UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2008
PERF-GO GREEN HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-141054 20-3079717
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification Number)
645 Fifth Avenue
New York, New York 10022
(Address of principal executive offices) (zip code)
(212) 848-0253
(Registrant's telephone number, including area code)
Perf-Go Green Holdings, Inc.
7425 Brighton Village Drive
Chapel Hill, North Carolina 27515
(Former name or former address, if changed since last report)
Copies to:
Adam P. Silvers, Esq.
Ruskin Moscou Faltischek, P.C.
1425 RexCorp Plaza
Uniondale, New York 11556
Phone: (516) 663-6600
Fax: (516) 663-6601
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 9.01 Financial Statements & Exhibits
EXPLANATORY NOTE
Perf-Go Green Holdings, Inc. is filing this Amendment No. 1 to the Current
Report on Form 8-K/A ("Amendment No.1") to amend our Current Report on Form 8-K
originally filed on May 16, 2008.
We are filing this Amendment No.1 to restate the Company's financial
statements as of March 31, 2008 included therein. In the original issuance of
the financial statements as of March 31, 2008 and for the period from November
15, 2007 (inception) to March 31, 2008, the Company did not assign a fair value
to the warrants issued in connection with the convertible notes and warrants
sold by Perf-Go Green, Inc. in January and February 2008. Generally accepted
accounting principles requires that a fair value be assigned to those warrants
and that such amount be recorded as debt discount and amortized over the life of
the related debt. Because the notes were converted to equity shortly after
issuance, generally accepted accounting principles require that the remaining
debt discount be charged to operations. The Company has determined that the fair
value of those warrants was approximately $669,000. Accordingly, the prior
financial statements have been restated as follows:
Balance sheet as of March 31, 2008:
----------------------------------
Originally
reported Restatement As restated
--------------- ---------------- -----------------
Additional paid in capital $ 804,028 $ 669,300 $ 1,473,328
Deficit accumulated during
the development stage $ (755,715) $(669,300) $(1,425,015)
Total stockholders equity $ 50,345 $ 0 $ 50,345
Statement of Operations for the period from
November 15, 2007 (inception) to March 31, 2008:
-----------------------------------------------
Originally
reported Restatement As restated
--------------- ---------------- -----------------
Other expense, net $ (128,690) $(669,300) $ (797,990)
Net loss $ (755,715) $(669,300) $(1,425,015)
Net loss per share $ (0.04) $ (0.04) $ (0.08)
Statement of Cash Flows for the Period from
November 15, 2007 (inception) to March 31, 2008:
-----------------------------------------------
Originally Restatement
reported adjustment As restated
---------------- ----------------- ----------------
Net loss $(755,715) $(669,300) $(1,425,015)
Warrants issued as
compensation in connection
with convertible debt
funding $ 42,697 $ 669,300 $ 711,997
Net cash used in operations $(402,370) $ - $ (402,370)
2
Except as disclosed in this Explanatory Note, we have not updated the
disclosure contained in the original Form 8-K, as filed on May 16, 2008.
Accordingly, this Amendment No. 1 should be read in conjunction with our other
filings made with the Securities and Exchange Commission ("SEC").
3
TABLE OF CONTENTS
Page
----
Report of Independent Registered Public Accounting Firm 6
Financial Statements:
Balance Sheet - As of March 31, 2008 7
Statement of Operations - For the Period from November 15, 2007
(Inception) to March 31, 2008 8
Statement of Changes in Stockholders' Equity - For the Period from
November 15, 2007 (Inception) to March 31, 2008 9
Statement of Cash Flows - For the Period from November 15, 2007
(Inception) to March 31, 2008 10
Notes to Financial Statements 11-22
4
PERF-GO GREEN, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2008
(AS RESTATED)
5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders' of:
Perf-Go Green, Inc.
We have audited the accompanying balance sheet of Perf-Go Green, Inc., (a
development stage company) as of March 31, 2008 and the related statements of
operations, changes in stockholders' equity and cash flows for the period from
November 15, 2007 (Inception) to March 31, 2008. 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 considerations 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 Perf-Go Green, Inc. as of March
31, 2008, and the results of its operations and its cash flows for the period
from November 15, 2007 (Inception) to March 31, 2008, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in Notes 2, 3, 5 and 8, the financial statements for the year ended
March 31, 2008 have been restated to account for the fair value of 1,500,000
stock warrants issued to third party investors in the convertible debt offering.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has a net loss of $1,425,015 and net cash used
in operations of $402,370 for the period ended March 31, 2008; and a deficit
accumulated during the development stage of $1,425,015 at March 31, 2008. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regards to these matters are also described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Berman & Company, P.A.
