UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended April 30, 2012

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from _____________________ to ______________

 

Commission File Number: 333-162597

 

Prime Estates & Developments, Inc.

(Name of registrant in our charter)

 

Nevada		6552		27 0611758
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		IRS I.D.

 

200 South Wacker Drive, Suite 3100, Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

 

Telephone: 312.674.4529

 

N/A

(Former name, former address and former three months, if changed since last report)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x  No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ¨      No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	¨		Accelerated filer	¨
Non-accelerated filer	¨		Smaller Reporting Company	x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

 

As of June 4, 2012 there were 24,709,282 shares issued and outstanding of the registrant’s common stock.

 

 

PRIME ESTATES & DEVELOPMENTS, INC.

(A Development Stage Company)

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION		3
Item 1 – Financial Statements		3
Item 2.  Management’s Discussion and Analysis or Plan of Operation.		11
Item 3.  Quantitative and Qualitative Disclosure about Market Risk		15
Item 4.  Controls and Procedures.		15
PART II — OTHER INFORMATION		15
Item 1.  Legal Proceedings.		15
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.		15
Item 3.  Defaults Upon Senior Securities		16
Item 4. (Removed and Reserved).		16
Item 5.  Other Information.		16
Item 6.  Exhibits.		16
SIGNATURES		18

 

 

PART I – FINANCIAL INFORMATION

 

Item 1 – Financial Statements

 

PRIME ESTATES & DEVELOPMENTS, INC.

(A Development Stage Company)

BALANCE SHEETS

 

		04/30/12 (Unaudited)				07/31/11
ASSETS
Cash and equivalents		$	35			$	15,238
Prepaid expenses			1,471				-
TOTAL ASSETS		$	1,506			$	15,238
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	1,849			$	-
Accrued expenses - related party			145,000				20,000
Note payable - related party			14,823				-
TOTAL CURRENT LIABILITIES			161,672				20,000
SHAREHOLDERS' DEFICIT
Preferred stock, par value $0.001, authorized 100 million shares, none issued and outstanding.			-				-
Common stock, par value $0.001, authorized 200 million, 24,709,282 and 24,514,282 issued and outstanding at April 30, 2012 and July 31, 2011, respectively.			24,709				24,514
Additional paid-in capital			4,048,062				3,932,798
Deficit accumulated during the development phase			(4,232,937	)			(3,962,074	)
TOTAL SHAREHOLDERS' EQUITY			(160,166	)			(4,762	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT		$	1,506			$	15,238

 

The accompanying notes are an integral part of these financial statements.

 

 

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

RESULTS OF OPERATIONS

(Unaudited)

 

		Nine Months Ended April 30,								Three Months Ended April 30,								Inception (7/21/09) to Apr 30,
		2012				2011				2012				2011				2012
Interest income		$	-			$	-			$	-			$				$	52
General and administrative expenses			267,404				107,199				52,825				87,190				4,227,743
Interest expense - related parties			3,459				635				1,739				159				5,246
Net operating loss			(270,863	)			(107,834	)			(54,564	)			(87,349	)			(4,232,937	)
NET LOSS		$	(270,863	)		$	(107,834	)		$	(54,564	)		$	(87,349	)		$	(4,232,937	)
Net loss per share, basic and fully diluted		$	(0.01	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average number of shares outstanding			24,654,025				24,282,680				24,691,837				24,355,563

 

The accompanying notes are an integral part of these financial statements.

 

 

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

						Common Stock, Par Value $0.001								Additional Paid In				Develop. Stage				Total Shareholders'
		Date				Shares				Amount				Capital				Deficit				Deficit
Balances at inception							-			$	-			$	-			$	-			$	-
Founders' shares			07/31/09				20,000,000				20,000				(20,000	)			-				-
Net loss, 7/21/09 to 7/31/09																			(4,600	)			(4,600	)
Balances, 7/31/09							20,000,000				20,000				(20,000	)			(4,600	)			(4,600	)
Shares issued for services			08/04/09				101,960				102				10,094								10,196
Shares issued for cash			09/15/09				392,000				392				38,808								39,200
			02/03/10				15,000				15				14,985								15,000
Imputed interest on related-party debt															952								952
Shares issued for services			06/16/10				3,710,000				3,710				3,706,290								3,710,000
Net loss, year ended 7/31/10																			(3,788,229	)			(3,788,229	)
Balances, 7/31/10							24,218,960				24,219				3,751,129				(3,792,829	)			(17,481	)

