000,000 shares of our common stock to Madeleine
Houle, our chief financial officer, secretary and director, who were our
officers and directors at inception. These shares were issued in
exchange for services valued at $8,000, or $0.001 per share.
On May
14, 2008, we entered into a License Agreement with Clem-G Plycrete Inc., a
private company controlled by Clément Guèvremont, our president and director,
pursuant to which we paid the initial payment of $30,000, with the remaining
payment of $70,000 was paid in 2009.
Clément
Guèvremont, our president and one of our directors, currently provides
approximately 200 square feet of office space to us at no charge. Our financial
statements reflect, as occupancy costs, the fair market value of that space,
which is approximately $250 per month.
We
believe that each report transaction and relationship is on terms that are at
least as fair to us as would be expected if those transactions were negotiated
with third parties.
There
have been no other related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation
S-K.
With
regard to any future related party transaction, we plan to fully disclose any
and all related party transactions, including, but not limited to, the
following:
·
|
disclose
such transactions in prospectuses where
required;
|
·
|
disclose
in any and all filings with the Securities and Exchange Commission, where
required;
|
·
|
obtain
disinterested directors’ consent;
and
|
·
|
obtain
shareholder consent where required.
|
18
Market for Common Equity and
Related Stockholder Matters
Reports to Security Holders.
Our securities are not listed for trading on any exchange or quotation
service. We are not required to comply with the timely disclosure policies of
any exchange or quotation service. The requirements to which we would be subject
if our securities were so listed typically include the timely disclosure of a
material change or fact with respect to our affairs and the making of required
filings. Although we are not required to deliver an annual report to security
holders, we intend to provide an annual report to our security holders, which
will include audited financial statements.
When we
become a reporting company with the Securities and Exchange Commission, the
public may read and copy any materials filed with the Securities and Exchange
Commission at the Security and Exchange Commission’s Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549. The public may also obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities
and Exchange Commission maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
As of
February 2, 2010, there were ten record holders of our common
stock.
There are
no outstanding shares of our common stock which can be sold pursuant to Rule
144. There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that we have agreed to register under the Securities Act of
1933 for sale by security holders.
There
have been no cash dividends declared on our common stock. Dividends
are declared at the sole discretion of our Board of Directors.
Recent Sales of Unregistered
Securities. There have been no sales of unregistered securities within
the last three (3) years which would be required to be disclosed pursuant to
Item 701 of Regulation S-K, except for the following:
On August
21, 2007, we issued 8,450,000 shares of common stock to our founders in exchange
for services valued at $8,450, or $0.001 per share. The shares were issued in
transactions which we believe satisfies the requirements of that exemption from
the registration and prospectus delivery requirements of the Securities Act of
1933, which exemption is specified by the provisions of Section 5 of that act
and Regulation S promulgated pursuant to that act by the Securities and Exchange
Commission.
During
the period April 1, 2008 through June 30, 2008, we sold 2,000,000 shares of
common stock in exchange for $200,000, or $.10 per share. The shares were issued
in transactions which we believe satisfies the requirements of that exemption
from the registration and prospectus delivery requirements of the Securities Act
of 1933, which exemption is specified by the provisions of Section 5 of that act
and Regulation S promulgated pursuant to that act by the Securities and Exchange
Commission.
Purchases of Equity Securities.
None.
No Equity Compensation Plan.
We do not have any securities authorized for issuance under any equity
compensation plan. We also do not have an equity compensation plan
and do not plan to implement such a plan.
Penny stock
regulation. Shares of our common stock will probably be
subject to rules adopted by the Securities and Exchange Commission 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, except for 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 those securities is provided by the
exchange or system. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from those rules,
deliver a standardized risk disclosure document prepared by the Securities and
Exchange Commission, which contains the following:
·
|
a
description of the nature and level of risk in the market for penny stocks
in both public offerings and secondary
trading;
|
·
|
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 violation to
such duties or other requirements of securities’
laws;
|
·
|
a
brief, clear, narrative description of a dealer market, including “bid”
and “ask” prices for penny stocks and the significance of the spread
between the “bid” and “ask” price;
|
·
|
a
toll-free telephone number for inquiries on disciplinary
actions;
|
·
|
definitions
of significant terms in the disclosure document or in the conduct
of trading in penny stocks;
and
|
·
|
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.
|
19
Prior to
effecting any transaction in penny stock, the broker-dealer also must provide
the customer the following:
·
|
the
bid and offer quotations for the penny
stock;
|
·
|
the
compensation of the broker-dealer and its salesperson in the
transaction;
|
·
|
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
|
·
|
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 suitably
statement. These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. Holders of shares of our common
stock may have difficulty selling those shares because our common stock will
probably be subject to the penny stock rules.
Executive
Compensation
Any
compensation received by our officers, directors, and management personnel will
be determined from time to time by our board of directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation
Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers for the year ended July 31,
2009 and the period from August 21, 2007 (inception) to July 31,
2008. Our board of directors may adopt an incentive stock option plan
for our executive officers which would result in additional
compensation.
Annual
Compensation
|
Long
Term Compensation
|
|||||||
Name
and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compensation
($)
|
Awards
|
Payouts
|
All
Other
Compensation
|
|
Restricted
Stock
Awards
($)
|
Securities
Underlying
Options/SARs
(#)
|
LTIP
Payouts
($)
|
||||||
Clement
Guèvremont,
president
|
2009
|
None
|
None
|
None
|
None
|
None
|
None
|
None
|
2008
|
None
|
None
|
None
|
None
|
None
|
None
|
None
|
|
Madeleine
Houle,
chief
financial officer,
secretary
|
2009
|
None
|
None
|
None
|
None
|
None
|
None
|
None
|
2008
|
None
|
None
|
None
|
None
|
None
|
None
|
None
|
20
Employment Contracts and Termination
of Employment. We do not anticipate that we will enter into any
employment contracts with any of our employees. We have no plans or arrangements
in respect of remuneration received or that may be received by our executive
officers to compensate such officers in the event of termination of employment
(as a result of resignation or retirement).
Stock Options/SAR Grants. No
grants of stock options or stock appreciation rights were made since our date of
incorporation on August 21, 2007.
Outstanding Equity Awards at Fiscal
Year-end. As of the year ended July 31, 2009, the following named
executive officer had the following unexercised options, stock that has not
vested, and equity incentive plan awards:
Option Awards
|
Stock
Awards
|
||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
#
Exercisable
|
#
Un-exercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
Not
Vested
|
Market
Value
of
Shares
or
Units Not
Vested
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
Not
Nested
|
Value
of
Unearned
Shares,
Units
or
Other
Rights
Not
Vested
|
Clement
Guèvremont, president
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Madeleine
Houle,
chief
financial officer, secretary
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Long-Term Incentive Plans. There are no
arrangements or plans in which we provide pension, retirement or similar
benefits for directors or executive officers. We do not have any material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to our directors or executive officers. As of July 31, 2009, we had
no group life, health, hospitalization, or medical reimbursement or relocation
plans in effect.
Compensation of Directors. Our
directors who are also our employees receive no extra compensation for their
service on our board of directors.
21
Financial
Statements
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | 23 | ||
Balance Sheets as of October 31, 2009 (unaudited) and July 31, 2009 |
24
|
||
Statements of Operations and Accumulated Other Comprehensive Loss For the Three Months Ended October 31, 2009 and 2008 and Period August 21, 2007 (Inception) through October 31, 2009 | 25 | ||
Statements
of Changes in Stockholders’ Equity (Deficit) For the Period August 21,
2007 (Inception) through October 31, 2009
|
26 | ||
Statements of Cash For the Three Months Ended October 31, 2009 and 2008 and Period August 21, 2007 (Inception) through October 31, 2009 | 27 | ||
Notes
to Financial Statements
|
28 |
22
Report
of Independent Registered Public Accounting Firm
To the
Directors of
Plycrete
Inc.
We have
reviewed the accompanying balance sheet of Plycrete Inc. (the "Company") (a
development stage company) as of October 31, 2009, and the related statements of
operations and accumulated other comprehensive loss, changes in stockholders'
equity (deficit) and cash flows for the three months ended October 31, 2009 and
2008, and the period August 21, 2007 (inception) through October 31, 2009. These interim financial statements are
the responsibility of the Company's management.
We
conducted the reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on
our reviews, we are not aware of any material modifications that should be made
to the accompanying interim financial statements for them to be in conformity
with U.S. generally accepted accounting principles.
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 sustained operating losses and capital
deficits 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.