--------------------------
Berman & Company, P.A.
Boca Raton, Florida
May 2, 2008, except for notes 2, 3, 5(A)(4), 5(B)(1), 5(B)(3) and 8 as to which
the date is August 7, 2008
6
PERF-GO GREEN, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31, 2008
-----------------------
(As Restated)
-----------------------
Assets
Current Assets:
Cash and cash equivalents $ 270,185
Prepaid expenses
32,615
-----------------------
Total Current Assets 302,800
Equipment, net of accumulated depreciation of $85 2,460
-----------------------
Total Assets $ 305,260
=======================
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable
$ 199,645
Accrued expenses
55,270
-----------------------
Total Current Liabilities
254,915
-----------------------
Stockholders' Equity:
Preferred stock ($.0001 par value, 10,000,000 shares authorized,
none issued and outstanding)
-
Common stock ($0.0001 par value, 100,000,000 shares authorized,
20,322,767 shares issued and outstanding)
2,032
Additional paid-in capital 1,473,328
Deficit accumulated during development stage (1,425,015)
-----------------------
Total Stockholders' Equity
50,345
-----------------------
Total Liabilities and Stockholders' Equity $ 305,260
=======================
See accompanying notes to the financial statements.
7
PERF-GO GREEN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the Period from
November 15, 2007
(Inception) to
March 31, 2008
-------------------------
(As Restated)
-------------------------
Operating expenses
General and administrative $ 627,025
-------------------------
Total operating expenses 627,025
-------------------------
Loss from operations (627,025)
Other income (expense)
Interest income 391
Interest expense (798,381)
-------------------------
Total other expense - net (797,990)
-------------------------
Net loss $ (1,425,015)
=========================
Net loss per share - basic and diluted $ (0.08)
=========================
Weighted average number of shares outstanding
during the period - basic and diluted 18,860,109
=========================
See accompanying notes to the financial statements.
8
PERF-GO GREEN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM NOVEMBER 15, 2007 (INCEPTION) TO MARCH 31, 2008
(AS RESTATED)
Common Stock Additional Deficit Total
-------------------------- Paid-in Accumulated during Stockholders'
Shares Amount Capital Development Stage Equity
------------- ----------- -------------- ------------------ ------------
Contributed capital - related party - $ - $ 100 $ - $ 100
Common stock issued for compensation
- founders - ($0.0001/share) 18,800,000 1,880 - - 1,880
Common stock issued in connection with
conversion of convertible debt
and related accrued interest ($0.50/share) 1,522,767 152 761,231 - 761,383
Warrants issued as compensation in connection
with convertible debt funding - - 711,997 - 711,997
Net loss from November 15, 2007 (inception
date) to March 31, 2008 - - - (1,425,015) (1,425,015)
------------- ----------- -------------- ------------------ ------------
Balance March 31, 2008, as restated 20,322,767 $ 2,032 $ 1,473,328 $(1,425,015) $ 50,345
============= =========== ============== ================== ============
See accompanying notes to the financial statements.
9
PERF-GO GREEN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the Period from
November 15, 2007
(Inception) to
March 31, 2008
--------------------------
(As Restated)
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,425,015)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of debt issue costs 75,000
Depreciation 85
Stock issued for compensation - founders 1,880
Warrants issued as compensation in connection with
convertible debt funding 711,997
Changes in operating assets and liabilities:
(Increase) in prepaid expenses (32,615)
Increase in accounts payable 199,645
Increase in accrued expenses 55,270
Increase in accrued interest payable 11,383
--------------------------
Net Cash Used In Operating Activities (402,370)
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (2,545)
--------------------------
Net Cash Used in Investing Activities (2,545)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributed capital - related party
100
Proceeds from sale of convertible debt 750,000
Cash paid as direct offering costs - convertible debt funding (75,000)
--------------------------
Net Cash Provided By Financing Activities 675,100
--------------------------
Net Increase in Cash and Cash Equivalents 270,185
Cash and Cash Equivalents - Beginning of Period -
--------------------------
Cash and Cash Equivalents - End of Period $ 270,185
==========================
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Income Taxes $ -
==========================
Interest $ 75,000
==========================
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for conversion of convertible debt
and related accrued interest $ 761,383
==========================
See accompanying notes to the financial statements.