 

The accompanying notes are an integral part of these financial statements

 

 

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Continued)

(Unaudited)

 

						Common Stock, Par Value $0.001								Additional Paid In				Develop. Stage				Total Shareholders'
		Date				Shares				Amount				Capital				Deficit				Deficit
Shares issued for services			04/28/11				80,000				80				63,120								63,200
Shares issued for cash			10/30/10				56,322				56				22,473								22,529
			03/16/11				10,000				10				5,990								6,000
			03/18/11				100,000				100				59,900								60,000
			03/31/11				14,000				14				8,386								8,400
			04/01/11				35,000				35				20,965								21,000
Imputed interest on related-party debt															835								835
Net loss, year ended 7/31/11																			(169,245	)			(169,245	)
Balances, 7/31/11							24,514,282				24,514				3,932,798				(3,962,074	)			(4,762	)
Stock issued for cash			08/09/11				23,500				24				14,076								14,100
			03/06/12				25,000				25				9,975								10,000
Stock issued for services			08/12/11				100,000				100				59,900								60,000
			12/08/11				46,500				46				27,854								27,900
Imputed interest on related-party debt															3,459								3,459
Net loss for the period																			(270,863	)			(270,863	)
Balances, 4/30/12							24,709,282			$	24,709			$	4,048,062			$	(4,232,937	)		$	(160,166	)

 

The accompanying notes are an integral part of these financial statements

 

 

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Nine Months Ended April 30,								Inception (7/21/09) to
		2012				2011				Apr 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(270,863	)		$	(107,834	)		$	(4,232,937	)
Adjustments to reconcile net loss with cash used in operations:
Stock based compensation			87,900				63,200				3,871,296
Imputed interest			3,459				635				5,246
Change in operating assets and liabilities:											-
Prepaid expenses and other current assets			(1,471	)							(1,471	)
Accounts payable and accrued expenses			1,849				(2,079	)			1,849
Accrued expenses, related-party			125,000				5,000				145,000
Net cash used in operating activities			(54,126	)			(41,078	)			(211,017	)
CASH FLOWS FROM INVESTING ACTIVITIES
			-				-				-
Net cash provided by / used in investing activities			-				-				-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party note payable			14,823				1,650				32,345
Principal payments on related-party note payable			-				(17,522	)			(17,522	)
Proceeds from the sale of common stock			24,100				117,929				196,229
Net cash provided by financing activities			38,923				102,057				211,052
NET INCREASE / (DECREASE) IN CASH			(15,203	)			60,979				35
Cash at beginning of period			15,238				470				-
Cash at end of period		$	35			$	61,449			$	35
SUPPLEMENTAL DISCLOSURES
Cash paid for interest			-				-				-
Cash paid for income taxes			-				-				-

 

The accompanying notes are an integral part of these financial statements.

 

 

PRIME ESTATES & DEVELOPMENTS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

APRIL 30, 2012

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

Prime Estates and Developments, Inc. (“Prime Estates”, “The Company”, “we”, or “us”) was incorporated in the State of Nevada on July 21, 2009 for the purpose of acquiring and operating commercial real estate and real estate related assets. On the date of its inception, the Company issued 20 million shares of its common stock to three founders which were recorded at no value (offsetting increases and decreases in Common Stock and Additional Paid in Capital).

 

In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year.

 

Summary of Significant Accounting Policies

 

Basis of Financial Statement Presentation

The accompanying financial statements have been prepared in accordance with principles generally accepted in the United States of America.

 

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of April 30, 2012 and July 31, 2011, there were no cash equivalents.

 

Development Stage Enterprise

The Company complies with the accounting rules related to the characterization of the Company as development stage.

 

Revenue Recognition

We plan to recognize revenues from real estate sales under the full accrual method which requires that revenues be recognized when the sale is consummated; when the initial and continuing investments by the buyer in the property are sufficient; All the risks and rewards of ownership reside with buyer; There is no continuing duty or involvement by the seller post-sale (after closing); and, There is no future subordination of any buyer receivable (seller financing cases).

 

The Company may also earn rental income and management fees. The fees are recognized as they are earned.

 

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment in accordance with the accounting rules related to Property, Plant and Equipment (“Codification Topic 360”). Under these rules, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized or the amount, if any, which the carrying value of the asset exceeds the fair value.