/s/KBL,
LLP
New York,
NY
January
25, 2010
23
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
OCTOBER
31, 2009 (UNAUDITED) AND JULY 31, 2009
ASSETS
|
||||||||
IN
US$
|
||||||||
OCTOBER
31,
|
JULY
31,
|
|||||||
2009
|
2009
|
|||||||
(unaudited)
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 49 | $ | 2,415 | ||||
Prepaid
expenses and other current assets
|
1,288 | 1,288 | ||||||
Total current assets
|
1,337 | 3,703 | ||||||
Other
Asset
|
||||||||
License,
net of accumualted amortization
|
85,833 | 88,333 | ||||||
|
||||||||
TOTAL
ASSETS
|
$ | 87,170 | $ | 92,036 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued expenses
|
$ | 11,325 | $ | 11,325 | ||||
Short-term
notes payable
|
40,000 | 40,000 | ||||||
Total current liabilities
|
51,325 | 51,325 | ||||||
TOTAL
LIABILITIES
|
51,325 | 51,325 | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
Common
stock, $0.001 par value, 75,000,000 shares authorized,
10,450,000
shares issued and outstanding
|
10,450 | 10,450 | ||||||
Additional
paid in capital
|
198,200 | 198,200 | ||||||
Deficit
accumulated during the development stage
|
(172,760 | ) | (167,909 | ) | ||||
Accumulated
other comprehensive income (loss)
|
(45 | ) | (30 | ) | ||||
Total stockholders' equity (deficit)
|
35,845 | 40,711 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 87,170 | $ | 92,036 |
The accompanying notes are an integral part of
these financial statements.
24
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF OPERATIONS AND ACCUMULATED OTHER COMPREHENSIVE LOSS
FOR THE THREE
MONTHS ENDED OCTOBER 31, 2009 AND 2008 AND
FOR THE PERIOD
AUGUST 21, 2007 (INCEPTION) THROUGH OCTOBER 31, 2009
IN
US$
|
||||||||||||
AUGUST
21, 2007
|
||||||||||||
THREE
MONTHS
|
THREE
MONTHS
|
(INCEPTION)
|
||||||||||
ENDED
|
ENDED
|
THROUGH
|
||||||||||
OCTOBER
31, 2009
|
OCTOBER
31, 2008
|
OCTOBER
31, 2009
|
||||||||||
REVENUE
|
$ | - | $ | - | $ | - | ||||||
COST
OF REVENUES
|
- | - | - | |||||||||
GROSS
PROFIT
|
- | - | - | |||||||||
OPERATING
EXPENSES
|
||||||||||||
Professional
fees
|
1,750 | 5,000 | 125,830 | |||||||||
Consulting
fees
|
- | 5,000 | 8,450 | |||||||||
General
and administrative
|
97 | 5,016 | 22,484 | |||||||||
Amortization
expense
|
2,500 | 2,500 | 14,167 | |||||||||
Total operating expenses
|
4,347 | 17,516 | 170,931 | |||||||||
NET
(LOSS) BEFORE OTHER EXPENSE
|
(4,347 | ) | (17,516 | ) | (170,931 | ) | ||||||
|
||||||||||||
OTHER
EXPENSE
|
||||||||||||
Interest
expense
|
(504 | ) | (8 | ) | (1,829 | ) | ||||||
Total other expense
|
(504 | ) | (8 | ) | (1,829 | ) | ||||||
NET
(LOSS)
|
$ | (4,851 | ) | $ | (17,524 | ) | $ | (172,760 | ) | |||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
10,450,000 | 10,450,000 | 10,250,000 | |||||||||
NET
(LOSS) PER SHARE
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.02 | ) | |||
ACCUMULATED
OTHER COMPREHENSIVE LOSS
|
||||||||||||
Net
loss
|
$ | (4,851 | ) | $ | (17,524 | ) | $ | (172,760 | ) | |||
Currency
translation adjustment
|
(15 | ) | (14 | ) | (45 | ) | ||||||
Total
accumulated comprehensive loss
|
(4,866 | ) | (17,538 | ) | (172,805 | ) |
The accompanying notes are an integral part of these financial
statements.
25
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR
THE PERIOD AUGUST 21, 2007 (INCEPTION) THROUGH OCTOBER 31,
2009
IN
US$
|
||||||||||||||||||||||||
Deficit
|
Accumulated
|
|||||||||||||||||||||||
Accumulated
|
Other
|
|||||||||||||||||||||||
Additional
|
During
the
|
Comprehensive
|
||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Development
|
Income
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
(Loss)
|
Total
|
|||||||||||||||||||
Balance
- August 21, 2007
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Common
shares issued for services
|
8,450,000 | 8,450 | - | - | - | 8,450 | ||||||||||||||||||
Common
shares issued for cash
|
2,000,000 | 2,000 | 198,000 | - | - | 200,000 | ||||||||||||||||||
Contributed
capital
|
- | - | 200 | - | - | 200 | ||||||||||||||||||
Net
loss for the period
|
- | - | - | (87,479 | ) | (4 | ) | (87,483 | ) | |||||||||||||||
Balance
- July 31, 2008
|
10,450,000 | 10,450 | 198,200 | (87,479 | ) | (4 | ) | 121,167 | ||||||||||||||||
Net
loss for the period
|
- | - | - | (80,430 | ) | (26 | ) | (80,456 | ) | |||||||||||||||
Balance
- July 31, 2009
|
10,450,000 | 10,450 | 198,200 | (167,909 | ) | (30 | ) | 40,711 | ||||||||||||||||
Net
loss for the period
|
- | - | - | (4,851 | ) | (15 | ) | (4,866 | ) | |||||||||||||||
Balance
- October 31, 2009
|
10,450,000 | $ | 10,450 | $ | 198,200 | $ | (172,760 | ) | $ | (45 | ) | $ | 35,845 |
The accompanying notes are an integral part of these financial
statements.
26
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT OF
CASHFLOW
FOR THE THREE
MONTHS ENDED OCTOBER 31, 2009 AND 2008 AND
FOR THE PERIOD
AUGUST 21, 2007 (INCEPTION) THROUGH OCTOBER 31,
2009
IN
US$
|
||||||||||||
AUGUST
21, 2007
|
||||||||||||
THREE
MONTHS
|
THREE
MONTHS
|
(INCEPTION)
|
||||||||||
ENDED
|
ENDED
|
THROUGH
|
||||||||||
OCTOBER
31, 2009
|
OCTOBER
31, 2008
|
OCTOBER
31, 2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
(loss)
|
$ | (4,851 | ) | $ | (17,524 | ) | $ | (172,760 | ) | |||
Adjustments
to reconcile net (loss)
|
||||||||||||
to
net cash used in operating activities:
|
||||||||||||
Amortization
|
2,500 | 2,500 | 14,167 | |||||||||
Common
stock issued for services
|
- | - | 8,450 | |||||||||
Change
in assets and liabilities
|
||||||||||||
(Increase)
in prepaid expenses and other current assets
|
- | - | (1,288 | ) | ||||||||
Increase
(decrease) in accounts payable and accrued expenses
|
- | (46,992 | ) | 11,325 | ||||||||
Total
adjustments
|
2,500 | (44,492 | ) | 32,654 | ||||||||
Net
cash (used in) operating activities
|
(2,351 | ) | (62,016 | ) | (140,106 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of license
|
- | - | (100,000 | ) | ||||||||
Net
cash (used in) investing activities
|
- | - | (100,000 | ) | ||||||||
|
||||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from notes payable
|
- | 25,000 | 40,000 | |||||||||
Issuance
of stock for cash
|
- | - | 200,000 | |||||||||
Contribution
of capital
|
- | - | 200 | |||||||||
Net
cash provided by financing activities
|
- | 25,000 | 240,200 | |||||||||
Effect
of foreign currency
|
(15 | ) | (14 | ) | (45 | ) | ||||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
(2,366 | ) | (37,030 | ) | 49 | |||||||
|
||||||||||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
2,415 | 91,546 | - | |||||||||
|
||||||||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$ | 49 | $ | 54,516 | $ | 49 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - |
The accompanying notes are an integral part of these financial
statements.
27
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
1-
|
ORGANIZATION AND BASIS
OF PRESENTATION
|
On August
21, 2007, Plycrete Inc. (the “Company”) was incorporated in the State of
Nevada.
The
Company was formed to acquire the license and trademark rights to the Clem-G and
Plycrete products for North America. As discussed in Note 4, the Company
acquired a license and certain rights certain technology that relates to
building panels and methods, more particularly concerned with wall surface
building panels with quick assembly features and improved joint sealing, and
method of installation known as CLEM-G, and certain technology that relates to
cementious structures and methods for fabrication thereof, more particularly
concerned with a reinforced multilayer cementious structure and a method of
manufacture known as PLYCRETE.