10
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Note 1 Nature of Operations and Summary of Significant Accounting Policies
Nature of operations
Perf Go Green, Inc. (the "Company") is a Delaware corporation that was
incorporated on November 15, 2007 as an LLC and then converted to a "C"
corporation on January 7, 2008. The Company had no activity during its existence
as an LLC.
The Company has been created as an environmentally friendly "green" company for
the development and global marketing of eco-friendly, non-toxic, food contact
compliant, biodegradable plastic products. We believe our plastic products will
break down in landfill environments within twelve to twenty four months, leaving
no visible or toxic residue. All of our products incorporate recycled plastic.
The product is intended to be presented to mass retailers in the United States
and Canada and it is the Company's intention to market the products worldwide.
Development stage
The Company's financial statements are presented as those of a development stage
enterprise. Activities during the development stage primarily include debt
financing, product design and the development of mass-market product
distribution networks for the eventual distribution of the products. There have
been no sales since our Inception.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Significant estimates in 2008 included the valuation of stock issued for
compensation and services, stock issued to convert outstanding debt and related
accrued interest, warrants issued as compensation, estimated useful life of
equipment, and a 100% valuation allowance for deferred taxes due to the
Company's continuing and expected future losses.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments purchased with a maturity of three months or less and money
market accounts to be cash equivalents.
The Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At March 31, 2008, the balance
exceeded the federally insured limit by $185,328.
11
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Equipment
Equipment is stated at cost, less accumulated depreciation on a straight-line
basis over the estimated useful life, which is five years.
Net loss per share
Basic loss per share is computed by dividing net loss by weighted average number
of shares of common stock outstanding during each period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period. At March 31, 2008, the Company had
1,650,000 warrants that could potentially dilute future earnings per share;
however, a separate computation of diluted loss per share is not presented, as
these common stock equivalents would be anti-dilutive.
Fair value of financial instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosures of information about the
fair value of certain financial instruments for which it is practicable to
estimate the value. For purpose of this disclosure, the fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced sale or
liquidation.
The carrying amount reported in the balance sheet for prepaid expenses, accounts
payable and accrued expenses approximates its fair market value based on the
short-term maturity of these instruments.
Segment information
The Company follows Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information." During
2008, the Company only operated in one segment; therefore, segment information
has not been presented.
Stock-based compensation
All share-based payments to employees is recorded and expensed in the statement
of operations as applicable under SFAS No. 123R, "Share-Based Payment". The
Company has not issued any stock based compensation since inception to
employees.
12
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Non-employee stock based compensation
Stock-based compensation awards issued to non-employees for services are
recorded at either the fair value of the services rendered or the instruments
issued in exchange for such services, whichever is more readily determinable,
using the measurement date guidelines enumerated in Emerging Issues Task Force
Issue EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services" ("EITF 96-18"). The Company has issued stock warrants to third party
investors and a third party placement agent (See Note 5).
Derivative Liabilities
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
requires bifurcation of embedded derivative instruments and measurement of their
fair value for accounting purposes. In determining the appropriate fair value,
the Company uses the Black-Scholes option-pricing model. Derivative liabilities
are adjusted to reflect fair value at each period end, with any increase or
decrease in the fair value being recorded in results of operations as an
adjustment to fair value of derivatives. In addition, the fair value of
freestanding derivative instruments such as warrants, are valued using the
Black-Scholes option-pricing model. At March 31, 2008, we had no such derivative
instruments.
Advertising costs
Advertising costs are expensed as incurred. Advertising expense totaled $2,840
for the period from November 15, 2007 (Inception) to March 31, 2008.
Income taxes
For the period November 15, 2007 (Inception) to January 6, 2008, the Company was
taxed as an LLC and was treated as a pass through entity. On January 7, 2008,
the Company became a "C" corporation. The Company accounts for income taxes
under the liability method in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" under this method, deferred
income tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
We adopted the provisions of FASB Interpretation No. 48; "Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109" ("FIN
48). FIN 48 contains a two-step approach to recognizing and measuring uncertain
tax positions. The first step is to evaluate the tax position for recognition by
determining if the weight of available evidence indicates it is more likely than
not, that the position will be sustained on audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure
the tax benefit as the largest amount, which is more than 50% likely of being
realized upon ultimate settlement. We consider many factors when evaluating and
estimating our tax positions and tax benefits, which may require periodic
13
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
adjustments. At March 31, 2008, we did not record any liabilities for uncertain
tax position.