 

Fair Value of Financial Instruments

Financial instruments, including cash, receivables, accounts payable, and notes payable are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with market rates. No adjustments have been made in the current period.

 

Income Taxes

The Company accounts for income taxes under the accounting rules related to income taxes (“Codification Topic 740”). Under these rules, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. 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 income in the period that includes the enactment date. There was no current or deferred income tax expense or benefits for the periods ending April 30, 2012 and July 31, 2011.

 

 

Basic and Diluted Net Loss Per Common Share

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the periods presented. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same due to the anti dilutive nature of potential common stock equivalents.

 

Stock Based Compensation

The Company accounts for stock-based employee compensation arrangements using the fair value method in accordance with the accounting provisions relating to share-based payments (“Codification Topic 718”). The company accounts for the stock options issued to non-employees in accordance with these provisions.

 

The Company did not grant any stock options or warrants during the periods presented.

 

Organizational and Offering Costs

Costs incurred to organize the Company are expensed as incurred. Offering costs incurred in connection with the Company’s common share offerings are reflected as a reduction of capital upon the receipt of the net proceeds of the offering or charged to expense if the offering is not completed. No such costs have been incurred as of April 30, 2012.

 

Recent Accounting Pronouncements

 

Prime Estates does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

 

NOTE 2 – GOING CONCERN

 

These financial statements have been prepared on a going concern basis, which implies Prime Estates will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and 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 Prime Estates be unable to continue as a going concern.

 

The Company had incurred losses and has a working capital deficit as of April 30, 2012; these factors among others raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company intends to acquire and operate commercial real estate but will require capital to do so. There is no guarantee that we will be able to raise the capital necessary to make our acquisitions or if, upon acquiring properties, we will be able to generate positive cash flows from operations. These factors raise substantial doubt regarding Prime Estates’ ability to continue as a going concern.

 

NOTE 3 – CAPITAL STRUCTURE

 

Common Stock

The Company is authorized to issue 200 million common shares. At July 31, 2011, we had 24,514,282 common shares issued and outstanding.

 

During the nine months ended April 30, 2012, we issued 100,000 shares to a law firm for one year of legal services pertaining to our Exchange Act filings. We valued the shares at the closing price on the grant date and charged general and administrative expenses with $60,000.

 

Also during the nine months ended April 30, 2012, we issued 23,500 shares for $14,100 in cash and 25,000 shares for $10,000 in cash.

 

On August 18, 2011, we entered into an agreement with a consulting firm to propose investment opportunities in the area of distressed residential and commercial real estate. We issued 46,500 shares of common stock, valuing them at the fair value at the grant date. We charged general and administrative expense with $27,900.

 

 

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock which has preferential liquidation rights over common stock and is non-voting. As of April 30, 2012, no shares have been issued.

 

Potentially Dilutive Securities

No options, warrants or other potentially dilutive securities have been issued as of April 30, 2012.

 

NOTE 4 – INCOME TAXES

 

The Company has tax losses which may be applied against future taxable income. The potential tax benefits arising from these loss carry-forwards expire beginning in 2029 and are offset by a valuation allowance due to the uncertainty of profitable operations in the future. The estimated net tax loss carry-forward was approximately $362,000 at April 30, 2012 resulting in a potential tax benefit of approximately $141,040.

 

The significant components of the deferred tax asset as of April 30, 2012 and July 31, 2011 are as follows:

 

		April 30, 2012				Jul 31, 2011
Net operating loss carry-forwards			141,040				62,537
Valuation allowance			(141,040	)			(62,537	)
Net deferred tax asset		$	-			$	-

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

In January, 2010, a shareholder paid expenses on behalf of the company totaling $15,872. Again in March, 2011 this shareholder paid expenses of $1,650. This contribution is not evidenced by a promissory note and bears no interest.

 

On March 18, 2011 the shareholder was repaid the advances of $17,522.

 

During the nine months ended April 30, 2012, two of our directors collectively loaned the Company $14,823. The loan is not witnessed by a promissory note and there is no maturity date. The Company has agreed to repay the amount when cash becomes available to do so. During the nine months ended April 30, 2012, we imputed $469 on these advances, charging Interest Expenses and increasing Additional Paid in Capital.

 

NOTE 6 – AGREEMENT WITH GREEN ERA LTD.

