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EX-32.1 - CEO SECTION 906 CERTIFICATION - Xun Energy, Inc.ex32-1.txt
EX-31.2 - CFO SECTION 302 CERTIFICATION - Xun Energy, Inc.ex31-2.txt
EX-31.1 - CEO SECTION 302 CERTIFICATION - Xun Energy, Inc.ex31-1.txt
EX-32.2 - CFO SECTION 906 CERTIFICATION - Xun Energy, Inc.ex32-2.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                For the quarterly period ended November 30, 2009

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

         For the transition period from ______________ to ______________

                        Commission File Number 000-53466


                            REAL VALUE ESTATES, INC.
             (Exact name of registrant as specified in its charter)

            Nevada                                               26-1616719
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


   3/11 Trumpeldor St., Holon, Israel                              58271
(Address of principal executive offices)                         (Zip Code)

                          Telephone: +972 (54) 779-1657
              (Registrant's telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark 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):

Large accelerated filer [ ]                        Accelerated filer [ ]

Non-accelerated filer [ ]                          Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No []

There were 6,380,200 shares of common stock, $0.0001 par value per share,
outstanding on December 21, 2009.

REAL VALUE ESTATES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDING NOVEMBER 30, 2009 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1: Financial Statements (unaudited)................................... 3 Balance Sheet......................................................... 3 Statements of Operations.............................................. 4 Statements of Stockholders' Equity.................................... 5 Statements of Cash Flows.............................................. 6 Notes to Financial Statements......................................... 7 Item 2: Management's Discussion and Analysis Or Plan of Operation.......... 11 Item 3: Quantitative and Qualitative Disclosures about Market Risk......... 13 Item 4: Controls and Procedures............................................ 13 PART II - OTHER INFORMATION Item 1: Legal Proceedings.................................................. 14 Item 1A: Risk Factors...................................................... 14 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds........ 14 Item 3: Defaults Upon Senior Securities.................................... 14 Item 4: Submission of Matters to a Vote of Security Holders................ 14 Item 5: Other Information.................................................. 14 Item 6: Exhibits........................................................... 14 Signatures................................................................. 15 References in this Form 10-Q to "we", "us", "our", the "Company" and "Real Value" refers to Real Value Estates, Inc. unless otherwise noted. 2
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REAL VALUE ESTATES, INC. (A Development Stage Company) BALANCE SHEETS November 30, May 31, 2009 2009 -------- -------- (unaudited) (audited) ASSETS Current Assets Cash $ 5,184 $ 9,953 -------- -------- Total Current Assets $ 5,184 $ 9,953 ======== ======== Total Assets $ 5,184 $ 9,953 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ -- $ -- -------- -------- Total Current Liabilities -- -- Stockholders' Equity Preferred Stock, authorized 50,000,000 shares, par value $0.0001 Common Stock, authorized 100,000,000 shares, par value $0.0001 Issued and outstanding on November 30, 2009 is 6,380,200 (May 31, 2009: 6,380,200) common stock 638 638 Paid in Capital 59,570 59,570 Deficit Accumulated During the Development Stage (55,024) (50,255) -------- -------- Total Stockholders' Equity 5,184 9,953 -------- -------- Total Liabilities and Stockholders' Equity $ 5,184 $ 9,953 ======== ======== The Accompanying Notes Are An Integral Part Of These Financial Statements. 3
REAL VALUE ESTATES, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS FOR TREE AND SIX MONTHS ENDED NOVEMBER 30, 2009 AND 2008, AND CUMULATIVE FROM INCEPTION (DECEMBER 20, 2007) THROUGH NOVEMBER 30, 2009 (unaudited) Three month Three month Six month Six month December 20, 2007 ended ended ended ended (Inception) To November 30, November 30, November 30, November 30, November 30, 2009 2008 2009 2008 2009 ---------- ---------- ---------- ---------- ---------- Revenue $ -- $ -- $ -- $ -- $ -- Expenses Filing Fees 80 1,242 400 1,242 1,962 General and Administrative (Note 5) 850 521 870 882 19,458 Professional Fees 1,500 1,335 3,500 6,335 33,604 ---------- ---------- ---------- ---------- ---------- Loss before income taxes 2,430 3,098 4,770 8,459 55,024 ---------- ---------- ---------- ---------- ---------- Provision for Income Taxes -- -- -- ---------- ---------- ---------- ---------- ---------- Net (Loss) $ (2,430) $ (3,098) $ (4,770) $ (8,459) $ (55,024) ========== ========== ========== ========== ========== Basic and Diluted (Loss) per Common Shares a a a a ---------- ---------- ---------- ---------- Weighted Average Number of Common Shares 6,380,200 5,516,517 6,380,200 5,516,517 ---------- ---------- ---------- ---------- ---------- a = Less than ($0.01) per share The Accompanying Notes Are An Integral Part Of These Financial Statements. 4