Recent accounting pronouncements
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements",
which clarifies the principle that fair value should be based on the assumptions
that market participants would use when pricing an asset or liability. It also
defines fair value and established a hierarchy that prioritizes the information
used to develop assumptions. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007. The Company does not
expect SFAS No. 157 to have a material impact on its financial position, results
of operations or cash flows.
In February 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial
Assets and Financial Liabilities", which permits entities to choose to measure
many financial instruments and certain other items at fair value. The unrealized
gains and losses on items for which the fair value option has been elected
should be reported in earnings. The decision to elect the fair value option is
determined on an instrument-by-instrument basis, should be applied to an entire
instrument and is irrevocable. Assets and liabilities measured at fair values
pursuant to the fair value option should be reported separately in the balance
sheet from those instruments measured using other measurement attributes. SFAS
No. 159 is effective as of the beginning of the Company's 2008 fiscal year. The
adoption of SFAS No. 159 is not expected to have a material effect on its
financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No 51" (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent's ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent's ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited. The
adoption of SFAS No. 160 is not expected to have a material effect on its
financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS 141R, "Business Combinations" ("SFAS
141R"), which replaces FASB SFAS 141, "Business Combinations". This Statement
retains the fundamental requirements in SFAS 141 that the acquisition method of
accounting be used for all business combinations and for an acquirer to be
identified for each business combination. SFAS 141R defines the acquirer as the
entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. SFAS 141R will require an entity to record separately from the
business combination the direct costs, where previously these costs were
included in the total allocated cost of the acquisition. SFAS 141R will require
an entity to recognize the assets acquired, liabilities assumed, and any
14
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
non-controlling interest in the acquired at the acquisition date, at their fair
values as of that date. This compares to the cost allocation method previously
required by SFAS No. 141. SFAS 141R will require an entity to recognize as an
asset or liability at fair value for certain contingencies, either contractual
or non-contractual, if certain criteria are met. Finally, SFAS 141R will require
an entity to recognize contingent consideration at the date of acquisition,
based on the fair value at that date. This Statement will be effective for
business combinations completed on or after the first annual reporting period
beginning on or after December 15, 2008. Early adoption of this standard is not
permitted and the standards are to be applied prospectively only. Upon adoption
of this standard, there would be no impact to the Company's results of
operations and financial condition for acquisitions previously completed. The
adoption of SFAS No. 141R is not expected to have a material effect on its
financial position, results of operations or cash flows.
In January 2008, the SEC released SAB No. 110, which amends SAB No. 107 which
provided a simplified approach for estimating the expected term of a "plain
vanilla" option, which is required for application of the Black-Scholes option
pricing model (and other models) for valuing share options. At the time, the
Staff acknowledged that, for companies choosing not to rely on their own
historical option exercise data (i.e., because such data did not provide a
reasonable basis for estimating the term), information about exercise patterns
with respect to plain vanilla options granted by other companies might not be
available in the near term; accordingly, in SAB No. 107, the Staff permitted use
of a simplified approach for estimating the term of plain vanilla options
granted on or before December 31, 2007. The information concerning exercise
behavior that the Staff contemplated would be available by such date has not
materialized for many companies. Thus, in SAB No. 110, the Staff continues to
allow use of the simplified rule for estimating the expected term of plain
vanilla options until such time as the relevant data becomes widely available.
The Company does not expect its adoption of SAB No. 110 to have a material
impact on its financial position, results of operations or cash flows.
In March 2008, the FASB issued SFAS No. 161 "Disclosures about Derivative
Instruments and Hedging Activities--An Amendment of FASB Statement No. 133."
("SFAS 161"). SFAS 161 establishes the disclosure requirements for derivative
instruments and for hedging activities with the intent to provide financial
statement users with an enhanced understanding of the entity's use of derivative
instruments, the accounting of derivative instruments and related hedged items
under Statement 133 and its related interpretations, and the effects of these
instruments on the entity's financial position, financial performance, and cash
flows. This statement is effective for financial statements issued for fiscal
years beginning after November 15, 2008. The Company does not expect its
adoption of SFAS 161 to have a material impact on its financial position,
results of operations or cash flows.
15
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
and are not expected to have a material impact on the financial statements upon
adoption.
