Attached files
Exhibit 99.1
EcoReady Corporation
(Formerly PerfPower Corporation)
(A Development Stage Company)
December 31, 2009
Index to the Financial Statements
|
Contents
|
Page(s)
|
|||
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|||
|
Balance Sheet at December 31, 2009
|
F-3
|
|||
|
Statement of Operations for the Period From November 13, 2009 (inception) through December 31, 2009
|
F-4
|
|||
|
Statement of Stockholders’ Equity for the Period From November 13, 2009 (inception) through December 31, 2009
|
F-5
|
|||
|
Statement of Cash Flows for the Period From November 13, 2009 (inception) through December 31, 2009
|
F-6
|
|||
|
Notes to the Financial Statements
|
F-7
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
EcoReady Corporation
(Formerly PerfPower Corporation)
(A Development Stage Company)
Orlando, Florida
We have audited the accompanying balance sheet of EcoReady Corporation (formerly “PerfPower Corporation”), a development stage company, (the “Company”), as of December 31, 2009 and the related statements of operations, stockholders’ equity and cash flows for the period from November 13, 2009 (inception) through December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 the Company as of December 31, 2009 and the results of its operations and its cash flows for the period from November 13, 2009 (inception) through December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.
Li & Company, PC
Skillman, New Jersey
July 12, 2012
F-2
|
EcoReady Corporation
|
||||
|
(Formerly PerfPower Corporation)
|
||||
|
(A Development Stage Company)
|
||||
|
Balance Sheet
|
||||
|
December 31, 2009
|
||||
|
ASSETS
|
||||
|
CURRENT ASSETS:
|
||||
|
Cash
|
$ | 2,415 | ||
|
Stockholder advance
|
3,000 | |||
|
Inventory
|
24,948 | |||
|
Advance to Perf Go-Green Holdings, Inc. – related party
|
93,070 | |||
|
Total Current Assets
|
123,433 | |||
|
Total Assets
|
$ | 123,433 | ||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||
|
CURRENT LIABILITIES:
|
||||
|
Accounts payable
|
$ | 26,548 | ||
|
Total Current Liabilities
|
26,548 | |||
|
Total Liabilities
|
26,548 | |||
|
STOCKHOLDERS' EQUITY:
|
||||
|
Common stock: $0.001 par value; 100,000,000 shares authorized;
|
||||
|
4,940,000 shares issued and outstanding
|
4,940 | |||
|
Additional paid-in capital
|
99,900 | |||
|
Deficit accumulated during the development stage
|
(7,955 | ) | ||
|
Total Stockholders' Equity
|
96,885 | |||
|
Total Liabilities and Stockholders' Equity
|
$ | 123,433 | ||
|
See accompanying notes to the financial statements.
|
||||
F-3
|
EcoReady Corporation
|
||||
|
(Formerly PerfPower Corporation)
|
||||
|
(A Development Stage Company)
|
||||
|
Statement of Operations
|
||||
|
For the Period from
|
||||
|
November 13, 2009
|
||||
|
(inception) through
|
||||
|
December 31, 2009
|
||||
|
NET REVENUES
|
$ | - | ||
|
OPERATING EXPENSES:
|
||||
|
Consulting expense
|
4,840 | |||
|
General and administrative expenses
|
3,115 | |||
|
Total operating expenses
|
7,955 | |||
|
Loss before Income Tax Provision
|
(7,955 | ) | ||
|
Income Tax Provision
|
- | |||
|
NET LOSS
|
$ | (7,955 | ) | |
|
NET LOSS PER COMMON SHARE:
|
||||
|
- BASIC AND DILUTED
|
$ | (0.00 | ) | |
|
Weighted average common shares outstanding:
|
||||
|
- basic and diluted
|
4,881,670 | |||
|
See accompanying notes to the financial statements.
|
||||
F-4
|
EcoReady Corporation
|
||||||||||||||||||||
|
(Formerly PerfPower Corporation)
|
||||||||||||||||||||
|
(A Development Stage Company)
|
||||||||||||||||||||
|
Statement of Stockholders' Equity
|
||||||||||||||||||||
|
For the Period from November 13, 2009 (inception) through December 31, 2009
|
||||||||||||||||||||
|
Common Stock, $0.001 Par Value
|
Additional
|
Deficit Accumulated
during the
|
Total
|
|||||||||||||||||
|
Number of
|
Paid-in
|
Development
|
Stockholders'
|
|||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Stage
|
Equity
|
||||||||||||||||
|
Common stock issued on November 13, 2009 (inception)
|
||||||||||||||||||||
|
at par value, for compensation
|
4,840,000 | $ | 4,840 | $ | - | $ | - | $ | 4,840 | |||||||||||
|
Sale of common stock for cash at $1.00 per share
|
||||||||||||||||||||
|
on December 11, 2009
|
100,000 | 100 | 99,900 | 100,000 | ||||||||||||||||
|
Net loss
|
(7,955 | ) | (7,955 | ) | ||||||||||||||||
|
Balance, December 31, 2009
|
4,940,000 | $ | 4,940 | $ | 99,900 | $ | (7,955 | ) | $ | 96,885 | ||||||||||
|
See accompanying notes to the financial statements.