Going
Concern
These
financial statements have been prepared on a going concern basis, which implies
the Company will continue to realize its assets and discharge its liabilities in
the normal course of business. The Company has not generated revenues since
inception and has generated losses totaling $172,760 in their initial few years,
and needs to raise additional funds to carry out their business plan. The
continuation of the Company as a going concern is dependent upon the continued
financial support from its shareholders, and the ability of the Company to
obtain necessary equity financing to continue operations. The Company has had
very little operating history to date. These financial statements do not include
any adjustments to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. These factors raise
substantial doubt regarding the ability of the Company to continue as a going
concern.
In the
opinion of management, the current funds raised to date will satisfy the working
capital requirements for the next twelve months. Besides generating revenues
from current operations, the Company may need to raise additional capital to
expand operations to the point at which the Company can achieve profitability.
The terms of equity that may be raised may not be on terms acceptable by the
Company. If adequate funds cannot be raised outside of the Company, the
Company’s officers and directors may need to contribute funds to sustain
operations.
Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted
Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB
Accounting Standards Codification (the “Codification”) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with U.S. GAAP. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants.
28
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
1-
|
ORGANIZATION AND BASIS
OF PRESENTATION (CONTINUED)
|
All
guidance contained in the Codification carries an equal level of authority. The
Codification superseded all existing non-SEC accounting and reporting standards.
All other non-grandfathered, non-SEC accounting literature not included in the
Codification is non-authoritative. The FASB will not issue new standards in the
form of Statements, FASB Positions or Emerging Issue Task Force Abstracts.
Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not
consider ASUs as authoritative in their own right. ASUs will serve only to
update the Codification, provide background information about the guidance and
provide the bases for conclusions on the change(s) in the Codification.
References made to FASB guidance throughout this document have been updated for
the Codification.
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
Development Stage
Company
The
Company is considered to be in the development stage as defined in ASC 915. The
Company has devoted substantially all of its efforts to the corporate formation,
the raising of capital and attempting to generate customers for the sales of the
Company’s products.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Currency
Translation
The
Company operates in Canada, and certain accounts of the Company are reflected in
currencies other than the U.S. dollar. The Company translates income and expense
amounts at average exchange rates for the year, translates assets and
liabilities at year-end exchange rates and equity at historical rates for
currencies in the Canadian dollar. The Company’s functional currency is the
Canadian dollar, while the Company reports its currency in the US dollar. The
Company records these translation adjustments as accumulated other comprehensive
income (loss). Gains and losses from foreign currency transactions are included
in other income (expense) in the results of operations. For the three months
ended October 31, 2009 and 2008, the Company recorded approximately $15 and $14
in translation losses, respectively.
29
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Comprehensive Income
(Loss)
The
Company adopted ASC 220-10, “Reporting Comprehensive Income,” (formerly SFAS No.
130). ASC 220-10 requires the reporting of comprehensive income in addition to
net income from operations.
Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of information that historically has not been recognized in the
calculation of net income.
Cash and Cash
Equivalents
The
Company considers all highly liquid debt instruments and other short-term
investments with maturity of three months or less, when purchased, to be cash
equivalents.
The
Company maintains cash and cash equivalent balances at one financial institution
that is insured by the Federal Deposit Insurance Corporation.
Fixed
Assets
Although
the Company does not have any fixed assets at this point. Any fixed
assets acquired in the future will be stated at cost, less accumulated
depreciation. Depreciation will be provided using the straight-line method over
the estimated useful lives of the related assets. Costs of maintenance and
repairs will be charged to expense as incurred.
Recoverability of Long-Lived
Assets
Although
the Company does not have any long-lived assets at this point, for any
long-lived assets acquired in the future the Company will review their
recoverability on a periodic basis whenever events and changes in circumstances
have occurred which may indicate a possible impairment. The assessment for
potential impairment will be based primarily on the Company’s ability to recover
the carrying value of its long-lived assets from expected future cash flows from
its operations on an undiscounted basis. If such assets are determined to be
impaired, the impairment recognized is the amount by which the carrying value of
the assets exceeds the fair value of the assets. Fixed assets to be disposed of
by sale will be carried at the lower of the then current carrying value or fair
value less estimated costs to sell.
30
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Fair Value of Financial
Instruments
The
carrying amount reported in the balance sheets for cash and cash equivalents,
accounts payable, and accrued expenses approximate fair value because of the
immediate or short-term maturity of these financial instruments. The Company
does not utilize derivative instruments.
Income
Taxes
The
Company accounts for income taxes utilizing the liability method of
accounting. Under the liability method, deferred taxes are determined
based on differences between financial statement and tax bases of assets and
liabilities at enacted tax rates in effect in years in which differences are
expected to reverse. Valuation allowances are established, when
necessary, to reduce deferred tax assets to amounts that are expected to be
realized.
Revenue
Recognition
The
Company will generate revenue from their sales. The criteria for recognition are
as follows:
1)
|
Persuasive
evidence of an arrangement exists;
|
2)
|
Delivery
has occurred or services have been
rendered;
|
3)
|
The
seller’s price to the buyer is fixed or determinable,
and
|
4)
|
Collectable
is reasonably assured.
|
The
Company’s revenues will be generated through the manufacturing of their
products. The Company will ship their product to their suppliers. It is policy
that the Company will recognize revenues upon placement of the purchase order.
This is the time when the criteria established above has been determined to have
been met. The Company will primarily ship products the same day as the purchase
order is received. The customer will typically pay for products within a 30 day
period. The right of return will exist for a small period subsequent to
sale.
31
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
(Loss) Per Share of
Common Stock
Basic net
loss per common share is computed using the weighted average number of common
shares outstanding. Diluted earnings per share (EPS) include
additional dilution from common stock equivalents, such as stock issuable
pursuant to the exercise of stock options and warrants. Common stock
equivalents are not included in the computation of diluted earnings per share
when the Company reports a loss because to do so would be anti-dilutive for
periods presented. The following is a reconciliation of the computation for
basic and diluted EPS:
October
31,
|
October
31,
|
||||||||
2009
|
2008
|
||||||||
Net
loss
|
$ | (4,851 | ) | $ | (17,524 | ) | |||
Weighted-average
common shares
|
|||||||||
outstanding
(Basic)
|
10,450,000 | 10,450,000 | |||||||
Weighted-average
common stock
|
|||||||||
Equivalents
|
|||||||||
Stock
options
|
- | - | |||||||
Warrants
|
- | - | |||||||
Weighted-average
common shares
|
|||||||||
outstanding
(Diluted)
|
10,450,000 | 10,450,000 |
32
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Uncertainty in Income
Taxes
Under ASC
740-10-25 recognition and measurement of uncertain income tax positions is
required using a “more-likely-than-not” approach. Management evaluates their tax
positions on an annual basis, and has determined that as of October 31, 2009, no
additional accrual for income taxes is necessary.
Recent Issued Accounting
Standards
In
September 2006, ASC issued 820, Fair Value Measurements. ASC
820 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosure about fair
value measurements. This statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007. Early adoption is
encouraged. The adoption of ASC 820 is not expected to have a material impact on
the financial statements.
In
February 2007, ASC issued 825-10, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of ASC 320-10,
(“ASC 825-10”) which permits entities to choose to measure many financial
instruments and certain other items at fair value at specified election dates. A
business entity is required to report unrealized gains and losses on items for
which the fair value option has been elected in earnings at each subsequent
reporting date. This statement is expected to expand the use of fair value
measurement. ASC 825-10 is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years.
In
December 2007, the ASC issued ASC 810-10-65, Noncontrolling Interests in
Consolidated Financial Statements. ASC 810-10-65 establishes accounting
and reporting standards for ownership interests in subsidiaries held by parties
other than the parent, changes in a parent’s ownership of a noncontrolling
interest, calculation and disclosure of the consolidated net income attributable
to the parent and the noncontrolling interest, changes in a parent’s ownership
interest while the parent retains its controlling financial interest and fair
value measurement of any retained noncontrolling equity investment.
ASC
810-10-65 is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. Early adoption is prohibited. Management is determining the impact that
the adoption of ASC 810-10-65 will have on the Company’s financial position,
results of operations or cash flows.