 

On February 17, 2011, we entered into a license agreement with GreenEra, Ltd., (“GreenEra”), a company formed under the laws of the Cyprus Republic, to acquire the rights of exploitation of a 60,000 hectares (approximately 150,000 acres) of forest land in Novo Aripuana, State of Amazones, Brazil.  GreenEra acquired these rights from the landowner in 2009. These rights expire on December 28, 2044.

 

The property can be developed and can probably produce carbon credits that when sold could produce profits. Any profits that will be gained from the development or the sale of the carbon credits will be shared 50-50 between PMLT and the owner of the forest land. The parties agree that:

 

·

Prime Estates will pay GreenEra $5,000 per month for approximately 34 years beginning in April 1, 2011. Prime Estates has the right to cancel the agreement. Upon such cancellation, no future obligation to GreenEra would exist.

 

·

Prime Estates will obtain financing sufficient to pay for all costs associated with obtaining the carbon credits, but not to exceed $1.2 million.

 

·

GreenEra will be the developer responsible for performing all actions necessary to obtain the credits.

 

GreenEra acquired the exclusive rights to develop and to obtain these carbon credits when it contracted with the landowner on December 28, 2009.  Therefore, Prime Estates & Developments Inc. has inherited the rights and obligations of that agreement which stipulates, in part:

 

·

The landowner has the right to veto sales of any credits under $2.00.

 

 

·

If GreenEra is unable to receive a carbon credit certification until December 31, 2013, or cannot sell, convey, assign, lend or sublet, carbon credits or any other rights or products the contract is voided.

 

Our Directors, Mr. Panagiotis Drakopoulos and Mr. Vasileios Mavrogiannis, are also shareholders but not directors or officers of GreenEra Ltd.

 

As of April 30, 2012, we have accrued $65,000 of costs on this contract and have made no cash payments to GreenEra. For the nine months ended April 30, 2012, we have imputed $2,990 of interest on the unpaid balance, charging Interest Expense and increasing Additional Paid in Capital.

 

NOTE 7 – SUBSEQUENT EVENTS

 

We have evaluated subsequent events through the date of issuance of the financial statements.

 

Item 2.   Management’s Discussion and Analysis or Plan of Operation.

 

This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and accompanying notes and the other financial information appearing else where in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

 

Overview

 

Prime Estates and Developments, Inc. (“Prime Estates”, “The Company”, “we”, or “us”) was incorporated in the State of Nevada on July 21, 2009 for the purpose of acquiring and operating commercial real estate and real estate related assets. Our principal office is located at 200 South Wacker Drive, Suite 3100, Chicago, Illinois 60606. Telephone: 312.674.4529.

 

Our Business

 

We intend to acquire and operate commercial real estate and real estate related-assets in Greece, Bulgaria, Romania and the United States. We intend to focus on acquiring commercial properties such as those requiring development, redevelopment or repositioning, those located in markets and submarkets with what we believe to be high growth potential and those available from sellers who are distressed or face time-sensitive deadlines.

 

In addition, given current economic circumstances in the real estate industry, our investment strategy may also include investments in real estate-related assets that we believe present opportunities for significant current income. Such investments may also have what we believe to be opportunities for capital gain, whether as a result of a discount purchase or related equity participations.

 

We may acquire a wide variety of commercial properties, including office, industrial, retail, hospitality, recreation and leisure, single-tenant, multifamily and other real properties such as forests. These properties may be existing, income-producing properties, newly constructed properties or properties under development or construction and may include multifamily properties purchased for conversion into condominiums and single-tenant properties that may be converted for multifamily use.

 

Assuming we raise sufficient funding, our investment strategy is designed to provide investors with a diversified portfolio of real estate assets. Although we have reviewed the real estate markets in the countries in which we intend to acquire properties, we have no contract, agreement or commitment to acquire any property as of the date of this filing.

 

Specifically, we have taken the following steps in furtherance of our business plan:

 

We have enriched our knowledge in the real estate market in Greece, Bulgaria, Romania and the United States by studying the existing statistics on this market and by having extensive discussions with many experts of the market as follows:

 

∙

Overall we have reviewed over 40 properties or development projects in two countries, the USA and Greece.

 

 

∙

The types of properties we have reviewed are residential and commercial.

 

∙

Overall we have met with many real estate agents in two countries, the USA and Greece.

 

∙

We have met with many real estate agents in two countries, the USA and Greece.