|
||||||||||||||||||||
F-5
|
EcoReady Corporation
|
||||
|
(Formerly PerfPower Corporation)
|
||||
|
(A Development Stage Company)
|
||||
|
Statement of Cash Flows
|
||||
|
For the Period from
|
||||
|
November 13, 2009
|
||||
|
(inception) through
|
||||
|
December 31, 2009
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||
|
Net loss
|
$ | (7,955 | ) | |
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||
|
Common stock issued for services
|
100 | |||
|
Changes in operating assets and liabilities:
|
||||
|
Inventory
|
(24,948 | ) | ||
|
Accounts payable
|
26,548 | |||
|
NET CASH USED IN OPERATING ACTIVITIES
|
(6,255 | ) | ||
|
NET CASH FROM INVESTING ACTIVITIES
|
||||
|
Advance to stockholder
|
(3,000 | ) | ||
|
Advance to Perf Go-Green Holdings, Inc. – related party
|
(93,070 | ) | ||
|
NET CASH USED IN INVESTING ACTIVITIES
|
(96,070 | ) | ||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||
|
Proceeds from issuance of common stock
|
104,740 | |||
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
104,740 | |||
|
NET CHANGE IN CASH
|
2,415 | |||
|
Cash at beginning of the period
|
- | |||
|
Cash at end of the period
|
$ | 2,415 | ||
|
SUPPLEMENTAL DISCLOSUREOF CASH FLOWS INFORMATION:
|
||||
|
Interest paid
|
$ | - | ||
|
Income tax paid
|
$ | - | ||
|
See accompanying notes to the financial statements.
|
||||
F-6
EcoReady Corporation
(Formerly PerfPower Corporation)
(A Development Stage Company)
December 31, 2009
Notes to the Financial Statements
Note 1 – Organization and Operations
PerfPower Corporation (“PerfPower Corporation”) was incorporated under the laws of the State of Nevada on November 13, 2009. PerfPower Corporation amended its Articles of Incorporation and changed its name to EcoReady Corporation (“EcoReady” or the “Company”).
EcoReady engages in the import and distribution of alkaline batteries.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Development Stage Company
The Company is a development stage company as defined by section 915-10-20 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification. The Company is devoting substantially all of its efforts on establishing the business and, therefore, qualifies as a development stage company. All losses accumulated since inception have been considered as part of the Company’s development stage activities.
Use of Estimates and Assumptions
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 disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reporting period.
The Company’s significant estimates and assumptions include the fair value of financial instruments; inventory valuation and obsolescence; and risk free interest rate(s); income tax rate, income tax provision, deferred tax assets and valuation allowance of deferred tax assets; and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Certain Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of certain of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of certain of its financial instruments except for the effects of derivative financial instruments relating to its convertible debt, redeemable Series A convertible preferred stock, and related warrants. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
F-7
|
Level 1
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
Level 2
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
Level 3
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, and accounts payable, approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
It is not, however, practical to determine the fair value of advances to stockholders and PerfGo-Green Holdings, Inc., if any, due to their related party nature.
Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis
The Company’s non-financial assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Inventories
Inventory Valuation
The Company values inventories, consisting of finished goods, at the lower of cost or market. Cost is determined on the first-in and first-out (“FIFO”) method. The Company reduces inventories for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated market value. Factors utilized in the determination of estimated market value include (i) current sales data and historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures, (iv) new product introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.
Inventory Obsolescence and Markdowns
The Company evaluates its current level of inventories considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification to adjust inventories to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations.
F-8
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
Revenue Recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with customers with revenues being generated upon the shipment of goods.
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Subtopic 505-50 of the FASB Accounting Standards Codification (“Subtopic 505-50”).
F-9
Pursuant to Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
The fair value of share options and similar instruments is estimated on the date of grant using the Cox, Ross & Rubenstein Binomial Lattice Model or Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:
|
●
|
Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
|
|
●
|
Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for it to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected term of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
|
|
●
|
Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
|
|
●
|
Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
|
Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.
Pursuant to ASC paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised.
Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.
F-10
Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the period from November 13, 2009 (inception) through December 31, 2009.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants.
There were no potentially dilutive shares outstanding for the period from November 13, 2009 (inception) through December 31, 2009.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.