In
December 2007, the Company adopted ASC 805, Business Combinations (“ASC
805”). ASC 805 retains the fundamental requirements that the acquisition method
of accounting be used for all business combinations and for an acquirer to be
identified for each business combination. ASC 805 defines the acquirer as the
entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control.
33
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Recent Issued Accounting
Standards (Continued)
ASC 805
will require an entity to record separately from the business combination the
direct costs, where previously these costs were included in the total allocated
cost of the acquisition. ASC 805 will require an entity to recognize
the assets acquired, liabilities assumed, and any non-controlling interest in
the acquired at the acquisition date, at their fair values as of that
date.
ASC 805
will require an entity to recognize as an asset or liability at fair value for
certain contingencies, either contractual or non-contractual, if certain
criteria are met. Finally, ASC 805 will require an entity to
recognize contingent consideration at the date of acquisition, based on the fair
value at that date. This will be effective for business combinations
completed on or after the first annual reporting period beginning on or after
December 15, 2008. Early adoption is not permitted and the ASC is to
be applied prospectively only. Upon adoption of this ASC, there would
be no impact to the Company’s results of operations and financial condition for
acquisitions previously completed. The adoption of ASC 805 is not
expected to have a material effect on the Company’s financial position, results
of operations or cash flows.
In March
2008, ASC issued ASC 815, Disclosures about Derivative
Instruments and Hedging Activities”, (“ASC 815”). ASC 815 requires
enhanced disclosures about an entity’s derivative and hedging activities. These
enhanced disclosures will discuss: how and why an entity uses derivative
instruments; how derivative instruments and related hedged items are accounted
for and its related interpretations; and how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. ASC 815 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. The Company does
not believe that ASC 815 will have an impact on their results of operations or
financial position.
Effective
April 1, 2009, the Company adopted ASC 855, Subsequent Events (“ASC
855”). ASC 855 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. It requires disclosure of the date
through which an entity has evaluated subsequent events and the basis for that
date – that is, whether that date represents the date the financial statements
were issued or were available to be issued. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent events
after that date in the set of financial statements being presented. Adoption of
ASC 855 did not have a material impact on the Company’s results of operations or
financial condition. The Company has evaluated subsequent events through January
25, 2010, the date the financial statements were issued.
34
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Recent Issued Accounting
Standards (Continued)
In April
2008, the FASB issued ASC 350, “Determination of the Useful Life of Intangible
Assets”. The Company adopt ASC 350 on October 1, 2008. The guidance in ASC 350
for determining the useful life of a recognized intangible asset shall be
applied prospectively to intangible assets acquired after adoption, and the
disclosure requirements shall be applied prospectively to all intangible assets
recognized as of, and subsequent to, adoption. The Company does not believe ASC
350 will materially impact their financial position, results of operations or
cash flows.
Effective
July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurement and
Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments
to ASC 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities. ASU 2009-05 provides clarification that in circumstances in which a
quoted market price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using certain
techniques. ASU 2009-05 also clarifies that when estimating the fair value of a
liability, a reporting entity is not required to include a separate input or
adjustment to other inputs relating to the existence of a restriction that
prevents the transfer of a liability. ASU 2009-05 also clarifies that both a
quoted price in an active market for the identical liability at the measurement
date and the quoted price for the identical liability when traded as an asset in
an active market when no adjustments to the quoted price of the asset are
required for Level 1 fair value measurements. Adoption of ASU 2009-05 did not
have a material impact on the Company’s results of operations or financial
condition.
Other
ASU’s that have been issued or proposed by the FASB ASC that do not require
adoption until a future date and are not expected to have a material impact on
the financial statements upon adoption.
NOTE
3-
|
STOCKHOLDERS’ EQUITY
(DEFICIT)
|
The
Company was established with one class of stock, common stock – 75,000,000
shares authorized at a par value of $0.001.
On August
21, 2007 the Company issued 8,450,000 shares of common stock to the Company’s
founders at a value of $8,450 ($.001 per share) for services
rendered.
During
the period April 1, 2008 through June 30, 2008 the Company raised $200,000
through the sale of 2,000,000 shares of common stock ($.10 per
share).
As of
October 31, 2009, the Company has 10,450,000 shares of common stock issued and
outstanding.
The
Company has not issued any options or warrants to date.
35
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
4-
|
LICENSE
AGREEMENT
|
|
On
May 14, 2008, the Company entered into a License Agreement with Clem-G
Plycrete Inc., a Canadian company (“Clem-G”) (the “Agreement”). The
Agreement is for an initial term of ten years from May 14, 2008 to May 14,
2018. Under the terms of the Agreement, the Company has acquired the
license and trademark rights to market and sell certain technology that
relates to building panels and methods, more particularly concerned with
wall surface building panels with quick assembly features and improved
joint sealing, and method of installation known as CLEM-G, and certain
technology that relates to cementious structures and methods for
fabrication thereof, more particularly concerned with a reinforced
multilayer cementious structure and a method of manufacture known as
PLYCRETE. A patent for each of these methods was filed in the United
States and are pending. The Company has acquired these rights for
$100,000. The Company is amortizing the license fee over the 120 month
term of the Agreement. Amortization expense for the three months ended
October 31, 2009 and 2008 amounted to $2,500, respectively. The Company
anticipates amortizing $10,000 per
year.
|
NOTE
5-
|
NOTES
PAYABLE
|
The
Company was advanced $40,000 from three (3) individuals for amounts ranging
between $5,000 and $20,000 during the year ended July 31, 2009.
All of
these loans accrue interest at 5% per annum. The Company has accrued $1,829
through October 31, 2009.
Interest
expense for the three months ended October 31, 2009 was $504 and $8,
respectively.
36
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
6-
|
PROVISION FOR INCOME
TAXES
|
Deferred
income taxes are determined using the liability method for the temporary
differences between the financial reporting basis and income tax basis of the
Company’s assets and liabilities. Deferred income taxes are measured
based on the tax rates expected to be in effect when the temporary differences
are included in the Company’s tax return. Deferred tax assets and
liabilities are recognized based on anticipated future tax consequences
attributable to differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases.
As of
October 31, 2009, there is no provision for income taxes, current or
deferred.
Net
operating losses
|
$ | 58,738 | |||
Valuation
allowance
|
(58,738 | ) | |||
$ | - | ||||
At
October 31, 2009, the Company had a net operating loss carry forward in the
amount of $172,760, available to offset future taxable income through
2029. The Company established valuation allowances equal to the full
amount of the deferred tax assets due to the uncertainty of the utilization of
the operating losses in future periods.
A
reconciliation of the Company’s effective tax rate as a percentage of income
before taxes and federal statutory rate for the three months ended October 31,
2009 and 2008 is summarized below.
Federal
statutory rate
|
(34.0 | )% | |||
State
income taxes, net of federal benefits
|
0.0 | ||||
Valuation
allowance
|
34.0 | ||||
0 | % |
37
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
OCTOBER
31, 2009 AND 2008
NOTE
7-
|
FAIR VALUE
MEASUREMENTS
|
The
Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value,
provides a consistent framework for measuring fair value under generally
accepted accounting principles and expands fair value financial statement
disclosure requirements. ASC 820’s valuation techniques are based on observable
and unobservable inputs. Observable inputs reflect readily obtainable data from
independent sources, while unobservable inputs reflect our market assumptions.
ASC 820 classifies these inputs into the following hierarchy:
Level 1
inputs: Quoted prices for identical instruments in active markets.
Level 2
inputs: Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant value
drivers are observable.
Level 3
inputs: Instruments with primarily unobservable value drivers.
The
following table represents the fair value hierarchy for those financial assets
and liabilities measured at fair value on a recurring basis as of October 31,
2009:
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||||
Cash
|
49 | - | - | 49 | |||||||||||||
Total
assets
|
49 | - | - | 49 | |||||||||||||
38
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | 40 | |
Balance
Sheets as of July 31, 2009 and 2008
|
41 | |
Statements
of Operations and Accumulated Other Comprehensive Loss For the Year Ended
July 31, 2009 and Period August 21, 2007 (Inception) through July 31, 2008
and Period August 21, 2007 (Inception) through July 31,
2009
|
42 | |
Statements of Changes in Stockholders’ Equity (Deficit) For the Period August 21, 2007 (Inception) through July 31, 2009 | 43 | |
Statements
of Cash For the Year Ended July 31, 2009 and Period August 21, 2007
(Inception) through July 31, 2008 and Period August 21, 2007 (Inception)
through July 31, 2009
|
44 | |
Notes
to Financial Statements
|
45 |
39
Report
of Independent Registered Public Accounting Firm
To the
Directors of
Plycrete
Inc.