Note 2 Going Concern - As Restated
As reflected in the accompanying financial statements, the Company has a net
loss of $1,425,015 and net cash used in operations of $402,370 for the period
ended March 31, 2008; and a deficit accumulated during the development stage of
$1,425,015 at March 31, 2008. In addition, the Company is in the development
stage and has not yet generated any revenues. The ability of the Company to
continue as a going concern is dependent upon the Company's ability to further
implement its business plan and to continue to raise funds through debt or
equity raises. The financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities
that might be necessary should the Company be unable to continue as a going
concern.
Note 3 Restatement
In the original issuance of the financial statements as of March 31, 2008, and
for the period from November 15, 2007 (inception) to March 31, 2008, the Company
did not assign a fair value to the warrants issued to the investors in
connection with the convertible notes and warrants sold by Perf-Go Green, Inc.
in January and February 2008 as described in Note 8. Generally accepted
accounting principles requires that a fair value be assigned to those warrants
and that such amount be recorded as a debt discount and amortized over the life
of the related debt. Since these convertible notes were converted to equity
prior to the maturity of the convertible debt, the remaining debt discount is
charged to interest expense. The Company has determined that the fair value of
those warrants was approximately $669,300 as discussed further in Note 5.
Accordingly, the prior financial statements have been restated as follows:
Balance Sheet as of March 31, 2008:
----------------------------------
As originally Restatement
reported adjustment As restated
------------------ ------------------- -------------------
Additional paid in capital $ 804,028 $ 669,300 $ 1,473,328
Deficit accumulated
during the development
stage $ (755,715) $ (669,300) $(1,425,015)
Total stockholders equity $ 50,345 $ - $ 50,345
16
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Statement of Operations for the Period from
November 15, 2007 (inception) to March 31, 2008:
-----------------------------------------------
As originally Restatement
reported adjustment As restated
------------------ ------------------ ---------------------
Interest expense, net $ 128,690 $ 669,300 $ 797,990
Net loss $ (755,715) $ (669,300) $(1,425,015)
Net loss per share -
basic and diluted $ (0.04) $ (0.04) $ (0.08)
Statement of Cash Flows for the Period from
November 15, 2007 (inception) to March 31, 2008:
-----------------------------------------------
As originally Restatement
reported adjustment As restated
------------------- -------------------- ---------------------
Net loss $(755,715) $(669,300) $(1,425,015)
Warrants issued as compensation in
connection with convertible debt funding $42,697 $ 669,300 $ 711,997
Net cash used in operating activities $(402,370) $ - $ (402,370)
A restated statement of changes in stockholders' equity is not presented as the
components of the restatement have been shown on the balance sheet and statement
of operations tables above.
Note 4 Equipment
At March 31, 2008, equipment consisted of the following:
Useful Life
--------------------------------------
Computer equipment 5 Years $ 2,545
Less: accumulated depreciation (85)
------------------
$ 2,460
==================
17
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Note 5 Convertible Debt Offering - As Restated
On January 15, 2008, February 8, 2008 and February 28, 2008, respectively, the
Company sold $350,000, $250,000 and $150,000, respectively, of convertible debt
each with warrants. The terms for the debt and warrants were as follows:
(A) Convertible Debt
(1) Terms
a. Interest rate at 10%.
b. Secured by substantially all assets of the Company.
c. Due one year from issue date.
d. Conversion - all debt and related accrued interest was
convertible at $0.50/share.
(2) Conversion
All debt and related accrued interest was converted on March 27, 2008. The
Company issued 1,522,767 shares of common stock in exchange for $750,000
principal and $11,383 of accrued interest.
(3) Debt Issue Costs
In connection with raising these proceeds, the Company paid $75,000 as
direct offering costs to the placement agent. These costs were initially
capitalized as debt issue costs and were being amortized over the life of
the related convertible debt instrument. Upon conversion of the debt on
March 27, 2008, the remaining unamortized portion of debt issue costs was
charged to interest expense on the statement of operations.
(4) Beneficial Conversion Feature and Derivative Liability
Pursuant to EITF No.'s 98-5 and 00-27 and APB No. 14, the Company
determined that the exercise price of $0.50 was equivalent to the market
price of $0.50 on each commitment date discussed above. The market price
was determined based upon the conversion price of the debt as evidenced by
the investors who converted their debt and related accrued interest in
March 2008. The conversion price represented the best evidence of fair
value as this was a privately held entity. As a result, no allocation of
fair value was required for the convertible debt since its market price and
conversion price were equivalent..