REAL VALUE ESTATES, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM INCEPTION (DECEMBER 20, 2007) THROUGH NOVEMBER 30, 2009 (unaudited) Deficit Accumulated Common Stock Additional During the ------------------ Paid in Development Total Shares Amount Capital Stage Equity ------ ------ ------- ----- ------ INCEPTION DECEMBER 20, 2007 -- $ -- $ -- $ -- $ -- Common stock issued to Directors 5,000,000 500 4,500 5,000 for cash December 20, 2007 -- -- at 0.001 per share Private placement closed on March 31 @ 0.04 per share 1,380,200 138 55,070 55,208 Net loss for the year (85) (85) ---------- ----- -------- --------- -------- BALANCE, MAY 31, 2008 6,380,200 638 59,570 (85) 60,123 Net loss for the year (50,170) (50,170) ---------- ----- -------- --------- -------- BALANCE, MAY 31, 2009 6,380,200 638 59,570 (50,255) 9,953 Net loss for the period (4,769) (4,769) ---------- ----- -------- --------- -------- BALANCE, NOVEMBER 30, 2009 6,380,200 $ 638 $ 59,570 $ (55,024) $ 5,184 ========== ===== ======== ========= ======== The Accompanying Notes Are An Integral Part Of These Financial Statements. 5
REAL VALUE ESTATES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2009 AND 2008, AND CUMULATIVE FROM INCEPTION (DECEMBER 20, 2007) THROUGH NOVEMBER 30, 2009 (unaudited) Six month Six month December 20, 2007 ended ended (Inception) To November 30, November 30, November 30, 2009 2008 2009 -------- -------- -------- OPERATING ACTIVITIES Net (Loss) $ (4,770) $ (8,460) $(55,024) Adjustments To Reconcile Net Loss To Changes in Net Assets and Liabilities - Accounts payable and accrued liabilities -- -- -- -------- -------- -------- Net Cash Used By Operating Activities (4,770) (8,460) (55,024) FINANCING ACTIVITIES Proceeds from issuance of common stock -- -- 60,208 -------- -------- -------- Cash Provided by Financing Activities -- -- 60,208 -------- -------- -------- Net Increase in Cash (4,770) (8,460) 5,184 Cash, Beginning of Period 9,953 60,123 -- -------- -------- -------- Cash, End of Period $ 5,184 $ 51,663 $ 5,184 ======== ======== ======== Supplemental disclosure with respect to cash flows: Cash paid for income taxes $ -- $ -- $ -- Cash paid for interest $ -- $ -- $ -- The Accompanying Notes Are An Integral Part Of These Financial Statements. 6
REAL VALUE ESTATES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS November 30, 2009 NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS The Company was incorporated under the laws of the state of Nevada on December 20, 2007. The Company has limited operations and is considered a development stage company and has not yet realized any revenues from its planned operations. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flow from inception to the current balance sheet date. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES BASIS OF ACCOUNTING The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a May 31 fiscal year end. UNADITED INTERIM FINANCIAL STATEMENTS The interim financial statements of Real Value Estates, Inc. as of November 30, 2009, and for the period ended November 30, 2009, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly Real Value Estates, Inc.'s financial position as of November 30, 2009, and the results of its operations and its cash flows for the period ended November 30, 2009, and November 30, 2008, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending May 31, 2009. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America. Refer to the Company's audited financial statements as of May 31, 2008, filed with the SEC for additional information, including significant accounting policies. EARNINGS PER SHARE Basic earnings (loss) per share amount are computed by dividing the net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. CASH EQUIVALENTS The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of the Company's financial instruments, consisting of accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements. 7
INCOME TAXES Income taxes are provided in accordance with FASB ASC 740. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 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 disclosure 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. SOFTWARE DEVELOPMENT COSTS Software development costs representing capitalized costs of design, configuration, coding, installation and testing of the Company's website up to its initial implementation. Upon implementation, the asset will be amortized to expense over its estimated useful life of three years using the straight-line method. Ongoing website post-implementation costs of operation, including training and application maintenance, will be charged to expense as incurred. NOTE 3. ADVERTISING The Company's policy regarding advertising is to expense advertising when incurred. The Company had not incurred any advertising expense as of November 30, 2009. NOTE 4. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has net losses for the period from inception (December 20, 2007) to November 30, 2009. This condition raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management is planning to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be successful in these efforts. NOTE 5. RELATED PARTY TRANSACTIONS The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. On December 20, 2007, pursuant to the terms of a subscription agreement, we sold 1,000,000 shares of our common stock to Ms. Marina Karpilovski, our President and a director, for cash payment to us of $1,000. We believe this issuance was deemed to be exempt under Regulation S of the Securities Act, as no advertising or general solicitation was employed in offering the securities, the offering and sale was made only to Ms. Karpilovski who is a non-U.S. citizen, and transfer was restricted by us in accordance with the requirements of the Securities Act. On December 20, 2007 pursuant to the terms of a subscription agreement, we sold 4,000,000 shares of our common stock to Mr. Michael Zazkis, our Secretary, Treasurer and a director, for cash payment to us of $4,000. We believe this issuance was deemed to be exempt under Regulation S of the Securities Act, as no advertising or general solicitation was employed in offering the securities, the offering and sale was made only to Mr. Zazkis who is a non-U.S. citizen, and transfer was restricted by us in accordance with the requirements of the Securities Act. 8
NOTE 6. INCOME TAXES The Company uses the liability method , where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During fiscal 2008, the Company incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. NOTE 7. NET OPERATING LOSSES As of November 30, 2009, the Company has a net operating loss carry-forward of approximately $55,024 which will expire 20 years from the date the loss was incurred. NOTE 8. STOCKHOLDERS' EQUITY AUTHORIZED The Company is authorized to issue 100,000,000 shares of $0.0001 par value common stock and 50,000,000 shares of preferred stock, par value $0.0001. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. ISSUED AND OUTSTANDING On December 20, 2007, the Company issued 5,000,000 common shares to its Directors for cash of $5,000. Since inception (December 20, 2007) to November 30, 2009, the Company accepted subscriptions for 1,380,200 common shares from 37 investors under a private placement scheduled to close on March 31, 2008. The private placement was not subject to any minimum investment and was priced at $0.04 per share. The Company accepted the subscriptions on various dates throughout the year. NOTE 9. RECENT ACCOUNTING PRONOUNCEMENTS In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4"), codified in FASB ASC 820-10-65, which provides additional guidance for estimating fair value in accordance with ASC 820-10 when the volume and level of activity for an asset or liability have significantly decreased. ASC 820-10-65 also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's results of operations or financial condition. In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in FASB ASC 855-10-05, which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FASB ASC 855-10-05 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. FASB ASC 855-10-05 is effective for interim and annual periods ending after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate subsequent events through the date that the financial statements are issued. In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB ASC 860, which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets and requires additional disclosures. FASB ASC 860 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an impact on the Company's financial condition, results of operations or cash flows. 9
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. FASB ASC 810-10 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. FASB ASC 810-10 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. FASB ASC 810-10 also requires additional disclosures about a company's involvement in variable interest entities and any significant changes in risk exposure due to that involvement. FASB ASC 810-10 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 810-10 did not have an impact on the Company's financial condition, results of operations or cash flows. In June 2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of FASB ASC 105, we have updated references to GAAP in our financial statements. The adoption of FASB ASC 105 did not impact the Company's financial position or results of operations. NOTE 10. SUBSEQUENT EVENTS The Company evaluated events occurring between the balance sheet date and December 17, 2009, the date the financial statements were issued and there were no reportable events. 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION GENERAL OVERVIEW Since incorporation, we have not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. Real Value has never declared bankruptcy, has never been in receivership, and has never been involved in any legal action or proceedings. Real Value Estates is a development stage company that was incorporated under the laws of the state of Nevada on December 20, 2007. We currently have no revenue and no significant assets. Our offices are currently located at 3/11 Trumpeldor St., Holon 58271 Israel. Our telephone number is +972-54-779-1657. On March 11, 2009, our Board of Directors approved the dismissal of Moore & Associates, Chartered, Independent Registered Public Accounting Firm, the independent registered public accounting firm who had been engaged as the principal accountant to audit our financial