We have
audited the accompanying balance sheets of Plycrete Inc. (the "Company") (a
development stage company) as of July 31, 2009 and 2008, and the related
statements of operations and accumulated other comprehensive loss, changes in
stockholders' equity (deficit) and cash flows for the year ended July 31, 2009
and the period August 21, 2007 (Inception) through July 31, 2008 and the period
August 21, 2007 (Inception) through July 31, 2009. Our responsibility is to
express an opinion on these financial statements based on our
audits.
.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. We were
not engaged to perform an audit of the Company’s internal control over financial
reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An
audit 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. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Plycrete Inc. (a development stage
company) as of July 31, 2009 and 2008, and the results of its statements of
operations and accumulated other comprehensive loss, changes in stockholders’
equity (deficit), and cash flows for the year ended July 31, 2009 and period
August 21, 2007 (Inception) through July 31, 2008 and August 21, 2007
(Inception) through July 31, 2009 in conformity with U.S. generally accepted
accounting principles.
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 is in process of executing its business plan and
expansion. The Company has not generated significant revenue to this point,
however, has been successful in raising funds in their private placement. The
lack of profitable operations and the need to continue to raise funds raise
significant doubt about the Company’s ability to continue as a going concern.
Management’s plans in this regard are described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/KBL,
LLP
New York,
NY
January
7, 2010
40
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
JULY
31, 2009 AND 2008
ASSETS
|
||||||||
IN
US$
|
||||||||
JULY
31,
|
JULY
31,
|
|||||||
2009
|
2008
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 2,415 | $ | 91,546 | ||||
Prepaid
expenses and other current assets
|
1,288 | 1,288 | ||||||
Total current assets
|
3,703 | 92,834 | ||||||
Other
Asset
|
||||||||
License,
net of accumualted amortization
|
88,333 | 98,333 | ||||||
|
||||||||
TOTAL
ASSETS
|
$ | 92,036 | $ | 191,167 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued expenses
|
$ | 11,325 | $ | 70,000 | ||||
Short-term
notes payable
|
40,000 | - | ||||||
Total current liabilities
|
51,325 | 70,000 | ||||||
TOTAL
LIABILITIES
|
51,325 | 70,000 | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
Common
stock, $0.001 par value, 75,000,000 shares authorized,
10,450,000 shares issued and
outstanding
|
10,450 | 10,450 | ||||||
Additional
paid in capital
|
198,200 | 198,200 | ||||||
Deficit
accumulated during the development stage
|
(167,909 | ) | (87,479 | ) | ||||
Accumulated
other comprehensive income (loss)
|
(30 | ) | (4 | ) | ||||
Total stockholders' equity (deficit)
|
40,711 | 121,167 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 92,036 | $ | 191,167 | ||||
The
accompanying notes are an integral part of these financial
statements.
41
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF OPERATIONS AND ACCUMULATED OTHER COMPREHENSIVE LOSS
FOR THE YEARS
ENDED JULY 31, 2009 AND 2008 AND
FOR THE PERIOD
AUGUST 21, 2007 THROUGH JULY 31, 2008 AND
FOR THE PERIOD
AUGUST 21, 2007 (INCEPTION) THROUGH JULY 31,
2009
IN
US$
|
||||||||||
AUGUST
21, 2007
|
AUGUST
21, 2007
|
|||||||||
(INCEPTION)
|
(INCEPTION)
|
|||||||||
YEAR
ENDED
|
THROUGH
|
THROUGH
|
||||||||
JULY
31, 2009
|
JULY
31, 2008
|
JULY
31, 2009
|
||||||||
REVENUE
|
$ |
-
|
$ |
-
|
$ |
-
|
||||
COST
OF REVENUES
|
-
|
-
|
-
|
|||||||
GROSS
PROFIT
|
-
|
-
|
-
|
|||||||
OPERATING
EXPENSES
|
||||||||||
Professional
fees
|
49,996
|
74,084
|
124,080
|
|||||||
Consulting
fees
|
-
|
8,450
|
8,450
|
|||||||
General
and administrative
|
19,109
|
3,278
|
22,387
|
|||||||
Amortization
expense
|
10,000
|
1,667
|
11,667
|
|||||||
Total operating expenses
|
79,105
|
87,479
|
166,584
|
|||||||
NET
(LOSS) BEFORE OTHER EXPENSE
|
(79,105
|
) |
(87,479
|
) |
(166,584
|
) | ||||
|
||||||||||
OTHER
EXPENSE
|
||||||||||
Interest
expense
|
(1,325
|
) |
-
|
(1,325
|
) | |||||
Total other expense
|
(1,325
|
) |
-
|
(1,325
|
) | |||||
NET
(LOSS)
|
$ |
(80,430
|
) | $ |
(87,479
|
) | $ |
(167,909
|
) | |
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
10,450,000
|
10,443,353
|
9,650,000
|
|||||||
NET
(LOSS) PER SHARE
|
$ |
(0.01
|
) | $ |
(0.01
|
) | $ |
(0.02
|
) | |
ACCUMULATED
OTHER COMPREHENSIVE LOSS
|
||||||||||
Net
loss
|
$ |
(80,430
|
) $ | $ |
(87,479
|
) | $ |
(167,909
|
) | |
Currency
translation adjustment
|
(26
|
) |
(4
|
) |
(30
|
) | ||||
Total
accumulated comprehensive loss
|
(80,456
|
) |
(87,483
|
) |
(167,939
|
) |
The
accompanying notes are an integral part of these financial
statements.
42
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR
THE PERIOD AUGUST 21, 2007 (INCEPTION) THROUGH JULY 31, 2009
IN
US$
|
||||||||||||||||||||||||
Deficit
|
Accumulated
|
|||||||||||||||||||||||
Accumulated
|
Other
|
|||||||||||||||||||||||
Additional
|
During
the
|
Comprehensive
|
||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Development
|
Income
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
(Loss)
|
Total
|
|||||||||||||||||||
Balance
- August 21, 2007
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Common
shares issued for services
|
8,450,000 | 8,450 | - | - | - | 8,450 | ||||||||||||||||||
Common
shares issued for cash
|
2,000,000 | 2,000 | 198,000 | - | - | 200,000 | ||||||||||||||||||
Contributed
capital
|
- | - | 200 | - | - | 200 | ||||||||||||||||||
Net
loss for the period
|
- | - | - | (87,479 | ) | (4 | ) | (87,483 | ) | |||||||||||||||
Balance
- July 31, 2008
|
10,450,000 | 10,450 | 198,200 | (87,479 | ) | (4 | ) | 121,167 | ||||||||||||||||
Net
loss for the period
|
- | - | - | (80,430 | ) | (26 | ) | (80,456 | ) | |||||||||||||||
Balance
- July 31, 2009
|
10,450,000 | $ | 10,450 | $ | 198,200 | $ | (167,909 | ) | $ | (30 | ) | $ | 40,711 |
The
accompanying notes are an integral part of these financial
statements.
43
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT OF
CASHFLOW
FOR THE YEAR ENDED
JULY 31, 2009 AND
FOR THE PERIOD
AUGUST 21, 2007 (INCEPTION) THROUGH JULY 31, 2008 AND
FOR THE PERIOD
AUGUST 21, 2007 (INCEPTION) THROUGH JULY 31,
2009
IN
US$
|
||||||||||||
AUGUST
21, 2007
|
AUGUST
21, 2007
|
|||||||||||
(INCEPTION)
|
(INCEPTION)
|
|||||||||||
YEAR
ENDED
|
THROUGH
|
THROUGH
|
||||||||||
JULY
31, 2009
|
JULY
31, 2008
|
JULY
31, 2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
(loss)
|
$ | (80,430 | ) | $ | (87,479 | ) | $ | (167,909 | ) | |||
Adjustments
to reconcile net (loss)
|
||||||||||||
to
net cash used in operating activities:
|
||||||||||||
Amortization
|
10,000 | 1,667 | 11,667 | |||||||||
Common
stock issued for services
|
- | 8,450 | 8,450 | |||||||||
Change
in assets and liabilities
|
||||||||||||
(Increase)
in prepaid expenses and other current assets
|
- | (1,288 | ) | (1,288 | ) | |||||||
Increase
(decrease) in accounts payable and accrued expenses
|
(58,675 | ) | 70,000 | 11,325 | ||||||||
Total
adjustments
|
(48,675 | ) | 78,829 | 30,154 | ||||||||
Net
cash (used in) operating activities
|
(129,105 | ) | (8,650 | ) | (137,755 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of license
|
- | (100,000 | ) | (100,000 | ) | |||||||
Net
cash (used in) investing activities
|
- | (100,000 | ) | (100,000 | ) | |||||||
|
||||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from notes payable
|
40,000 | - | 40,000 | |||||||||
Issuance
of stock for cash
|
- | 200,000 | 200,000 | |||||||||
Contribution
of capital
|
- | 200 | 200 | |||||||||
Net
cash provided by financing activities
|
40,000 | 200,200 | 240,200 | |||||||||
Effect
of foreign currency
|
(26 | ) | (4 | ) | (30 | ) | ||||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
(89,131 | ) | 91,546 | 2,415 | ||||||||
|
||||||||||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
91,546 | - | - | |||||||||
|
||||||||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$ | 2,415 | $ | 91,546 | $ | 2,415 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - |
The
accompanying notes are an integral part of these financial
statements.