F-11
Recently Issued Accounting Pronouncements
FASB Accounting Standards Update No. 2011-05
In June 2011, the FASB issued the FASB Accounting Standards Update No. 2011-05 “Comprehensive Income” (“ASU 2011-05”), which was the result of a joint project with the IASB and amends the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income (OCI) in the statement of stockholders’ equity. Instead, the new guidance now gives entities the option to present all non-owner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.
The amendments in this Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within those years, beginning after December 15, 2011.
FASB Accounting Standards Update No. 2011-08
In September 2011, the FASB issued the FASB Accounting Standards Update No. 2011-08 “Intangibles—Goodwill and Other: Testing Goodwill for Impairment” (“ASU 2011-08”). This Update is to simplify how public and nonpublic entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.
The guidance is effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.
FASB Accounting Standards Update No. 2011-10
In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-10 “Property, Plant and Equipment: Derecognition of in Substance Real Estate-a Scope Clarification” (“ASU 2011-09”). This Update is to resolve the diversity in practice as to how financial statements have been reflecting circumstances when parent company reporting entities cease to have controlling financial interests in subsidiaries that are in substance real estate, where the situation arises as a result of default on nonrecourse debt of the subsidiaries.
The amended guidance is effective for annual reporting periods ending after June 15, 2012 for public entities. Early adoption is permitted.
FASB Accounting Standards Update No. 2011-11
In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.
The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
FASB Accounting Standards Update No. 2011-12
In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-12 “Comprehensive Income: Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”). This Update is a deferral of the effective date pertaining to reclassification adjustments out of accumulated other comprehensive income in ASU 2011-05. FASB is to going to reassess the costs and benefits of those provisions in ASU 2011-05 related to reclassifications out of accumulated other comprehensive income. Due to the time required to properly make such a reassessment and to evaluate alternative presentation formats, the FASB decided that it is necessary to reinstate the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of Update 2011-05.
All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011.
F-12
Other Recently Issued, but not yet Effective Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Note 3 - Inventory
Inventory consisted of finished goods at December 31, 2009.
Slow-Moving or Obsolescence Markdowns
The Company recorded no inventory obsolescence adjustments for the period from November 13, 2009 (inception) through December 31, 2009
Lower of Cost or Market Adjustments
There was no lower of cost or market adjustments for the period from November 13, 2009 (inception) through December 31, 2009.
Note 4 – Advance to Perf-Go Green Holdings, Inc.
During the period from November 13, 2009 (inception) through December 31, 2009, the Company was negotiating an operating agreement with Perf Go-Green Holdings, Inc. (“PGOG”), a publicly traded corporation based in New York, for the acquisition of the alkaline battery import and distribution business started by PGOG in the middle of 2009.
While the negotiations continued, the Company paid certain bills of PGOG, in the total amount of $93,070 as of December 31, 2009.
On January 12, 2010, the Company closed on the operating agreement under which certain assets and liabilities of the existing alkaline battery business of PGOG were transferred to the Company in exchange for 1,400,000 shares of common stock, cash of $125,000, and a licensing agreement to use the PerfPower trademark. The $93,070 advance to PGOG recorded in the balance sheet at December 31, 2009 was then offset against $95,000 due under the operating agreement.
Note 5 – Stockholders' Equity
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred Million (100,000,000) shares, of which One Hundred Million (100,000,000) shares shall be Common Stock, par value $0.001 per share.
Common Stock
At November 13, 2009 (inception), the Company issued 4,840,000 common shares to its founders as compensation valued at par or $4,840.
In December 2009, the Company issued 100,000 common shares at $1.00 per share for a total cash consideration of $100,000.
Note 6 – Related Party Transactions
Free Office Space from Majority Stockholder and Chief Executive Officer
The Company has been provided office space by its majority stockholder and Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Note 7 – Income Tax Provision
Deferred Tax Assets
At December 31, 2009, the Company has available for federal income tax purposes net operating loss (“NOL”) carry-forwards of $7,955. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements since the Company believes that the realization of its net deferred tax asset of approximately $2,705 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the full valuation allowance.
F-13
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. The valuation allowance increased approximately $2,705 for the period from November 13, 2009 (inception) through December 31, 2009.
Components of deferred tax assets as of December 31, 2009are as follows:
|
December 31,
2009
|
||||
|
Net deferred tax assets – Non-current:
|
||||
|
Expected income tax benefit from NOL carry-forwards
|
7,955
|
|||
|
Less valuation allowance
|
(7,955
|
)
|
||
|
Deferred tax assets, net of valuation allowance
|
$
|
-
|
||
Income Tax Provision in the Statement of Operations
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:
|
For the Period from November 13, 2009 (inception) through
December 31, 2009
|
||||
|
Federal statutory income tax rate
|
34.0
|
%
|
||
|
Change in valuation allowance on net operating loss carry-forwards
|
(34.0
|
)
|
||
|
Effective income tax rate
|
0.0
|
%
|
||
Note 8 – Subsequent Events
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.
F-14