statements, and the appointment of Alan Weinberg CPA as its new auditor. We are developing and plan to offer a website related to the residential real estate foreclosure market, containing an online social network for those involved in foreclosures, an online database with residential real estate foreclosure property listings, and a knowledge base with educational and informational materials about the foreclosure market. We plan to include foreclosure listings searchable by state, county and city throughout the United States. The site will be user-friendly and will enable our subscribers to communicate with each other and to search and locate foreclosure, pre-foreclosure and real estate owned properties with ease. Our foreclosure properties database is currently made available by foreclosure.com. Through initial searches on our site, our subscribers will be able to view preliminary data about the foreclosure properties such as the number of bedrooms and bathrooms, the sale price and a portion of the street address. Subscribers, who desire to obtain full access to the property information, including the seller's contact information, will be redirected to foreclosure.com and will be asked to subscribe to that site. Subscription to foreclosure.com requires payment of fees to that site, which can range from weekly fees of $9.99 to monthly fees of $39.80. These fees will be required to be paid in addition to any subscription fees we may charge for our site. Pursuant to our affiliate agreement with foreclosure.com, dated July 29, 2008, we earn a 25% commission on each subscriber fee collected by foreclosure.com as a result of the referral to that site from the redirection link from our website. PLAN OF OPERATION The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position of our Company should be read in conjunction with our most recent financial statements and notes appearing elsewhere in this Form 10-Q; and our registration statement on Form S-1 (File no. 333-153846), which was declared effective on October 16, 2008. We are a development stage company with very limited operations to date, no revenue and very limited financial backing. We have established the following goals over the next 12 months: * complete development of our website and launch it publicly by December 2009; * drive traffic to our website through marketing efforts utilizing online advertising campaigns using Google AdWords, and information style email advertising campaigns; * generate revenue by December of 2009, (approximately three months following the planned launch of our website), through receipt of premium membership fees paid by our premium subscribers, the commissions from foreclosure.com for referring subscribers to their site, as well as through fees paid to us from advertisers on our site; and * achieve break-even results of operations. During the first stages of our company's growth, our officers and directors will be responsible for executing the business plan at no charge. Since we intend to operate with very limited administrative support, the officers and directors will continue to be responsible for administering the company for at least the first year of operations. Management has no intention at this time to hire additional employees during the first year of operations. Due to limited financial resources, each of the management team will dedicate approximately 30 hours per week, to ensure all operations are executed. During the first quarter, our executive directors continued to develop the content for our website. We added articles and videos about different aspects of buying foreclosures. This process is expected to be an ongoing interactive process for the next several months. We expect to incur additional development and programming costs in the second and third quarter. 11
RESULTS OF OPERATIONS Our company posted losses of $2,430 for the three month ended November 30, 2009. Compared to posted losses of $3,098 for the three month ended November 30, 2008. From inception to November 30, 2009 we have incurred losses of $55,024. The principal component of our losses for the second quarter included filing fees of $80 general and administrative costs of $850 and professional fees of $1,500 LIQUIDITY AND CAPITAL RESOURCES At November 30, 2009, we had working capital of $5,184 compared to $9,953 at May 31, 2009. We opened the second quarter with approximately $7,463 in cash. As of the date hereof, we have approximately $5,184. Because we have not generated any revenue from our business, and currently have a budgeted shortfall and we will need to raise significant, additional funds for the future development of our business and to respond to unanticipated requirements or expenses. Our current cash balances will be extinguished within the next 3-6 months provided we do not have any unanticipated expenses. Our ability to successfully develop our product and to eventually produce and sell it to generate operating revenues also depends on our ability to obtain the necessary financing to implement our business plan. Given that we have no operating history, no revenues and only losses to date, we may not be able to achieve this goal, and if this occurs we will not be able to pay our development and marketing costs and we may go out of business. We may need to issue additional equity securities in the future to raise the necessary funds. We do not currently have any arrangements for additional financing and we can provide no assurance to investors we will be able to find such financing if further funding is required. Obtaining additional financing would be subject to a number of factors, including investor acceptance of our planned website and our business model. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. The resale of shares by our existing shareholders pursuant to this prospectus may result in significant downward pressure on the price of our common stock and cause negative impact on our ability to sell additional equity securities. Obtaining loans will increase our liabilities and future cash commitments, and there can be no assurance that we will even have sufficient funds to repay our future indebtedness or that we will not default on our future debts if we were able to even obtain loans. There can be no assurance that capital will continue to be available if necessary to meet future funding needs or, if the capital is available, that it will be on terms acceptable to us. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be forced to scale back or cease operations, which might result in the loss of some or all of your investment in our common stock. 12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This Item is not applicable to the Company. ITEM 4. CONTROLS AND PROCEDURES As required by Rule 13a-15 under the 1934 Act, as of the end of the period covered by this quarterly report, being the fiscal quarter ended November 30, 2009, we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon the results of that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective and provide reasonable assurance that material information related to our company is recorded, processed and reported in a timely manner. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for the design of internal controls over financial reporting. The fundamental issue is to ensure all transactions are properly authorized and identified and entered into a well-designed, robust and clearly understood system on a timely basis to minimize risk of inaccuracy, failure to fairly reflect transactions, failure to fairly record transactions necessary to present financial statements in accordance with the U.S. GAAP, unauthorized receipts and expenditures or the inability to provide assurance that unauthorized acquisitions or dispositions of assets can be detected. The small size of our company makes the identification and authorization process relatively simple and efficient and a process for reviewing internal controls over financial reporting has been developed. To the extent possible given our company's small size, the internal control procedures provide for separation of duties for handling, approving and coding invoices, entering transactions into the accounts, writing checks and requests for wire transfers. As of November 30, 2009, our Chief Executive Officer and Chief Financial Officer conclude that our system of internal controls is adequate and comparable to those of issuers of a similar size and nature. There were no significant changes to our internal controls or in other factors that could significantly affect these controls during the most recent quarter ended November 30, 2009, including any significant deficiencies or material weaknesses of internal controls that would require corrective action. MANAGEMENT'S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over our financial reporting. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. INHERENT LIMITATIONS OF INTERNAL CONTROLS Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: * pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; * provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and * provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate. 13
PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 1A. RISK FACTORS Not applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION On October 16, 2008 the SEC declared our registration statement on Form S-1 effective, which registered 1,380,200 common shares for resale held by 39 non-affiliated investors. ITEM 6. EXHIBITS (a) Pursuant to Rule 601 of Regulation SK, the following exhibits are included herein or incorporated by reference. Exhibit Number Description ------ ----------- 3.1 Certificate of Incorporation of the Company incorporated herein from Exhibit 3.1 of our Registration Statement on Form S-1, filed on October 2, 2008, file number 333-153846 3.2 Bylaws of Company incorporated herein from Exhibit 3.2 of our Registration Statement on Form S-1, filed on October 2, 2008, file number 333-153846 31.1 Certification of CEO Pursuant to 18 U.S.C. ss. 1350, Section 302 31.2 Certification of CFO Pursuant to 18 U.S.C. ss. 1350, Section 302 32.1 Certification Pursuant to 18 U.S.C. ss.1350, Section 906 32.2 Certification Pursuant to 18 U.S.C. ss. 1350, Section 906 14
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REAL VALUE ESTATES, INC. Date: December 21, 2009 By: /s/ Marina Karpilovski ------------------------------------- Name: Marina Karpilovski Title: President and Director (Principal Executive and Principal Financial and Accounting Officer) Date: December 21, 2009 By: /s/ Michael Zazkis ------------------------------------- Name: Michael Zazkis Title: Secretary, Treasurer and Director 1