44
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
1-
|
ORGANIZATION AND BASIS
OF PRESENTATION
|
On August
21, 2007, Plycrete Inc. (the “Company”) was incorporated in the State of
Nevada.
The
Company was formed to acquire the license and trademark rights to the Clem-G and
Plycrete products for North America. As discussed in Note 4, the Company
acquired a license and certain rights certain technology that relates to
building panels and methods, more particularly concerned with wall surface
building panels with quick assembly features and improved joint sealing, and
method of installation known as CLEM-G, and certain technology that relates to
cementious structures and methods for fabrication thereof, more particularly
concerned with a reinforced multilayer cementious structure and a method of
manufacture known as PLYCRETE.
Going
Concern
These
financial statements have been prepared on a going concern basis, which implies
the Company will continue to realize its assets and discharge its liabilities in
the normal course of business. The Company has not generated revenues since
inception and has generated losses totaling $167,909 in their initial few years,
and needs to raise additional funds to carry out their business plan. The
continuation of the Company as a going concern is dependent upon the continued
financial support from its shareholders, and the ability of the Company to
obtain necessary equity financing to continue operations. The Company has had
very little operating history to date. These financial statements do not include
any adjustments to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. These factors raise
substantial doubt regarding the ability of the Company to continue as a going
concern.
In the
opinion of management, the current funds raised to date will satisfy the working
capital requirements for the next twelve months. Besides generating revenues
from current operations, the Company may need to raise additional capital to
expand operations to the point at which the Company can achieve profitability.
The terms of equity that may be raised may not be on terms acceptable by the
Company. If adequate funds cannot be raised outside of the Company, the
Company’s officers and directors may need to contribute funds to sustain
operations.
45
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
Development Stage
Company
The
Company is considered to be in the development stage as defined in Statement of
Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by
Development Stage Enterprises”. The Company has devoted substantially all
of its efforts to the corporate formation, the raising of capital and attempting
to generate customers for the sales of the Company’s products.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Currency
Translation
The
Company operates in Canada, and certain accounts of the Company are reflected in
currencies other than the U.S. dollar. The Company translates income and expense
amounts at average exchange rates for the year, translates assets and
liabilities at year-end exchange rates and equity at historical rates for
currencies in the Canadian dollar. The Company’s functional currency is the
Canadian dollar, while the Company reports its currency in the US dollar. The
Company records these translation adjustments as accumulated other comprehensive
income (loss). Gains and losses from foreign currency transactions are included
in other income (expense) in the results of operations. For the year ended July
31, 2009 and period from August 21, 2007 (inception) to July 31, 2008, the
Company recorded approximately $26 and $4 in translation losses,
respectively.
Comprehensive Income
(Loss)
The
Company follows the provisions of Financial Accounting Standards No. 130,
“Reporting Comprehensive Income” (FAS 130). FAS 130 governs the financial
statement presentation of changes in stockholders’ equity (deficit) resulting
from non-owner sources. Accumulated other comprehensive income (loss) as
reported in the accompanying financial statements represent gains (losses) from
foreign currency translation.
46
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
Cash and Cash
Equivalents
The
Company considers all highly liquid debt instruments and other short-term
investments with maturity of three months or less, when purchased, to be cash
equivalents.
The
Company maintains cash and cash equivalent balances at one financial institution
that is insured by the Federal Deposit Insurance Corporation.
Fixed
Assets
Although
the Company does not have any fixed assets at this point. Any fixed
assets acquired in the future will be stated at cost, less accumulated
depreciation. Depreciation will be provided using the straight-line method over
the estimated useful lives of the related assets. Costs of maintenance and
repairs will be charged to expense as incurred.
Recoverability of Long-Lived
Assets
Although
the Company does not have any long-lived assets at this point, for any
long-lived assets acquired in the future the Company will review their
recoverability on a periodic basis whenever events and changes in circumstances
have occurred which may indicate a possible impairment. The assessment for
potential impairment will be based primarily on the Company’s ability to recover
the carrying value of its long-lived assets from expected future cash flows from
its operations on an undiscounted basis. If such assets are determined to be
impaired, the impairment recognized is the amount by which the carrying value of
the assets exceeds the fair value of the assets. Fixed assets to be disposed of
by sale will be carried at the lower of the then current carrying value or fair
value less estimated costs to sell.
Fair Value of Financial
Instruments
The
carrying amount reported in the balance sheets for cash and cash equivalents,
accounts payable, and accrued expenses approximate fair value because of the
immediate or short-term maturity of these financial instruments. The Company
does not utilize derivative instruments.
Income
Taxes
The
Company accounts for income taxes utilizing the liability method of
accounting. Under the liability method, deferred taxes are determined
based on differences between financial statement and tax bases of assets and
liabilities at enacted tax rates in effect in years in which differences are
expected to reverse. Valuation allowances are established, when
necessary, to reduce deferred tax assets to amounts that are expected to be
realized.
47
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Revenue
Recognition
The
Company will generate revenue from the sales in accordance with Staff Accounting
Bulletin 101. The criteria for recognition are as follows:
1)
|
Persuasive
evidence of an arrangement exists;
|
2)
|
Delivery
has occurred or services have been
rendered;
|
3)
|
The
seller’s price to the buyer is fixed or determinable,
and
|
4)
|
Collectable
is reasonably assured.
|
The
Company’s revenues will be generated through the manufacturing of their
products. The Company will ship their product to their suppliers. It is policy
that the Company will recognize revenues upon placement of the purchase order.
This is the time when the criteria established above has been determined to have
been met. The Company will primarily ship products the same day as the purchase
order is received. The customer will typically pay for products within a 30 day
period. The right of return will exist for a small period subsequent to
sale.
(Loss) Per Share of Common
Stock
Basic net
loss per common share is computed using the weighted average number of common
shares outstanding. Diluted earnings per share (EPS) include
additional dilution from common stock equivalents, such as stock issuable
pursuant to the exercise of stock options and warrants. Common stock
equivalents are not included in the computation of diluted earnings per share
when the Company reports a loss because to do so would be anti-dilutive for
periods presented. The following is a reconciliation of the computation for
basic and diluted EPS:
[Missing Graphic Reference]
July
31,
|
July
31,
|
||||||||
2009
|
2008
|
||||||||
Net
loss
|
$ | (80,430 | ) | $ | (87,479 | ) | |||
Weighted-average
common shares
|
|||||||||
outstanding
(Basic)
|
10,450,000 | 10,443,353 | |||||||
Weighted-average
common stock
|
|||||||||
Equivalents
|
|||||||||
Stock
options
|
- | - | |||||||
Warrants
|
- | - | |||||||
Weighted-average
common shares
|
|||||||||
outstanding
(Diluted)
|
10,450,000 | 10,443,353 |
48
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Uncertainty in Income
Taxes
In July
2006, the FASB issued Interpretation No. 48 (FIN No. 48), “Accounting for
Uncertainty in Income Taxes.” This interpretation requires recognition and
measurement of uncertain income tax positions using a “more-likely-than-not”
approach. FIN No. 48 is effective for fiscal years beginning after December 15,
2006. Management has adopted FIN 48 for 2007, and they evaluate their tax
positions on an annual basis, and has determined that as of July 31, 2009, no
additional accrual for income taxes is necessary.
Recent Issued Accounting
Standards
In
September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosure about fair
value measurements. This statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007. Early adoption is
encouraged. The adoption of SFAS 157 is not expected to have a material impact
on the financial statements.
In
February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115”, (“FAS 159”) which permits entities to choose to measure many financial
instruments and certain other items at fair value at specified election dates. A
business entity is required to report unrealized gains and losses on items for
which the fair value option has been elected in earnings at each subsequent
reporting date. This statement is expected to expand the use of fair value
measurement. FAS 159 is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent’s ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment.