 

∙

We have contacted two appraisers, one in the U.S. and another one in Greece. The appraiser we contacted in Greece is able to make appraisals also in Bulgaria and in Romania. In his team he also includes other scientists such as architects, engineers, topographers and seismologists.

 

∙

We have signed Consulting Agreements with 9 consultants that will assist the company in Management, Public Relations, Investor Relations, Strategic Planning, Corporate organization & structure, estimation, due diligence, acquisition, development, renovation, sale, and management of Real Estate properties, locating proper Real Estate, management of Real Estate, and locating and introducing buyers for Real Estate that the company wishes to lease or sell.

 

∙

In July 2010 we signed a Joint Venture Agreement with Madison Realty Advisors, LLC (“Madison”). Madison has extensive experience in the business of acquiring, financing, managing and selling commercial real estate properties for itself and third parties. Madison will actively seek commercial real estate properties for acquisition. In connection therewith, Madison will negotiate the acquisition, perform due diligence on the properties, arrange financing and close the properties. Then perform property management, asset management and be responsible for the ultimate disposition of the properties. All property acquisitions shall be subject to the approval of Prime.

 

In December 2010 we started to examine the possibility of adding forests, or signing joint venture agreements with companies or individuals that own management rights of forests, in order to take advantage of the economic benefits that can derive from these forests, including the so called “carbon credits”. A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one ton of carbon dioxide or carbon dioxide equivalent. We could sell carbon credits that derive from forestry to commercial and individual customers who are interested in lowering their carbon footprint.

 

Our discussions with various individuals concerning these properties and projects has included general discussions of acquiring properties directly either ourselves or in a joint venture with others or of developing properties either ourselves or in a joint venture with others, as described above. As of the date of this filing, all such discussions have been general and we have no specific plan as to whether we will acquire or develop ourselves or jointly any specific properties or projects.

 

On February 17, 2011, we entered into an agreement with GreenEra, Ltd., a company formed under the laws of the Cyprus Republic, to acquire the rights of exploitation of a 60,000 hectares (approximately 150,000 acres) of forest land in Novo Aripuana, State of Amazones, Brazil.  The property can be developed and can probably produce carbon credits that when sold could produce profits. Any profits that will be gained from the development or the sale of the carbon credits will be shared 50-50 between PMLT and the owner of the forest land. The parties agree that:

 

·

Prime Estates will pay GreenEra $5,000 per month for approximately 34 years beginning in April 1, 2011.

 

·

Prime Estates will obtain financing sufficient to pay for all costs associated with obtaining the carbon credits, but not to exceed $1.2 million.

 

·

GreenEra will be the developer responsible for performing all actions necessary to obtain the credits.

 

GreenEra acquired the exclusive rights to develop and to obtain these carbon credits when it contracted with the landowner on December 28, 2009.  Therefore, Prime Estates & Developments Inc. has inherited the rights and obligations of that agreement which stipulates, in part:

 

·

The landowner has the right to veto sales of any credits under $2.00.

 

·

If GreenEra is unable to receive a carbon credit certification until December 31, 2013, or cannot sell, convey, assign, lend or sublet, carbon credits or any other rights or products the contract is voided.

 

 

Our Directors, Mr. Panagiotis Drakopoulos and Mr. Vasileios Mavrogiannis, are also shareholders but not directors or officers of GreenEra Ltd.

 

In August 18, 2011, we signed a JV with Pelion Exclusive. Pelion Exclusive will actively seek and propose investment opportunities especially in the area of distressed residential and commercial real estate properties for merger and/or acquisition. Pelion Exclusive may also assist Prime in the financing and development of real estate projects. It may also perform property management, asset management and propose possible buyers for the ultimate disposition of the properties.

 

On December 1, 2011, we signed an MOU with Mr. Konstantinos Gogos and Mr. Anton Spaniol with a purpose to provide energy projects (solar parks) from their own portfolio or from third parties to Prime Estates. The specific project(s) and the amount of shares issued for its acquisition will be determined on a new contract if and when all parties reach an agreement.

 

During the first three months of 2012, we have been involved in discussions with Mave Sa, a Greek logistics company that holds real estate assets, concerning a potential business combination. However, as of the date of this report, we have not entered into any formal oral or written memorandum of understanding, letter of intent or similar non-binding understanding and have not entered into any oral or written binding agreement, commitment or understanding concerning this potential business combination. There is no assurance that we will ever enter into any formal written memorandum of understanding, letter of intent or similar non-binding understanding or any formal binding agreement, commitment or understanding concerning this potential business combination.