SFAS 160
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early adoption
is prohibited. Management is determining the impact that the adoption of SFAS
No. 160 will have on the Company’s financial position, results of operations or
cash flows.
49
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Recent Issued Accounting
Standards (Continued)
In
December 2007, the FASB issued SFAS 141R, Business Combinations (“SFAS
141R”), which replaces FASB SFAS 141, Business
Combinations. This Statement retains the fundamental
requirements in SFAS 141 that the acquisition method of accounting be used for
all business combinations and for an acquirer to be identified for each business
combination. SFAS 141R defines the acquirer as the entity that obtains control
of one or more businesses in the business combination and establishes the
acquisition date as the date that the acquirer achieves control. SFAS
141R will require an entity to record separately from the business combination
the direct costs, where previously these costs were included in the total
allocated cost of the acquisition. SFAS 141R will require an entity
to recognize the assets acquired, liabilities assumed, and any non-controlling
interest in the acquired at the acquisition date, at their fair values as of
that date. This compares to the cost allocation method previously
required by SFAS No. 141. SFAS 141R will require an entity to
recognize as an asset or liability at fair value for certain contingencies,
either contractual or non-contractual, if certain criteria are
met. Finally, SFAS 141R will require an entity to recognize
contingent consideration at the date of acquisition, based on the fair value at
that date. This Statement will be effective for business combinations
completed on or after the first annual reporting period beginning on or after
December 15, 2008. Early adoption of this standard is not permitted
and the standards are to be applied prospectively only. Upon adoption
of this standard, there would be no impact to the Company’s results of
operations and financial condition for acquisitions previously
completed. The adoption of SFAS No. 141R is not expected to have a
material effect on the Company’s financial position, results of operations or
cash flows.
In
December 2007, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 110, “Use of a Simplified Method in Developing Expected Term of
Share Options” (“SAB 110”). SAB 110 expresses the current view of the
staff that it will accept a company’s election to use the simplified method
discussed in Staff Accounting Bulletin 107, Share Based Payment, (“SAB
107”), for estimating the expected term of “plain vanilla” share options
regardless of whether the company has sufficient information to make more
refined estimates. SAB 110 became effective for the Company on
January 1, 2008. The adoption of SAB 110 is not expected to have a
material impact on the Company’s financial position.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”).
SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging
activities. These enhanced disclosures will discuss: how and why an entity uses
derivative instruments; how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations; and how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. The Company does not believe that SFAS 161 will have an impact on
their results of operations or financial position.
50
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
2-
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
Recent Issued Accounting
Standards (Continued)
In April
2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of
Intangible Assets”. This FSP amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets”. The Company was required to adopt FSP 142-3 on October 1, 2008. The
guidance in FSP 142-3 for determining the useful life of a recognized intangible
asset shall be applied prospectively to intangible assets acquired after
adoption, and the disclosure requirements shall be applied prospectively to all
intangible assets recognized as of, and subsequent to, adoption. The Company
does not believe FSP 142-3 will materially impact their financial position,
results of operations or cash flows.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS 162). SFAS 162 makes the hierarchy of generally
accepted accounting principles explicitly and directly applicable to preparers
of financial statements, a step that recognizes preparers’ responsibilities for
selecting the accounting principles for their financial statements. The
effective date for SFAS 162 is 60 days following the U.S. Securities and
Exchange Commission’s approval of the Public Company Accounting Oversight
Board’s related amendments to remove the GAAP hierarchy from auditing standards,
where it has resided for some time. The adoption of SFAS 162 will not have an
impact on the Company’s results of operations or financial
position.
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of SFAS No. 60” (SFAS 163). SFAS 163
prescribes accounting for insures of financial obligations, bringing consistency
to recognizing and recording premiums and to loss recognition. SFAS 163 also
requires expanded disclosures about financial guarantee insurance contracts.
Except for some disclosures, SFAS 163 is effective for financial statements
issued for fiscal years beginning after December 15, 2008. The adoption of SFAS
163 will not have an impact on the Company’s results of operations or financial
position.
In May
2009, the FASB published SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS
165 requires the Company to disclose the date through which subsequent events
have been evaluated and whether that date is the date the financial statements
were issued or the date the financial statements were available to be issued.
SFAS 165 is effective for financial periods ending after June 15, 2009.
Management has adopted SFAS 165 for their report for July 31, 2009 and has
evaluated subsequent events through January 7, 2010, the date the financial
statements were issued.
Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date and
are not expected to have a material impact on the financial statements upon
adoption.
51
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
3-
|
STOCKHOLDERS’ EQUITY
(DEFICIT)
|
The
Company was established with one class of stock, common stock – 75,000,000
shares authorized at a par value of $0.001.
On August
21, 2007 the Company issued 8,450,000 shares of common stock to the Company’s
founders at a value of $8,450 ($.001 per share) for services
rendered.
During
the period April 1, 2008 through June 30, 2008 the Company raised $200,000
through the sale of 2,000,000 shares of common stock ($.10 per
share).
As of
July 31, 2009, the Company has 10,450,000 shares of common stock issued and
outstanding.
The
Company has not issued any options or warrants to date.
NOTE
4-
|
LICENSE
AGREEMENT
|
|
On
May 14, 2008, the Company entered into a License Agreement with Clem-G
Plycrete Inc., a Canadian company (“Clem-G”) (the “Agreement”). The
Agreement is for an initial term of ten years from May 14, 2008 to May 14,
2018. Under the terms of the Agreement, the Company has acquired the
license and trademark rights to market and sell certain technology that
relates to building panels and methods, more particularly concerned with
wall surface building panels with quick assembly features and improved
joint sealing, and method of installation known as CLEM-G, and certain
technology that relates to cementious structures and methods for
fabrication thereof, more particularly concerned with a reinforced
multilayer cementious structure and a method of manufacture known as
PLYCRETE. A patent for each of these methods was filed in the United
States and are pending. The Company has acquired these rights for
$100,000. The Company paid the initial payment of $30,000, with the
remaining payment of $70,000 due within one-year (May 14, 2009). The
$70,000 is reflected in accounts payable and accrued expenses on the
balance sheet at July 31, 2008 and was fully paid in 2009. The Company is
amortizing the license fee over the 120 month term of the Agreement.
Amortization expense for the year ended July 31, 2009 and period August
21, 2007 (Inception) through July 31, 2008 amounted to $10,000 and $1,667,
respectively. The Company anticipates amortizing $10,000 per
year.
|
52
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
5-
|
NOTES
PAYABLE
|
The
Company was advanced $40,000 from three (3) individuals for amounts ranging
between $5,000 and $20,000 during the year ended July 31, 2009.
All of
these loans accrue interest at 5% per annum. The Company has accrued $1,325
through July 31, 2009.
Interest
expense for the year ended July 31, 2009 was $1,325. The loans were not
outstanding for the prior period.
NOTE
6-
|
PROVISION FOR INCOME
TAXES
|
Deferred
income taxes are determined using the liability method for the temporary
differences between the financial reporting basis and income tax basis of the
Company’s assets and liabilities. Deferred income taxes are measured
based on the tax rates expected to be in effect when the temporary differences
are included in the Company’s tax return. Deferred tax assets and
liabilities are recognized based on anticipated future tax consequences
attributable to differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases.
As of
July 31, 2009, there is no provision for income taxes, current or
deferred.
Net
operating losses
|
$ | 57,089 | |||
Valuation
allowance
|
(57,089 | ) | |||
$ | - | ||||
At July
31, 2009, the Company had a net operating loss carry forward in the amount of
$167,909, available to offset future taxable income through 2029. The
Company established valuation allowances equal to the full amount of the
deferred tax assets due to the uncertainty of the utilization of the operating
losses in future periods.
A
reconciliation of the Company’s effective tax rate as a percentage of income
before taxes and federal statutory rate for the year ended July 31, 2009 and
period August 21, 2007 (inception) through July 31, 2008 is summarized
below.
Federal
statutory rate
|
(34.0 | )% | |||
State
income taxes, net of federal benefits
|
0.0 | ||||
Valuation
allowance
|
34.0 | ||||
0 | % |
53
PLYCRETE
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2009 AND 2008
NOTE
7-
|
FAIR VALUE
MEASUREMENTS
|
On
January 1, 2008, the Company adopted SFAS 157. SFAS 157 defines fair value,
provides a consistent framework for measuring fair value under generally
accepted accounting principles and expands fair value financial statement
disclosure requirements. SFAS 157’s valuation techniques are based on observable
and unobservable inputs. Observable inputs reflect readily obtainable data from
independent sources, while unobservable inputs reflect our market assumptions.