 

There is no limitation in the amount of funds we may invest in either property acquisition or property development. There is no limitation on or percentage allocation of funds or assets between property acquisition and property development or between 100% ownership or joint venture ownership.

 

Results of Operations

 

Nine Months Ended April 30, 2012 versus 2011

 

We incurred $267,404 of general and administrative expenses for the nine months ended April 30, 2012 versus only $107,199 for the same period in 2011. This increase is principally due to our accrual of our monthly costs associated with our agreement with GreenEra, Ltd and our inclusion of Officer and Director salaries which began in April, 2011. In addition, we incurred $87,900 in non-cash compensation expense for the nine months ended April 30, 2012 whereas we had no such charge during the same period in 2011.

 

Our interest expense for the nine months ended January 31, 2012 versus 2011 witnessed an increase from $635 to $3,459, principally due to our imputation of interest expense on outstanding GreenEra debt.

 

Three Months Ended April 30, 2012 versus 2011

 

We incurred $52,825 of general and administrative expenses for the three months ended April 30, 2012 versus $87,190 for the same period in 2011. The decrease is primarily due to non-cash compensation recorded during the three months ended April 30, 2011, for which we have no counterpart in the current year.

 

Interest expense is also higher ($1,739 for the nine months ended April 30, 2012 versus only $159 for the same period in 2011). This is owing to higher accrued expenses and notes payable to related parties on which we impute interest costs.

 

Liquidity and Capital Resources

 

We will need to secure a minimum of $120,000 in funds to finance our business in the next 12 months, in addition to the funds which will be used to stay public, which funds will be used as set forth below. However in order to become profitable we may still need to secure additional debt or equity funding. We hope to be able to raise additional funds from an offering of our stock in the future. However, this offering may not occur, or if it occurs, may not raise the required funding. We do not have any plans or specific agreements for new sources of funding, except for the anticipated loans from management as described below, or any planned material acquisitions, although we are involved in preliminary discussions concerning joint venture or similar agreements to become involved in solar parks in Europe. Our independent auditor’s report expresses substantial doubt about our ability to continue as a going concern.  At April 30, 2012, we had only $35 in cash in our bank account.  We anticipate our monthly burn rate for the next 12 months to be approximately $10,000 per month, including the maximum estimated $50,000 costs of staying public as described herein.  

 

 

Until we generate operating revenues or receive other financing, all our costs, which we will incur irrespective of our business development activities, including bank service fees and those costs associated with SEC requirements associated with staying public, estimated to be less than $ 50,000 annually, will be funded as a loan from our officers and directors with no interest, to the extent that funds are available to do so. Our Officers and Directors are not obligated to provide these or any other funds although they have indicated that they currently intend to do so and that they have sufficient liquid assets to meet all of these anticipated future obligations if we do not generate operating revenues or secure other funding. There is no dollar limit to the amount they have agreed to provide. For the nine months ended April 30, 2012, our directors loaned the Company $14,823.

 

Additionally, since our inception, we have raised $196,229 for operations through the sale of our stock under transactions exempt from registration under Regulation S (see Note 3 to the financial statements).

 

If we fail to meet these requirements, we may lose the qualification and our securities would no longer trade on the over the counter bulletin board. Further, if we fail to meet these obligations and as a consequence we fail to satisfy our SEC reporting obligations, investors will now own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.

 

Plan of Operation in the Next Twelve Months

 

Our activities currently consist of website creation, and establishing additional cooperation agreements with real estate agents to establish the flow of real estate opportunities.  We do not intend to activate a website until we acquire properties and do not intend to put investor info on the site once activated. We have not completed any closings that would result in revenue to date and there can be no assurances that any future closings will result in revenue.

 

Specifically, our plan of operations for the next 12 months is as follows:

 

·

From today until the end of 2012 we plan to raise additional funds in order to be able to cover our operational expenses and have the needed financing to acquire our first pieces of real estate. We believe that the proceeds raised in our prior Private Placements will satisfy our cash requirements only until we finish our efforts for additional financing at the end of 2012. If we will not be able to raise any additional funds by the end of 2012 we do not anticipate having the ability to continue our operations. We may need to obtain debt financing to implement our business plan. However, we initially contemplate pursuing equity financing only to cover our expenses and finance our first acquisitions of real estate properties. Of course, there is no assurance that we will be able to raise any future capital in any amount and if we fail to do so investors could lose their entire investment.  We estimate the cost of this equity financing if we are able to secure it to be about $6,000, primarily legal and accounting costs and filing fees associated with such an offering.

 

·

By the end of 2012 we also plan to focus our efforts in order to locate the proper properties for acquisition and do a full estimation and due diligence on them. We also plan to collaborate with existing real estate agents in order to be able to locate more properties and receive offers from properties that are getting sold at opportunistic prices. We also plan to create collaborations with freelancers who will have specific experience and knowledge in certain specialized real estate areas such as appraisers, engineers, archeologists, etc. The freelancers will be used in case by case scenario whenever there is a need for their specialty. We wish to create such collaborations with freelancers in order to have accurate real estate estimations and development plans, and in order to have these services at discount prices. The cost that we estimate to have in order to locate the freelancers will be about $2,000.

 

·

Moreover, by the end of 2012 we believe that we will be able to locate enough real estate opportunities and do a full estimation and due diligence on them so that we will be able to take our first decision to acquire our first property. We estimate that the cost in order to locate a property at an opportunistic price and the cost of the needed due diligence for the first property will be about $3,000.

 

 

·

By the end of 2012, or the first quarter of 2013, we believe that we will be able to close our first deal, do the necessary paperwork and therefore acquire our first property. Moreover, in order to have a diversified portfolio of properties we plan to locate and acquire at least three more properties. Among the properties that we intend to buy are those that generate or will within a period of three months generate income from rent. Overall we plan to spend about 80% of the capital that we will have raised in order to acquire real estate properties in the next twelve months. Assuming that we will manage to raise about $10,000,000 until the end of 2012, we will invest about $8,000,000 in real estate assets. Specifically, we plan to invest a portion of these funds, no more than $1,200,000, in order to possibly develop the forest that we have acquired its rights in the Amazonas, Brazil. Moreover, we plan to invest up to 5% of our raised funds in more liquid types of assets such as real estate related securities, primarily such as bonds backed by real estate.  We plan to keep the rest of our funds in cash.

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.

 

Changes in Internal Control over Financial Reporting

 

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended April 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

(a)                 Unregistered Sales of Equity Securities.

 

In October 2010, we sold 56,322 shares of common stock to 4 non-U.S. investors at $0.40 for total consideration of $22,528.80.

 

In March and April, 2011, we sold 159,000 shares of common stock to 4 non-US investors at $0.60 per share for total consideration of $95,400.

 

In August, 2011, we issued 23,500 shares of common stock at $0.60 per share for total consideration of $14,100.

 

In March, 2012, we issued 25,000 shares of common stock at $0.40 per share for total consideration of $10,000.

 

During the nine months ended April 30, 2012, we issued 146,500 shares for services.

 

 

We relied upon Regulation S of the Securities Act of 1933, as amended for the above issuances to non US citizens or residents.

 

We believed that Regulation S was available because:

 

·

None of these issuances involved underwriters, underwriting discounts or commissions;

·

We placed Regulation S required restrictive legends on all certificates issued;

·

No offers or sales of stock under the Regulation S offering were made to persons in the United States;

·

No direct selling efforts of the Regulation S offering were made in the United States.

 

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:

 

·

Access to all our books and records.

·

Access to all material contracts and documents relating to our operations.

·

The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.

 

Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.

 

(b)                 Use of Proceeds.

 

The Registrant did not sell any registered securities during the three months ended April 30, 2012.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. (Removed and Reserved).

 

Item 5. Other Information.

 

Not applicable.

 

Item 6. Exhibits.

 

(a)

Exhibits.

 

Exhibit No.		Document Description
31.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

Exhibit 101		Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**
		101.INS	XBRL Instance Document**
		101.SCH	XBRL Taxonomy Extension Schema Document**
		101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
		101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
		101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
		101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

 

*  This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

 

 

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.

 

Prime Estates & Developments, Inc.

 

/s/ Panagiotis Drakopoulos
Panagiotis Drakopoulos	June 10, 2012
Principal Executive Officer

 

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.

 

SIGNATURE		NAME		TITLE		DATE
/s/ Vasileios Mavrogiannis		Vasileios Mavrogiannis		Treasurer/CFO		June 10, 2012
/s/ Panagiotis Drakopoulos		Panagiotis Drakopoulos		Principal Executive Officer, Secretary		June 10, 2012