SFAS 157 classifies these inputs into the following hierarchy:
Level 1
inputs: Quoted prices for identical instruments in active markets.
Level 2
inputs: Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant value
drivers are observable.
Level 3
inputs: Instruments with primarily unobservable value drivers.
The
following table represents the fair value hierarchy for those financial assets
and liabilities measured at fair value on a recurring basis as of July 31,
2009:
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||||
Cash
|
2,415 | - | - | 2,415 | |||||||||||||
Total
assets
|
2,415 | - | - | 2,415 | |||||||||||||
54
Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure
In 2008,
our Board of Directors appointed KBL, LLP, to audit our financial statements
from August 21, 2007, our date of formation, through July 31, 2009. There have
been no disagreements with our accountant since our formation.
Legal
Matters
The
validity of the issuance of the shares of common stock offered by us has been
passed upon by M2 Law Professional Corporation, located in Newport Beach,
California.
Experts
Our
financial statements for year ended July 31, 2009 and for the period from August
21, 2007, our date of formation, through July 31, 2008, appearing in this
prospectus which is part of a Registration Statement have been audited by KBL,
LLP and are included in reliance upon such report given upon the authority of
KBL, LLP as experts in accounting and auditing.
Additional
Information
We have
filed a registration statement on Form S-1 with the Securities and Exchange
Commission pursuant to the Securities Act of 1933. This prospectus
does not contain all of the information set forth in the registration statement
and the exhibits and schedules to the registration statement. For further
information regarding us and our common stock offered hereby, reference is made
to the registration statement and the exhibits and schedules filed as a part of
the registration statement.
55
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors
and Officers
Article
Twelfth of our Articles of Incorporation provides, among other things, that our
officers and directors shall not be personally liable to us or our shareholders
for monetary damages for breach of fiduciary duty as an officer or a director,
except for liability:
·
|
for
acts or omissions not in good faith or which involve intentional
misconduct, fraud or a knowing violation of law;
or
|
·
|
for
unlawful payments of dividends or unlawful stock purchase or redemption by
us.
|
Article V
of our Bylaws also provides that our officers and directors shall be indemnified
and held harmless by us to the fullest extent permitted by the provisions of
Section 78.7502 of the Nevada Revised Statutes.
Accordingly,
our directors may have no liability to our shareholders for any mistakes or
errors of judgment or for any act of omission, unless as provided under the
Nevada Revised Statutes, the act or omission involves intentional misconduct,
fraud, or a knowing violation of law or results in unlawful distributions to our
shareholders as provided.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
Other Expenses of Issuance
and Distribution
We will
pay all expenses in connection with the registration and sale of our common
stock. The estimated expenses of issuance and distribution are set forth
below.
Registration
Fees
|
Approximately
|
$53.48
|
||
Transfer
Agent Fees
|
Approximately
|
$1,000.00
|
||
Costs
of Printing and Engraving
|
Approximately
|
$1,000.00
|
||
Legal
Fees
|
Approximately
|
$12,000.00
|
||
Accounting
Fees
|
Approximately
|
$10,000.00
|
Recent Sales of Unregistered
Securities
There
have been no sales of unregistered securities within the last three years, which
would be required to be disclosed pursuant to Item 701 of Regulation S-K, except
for the following:
On August
21, 2007, we issued 8,450,000 shares of common stock to our founders in exchange
for services valued at $8,450 or $0.001 per share. The shares were issued in
transactions which we believe satisfies the requirements of that exemption from
the registration and prospectus delivery requirements of the Securities Act of
1933, which exemption is specified by the provisions of Section 5 of that act
and Regulation S promulgated pursuant to that act by the Securities and Exchange
Commission. There were no commissions paid on the sale of these shares. The
investors are non-U.S. persons and the sales were made in an offshore
transaction. No directed selling efforts were made in the United States by us or
any person acting on our behalf. The offer or sale was not made to a U.S. person
or for the account or benefit of a U.S. person. The purchaser of the securities
certified that it was not a U.S. person and was not acquiring the securities for
the account or benefit of any U.S. person. The purchasers of the securities have
agreed to resell such securities only in accordance with the provisions of
Regulation S or pursuant to registration under the Securities Act of 1933. The
shares of common stock issued to the purchaser contain a legend to the effect
that transfer is prohibited except in accordance with the provisions of this
Regulation S or pursuant to registration under the Securities Act of 1933. We
will not register any transfer of the securities unless such transfer is made in
accordance with the provisions of Regulation S or pursuant to registration under
the Securities Act of 1933.
56
During
the period April 1, 2008 through June 30, 2008, we sold 2,000,000 shares of
common stock in exchange for $200,000, or $.10 per share. The shares were issued
in transactions which we believe satisfies the requirements of that exemption
from the registration and prospectus delivery requirements of the Securities Act
of 1933, which exemption is specified by the provisions of Section 5 of that act
and Regulation S promulgated pursuant to that act by the Securities and Exchange
Commission. There were no commissions paid on the sale of these shares. The
investors are non-U.S. persons and the sales were made in an offshore
transaction. No directed selling efforts were made in the United States by us or
any person acting on our behalf. The offer or sale was not made to a U.S. person
or for the account or benefit of a U.S. person. The purchaser of the securities
certified that it was not a U.S. person and was not acquiring the securities for
the account or benefit of any U.S. person. The purchasers of the securities have
agreed to resell such securities only in accordance with the provisions of
Regulation S or pursuant to registration under the Securities Act of 1933. The
shares of common stock issued to the purchaser contain a legend to the effect
that transfer is prohibited except in accordance with the provisions of this
Regulation S or pursuant to registration under the Securities Act of 1933. We
will not register any transfer of the securities unless such transfer is made in
accordance with the provisions of Regulation S or pursuant to registration under
the Securities Act of 1933.
Exhibits
Copies of
the following documents are filed with this registration statement, Form S-1, as
exhibits:
Exhibit
No.
1
|
Underwriting
Agreement (not applicable)
|
3.1
|
Articles
of Incorporation
|
3.2
|
Bylaws
|
4.1
|
Subscription
Agreement
|
5
|
Executed
Opinion Re: Legality
|
8
|
Opinion
Re: Tax Matters (not applicable)
|
10.1
|
License
Agreement with Clem-G Plycrete, Inc.
|
11
|
Statement
Re: Computation of Per Share Earnings*
|
15
|
Letter
on unaudited interim financial information (not
applicable)
|
23.1
|
Consent
of Auditors
|
23.2
|
Consent
of Counsel**
|
* Included in Financial Statements
** Included
in Exhibit 5
57
Undertakings
A. We
hereby undertake:
|
(1)
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
|
(ii)
|
Reflect
in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement; and Notwithstanding the forgoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation From
the low or high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
and
|
|
(iii)
|
Include
any additional or changed material information on the plan of
distribution.
|
(2)
|
(3)
|
(4)
|
For
determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the
securities, the undersigned small business issuer undertakes that in a
primary offering of securities of the undersigned small business issuer
pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following
communications, the undersigned small business issuer will be a seller to
the purchaser and will be considered to offer or sell such securities to
such purchaser:
|
i.
|
ii.
|
iii.
|
iv.
|
58
B.
|
|
|
(1)
|
Insofar
as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions,
or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
|
|
(2)
|
In
the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid
by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the small business issuer will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of
such issue.
|
C.
|
Each
prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first
use.
|
59
|
SIGNATURES
|
Pursuant
to the requirements of the Securities Act, the Registrant has duly caused this
Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized.
Plycrete,
Inc.,
a Nevada
corporation
/s/
Clément Guèvremont
|
February 3, 2010 |
|
||
Name:
Clément Guèvremont
|
|
|||
Title :
President, Director
(Principal
Executive Officer)
|
|
/s/
Madeleine Houle
|
February 3, 2010 |
|
||
Name:
Madeleine Houle
|
|
|||
Title :
Chief Financial Officer, Secretary and Director
(Principal Financial
and Accounting Officer)
|
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
/s/
Clément Guèvremont
|
February 3, 2010 |
|
||
Name:
Clément Guèvremont
|
|
|||
Title :
President, Director
(Principal
Executive Officer)
|
|
/s/
Madeleine Houle
|
February 3, 2010 |
|
||
Name:
Madeleine Houle
|
|
|||
Title :
Chief Financial Officer, Secretary and Director
(Principal Financial
and Accounting Officer)
|
|
60