The Company also determined that SFAS No. 133 and EITF 00-19 were not
applicable, as the embedded conversion option did not require bifurcation
and related fair value accounting.
18
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
(B) Warrants
(1) Terms
a. Exercise price - $0.75.
b. Expected term - 1.5 years for the placement agent warrants and 5
years for the investor warrants.
(2) Issuance
a. The Company issued 1,500,000 warrants in the above debt offering.
Each $1 of debt sold was accompanied by 2 stock warrants.
b. The Company also issued, as a placement agent fee, 10% of the
gross warrants sold with the convertible debt. Therefore, an
additional 150,000 warrants were issued as additional
compensation. The Company determined the valuation of these
warrants by applying EITF 96-18 as follows:
(3) Determining Fair Value
Under EITF No. 00-19, for the 1,500,000 warrants sold to investors, the
Company concluded that these warrants met the definition of a freestanding
financial instrument that could be classified as equity. The detachable
stock purchase warrants permit the holders to purchase an aggregate of
1,500,000 shares of common stock of the Company at a price of $0.75 until
January 2013 (with respect to 700,000 shares) or February 2013 (with
respect to 800,000 shares). The Company recorded a fair value of $669,300
to debt issue costs, and then upon conversion of the related convertible
debt in March 2008, expensed the remaining unamortized debt issue costs to
interest expense. (See Note 3)
For the 150,000 placement agent warrants, the Company estimates the fair
value of stock warrants granted using the Black-Scholes option-pricing
model. The fair value of this warrant compensation to the placement agent
was $42,697 and was charged to interest expense upon each commitment date
for services rendered in the form of a direct debt offering cost. The
Company's determination of fair value using an option-pricing model is
affected by the stock price as well as assumptions regarding the number of
highly subjective variables.
The fair value of these aggregate 1,650,000 warrant grants for the period
from November 15, 2007 (Inception) to March 31, 2008 was estimated using
the following weighted- average assumptions:
Risk free interest rate 1.90 - 2.70 %
Expected term (in years) 1.5 - 5
Expected dividend yield 0 %
Expected volatility of common stock 150 %
Estimated annual forfeitures 0 %
See Note 7 for additional warrant disclosure.
19
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Note 6 Commitments and Related Party Transactions
-------------------------------------------------
During January 2008, the Company's CEO contributed $100 for general corporate
activities. The Company recorded this as contributed capital.
Effective January 1, 2008, the Company entered into four separate three-year
employment agreements with its senior management. The agreements provided for
salaries ranging from $75,000 - $175,000 per annum. Each of these individuals
will be entitled to annual increase of 20% per annum over the term of the
initial term of the employment agreement. There is additional compensation that
can be earned given certain milestones.
The Company's Chief Operating Officer and Chief Marketing Officer have subleased
certain office space to the Company. For the period from November 15, 2007
(Inception) to March 31, 2008, the Company was charged fair market value rent of
$15,500. Each of these leases is month to month, and there is no committed
arrangement. Beginning April 2008, monthly rent will be approximately
$9,500/month.
A director of our Company is the officer of a manufacturer that the Company has
entered into an agreement with. The terms require the Company to purchase a
minimum amount of products on a monthly basis. The minimum requirement is not
required to be met until October 2008.
Note 7 Stockholders' Equity
---------------------------
On January 15, 2008, the Company issued 18,800,000 shares of common stock to its
founders, having a fair value of $1,880 ($0.0001/ share), for pre-incorporation
services rendered.
A summary of warrant activity at March 31, 2008 is as follows:
Number of Warrants Weighted Average Exercise Price
------------------ -------------------------------
Granted 1,650,000 $ 0.75
Exercised - -
Forfeited - -
Cancelled - -
Balance - March 31, 2008 1,650,000 $ 0.75
=========
All outstanding warrants are fully vested and exercisable.
Warrants Outstanding/Exercisable
--------------------------------
Range of Exercise Price Number Outstanding/Exercisable Weighted Average Remaining
----------------------- ------------------------------ --------------------------
Contractual Life
----------------
$0.75 1,650,000 4.88 years
20
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Note 8 Income Taxes - As Restated
---------------------------------
SFAS 109 requires the recognition of deferred tax assets and liabilities for
both the expected impact of differences between the financial statements and the
tax basis of assets and liabilities, and for the expected future tax benefit to
be derived from tax losses and tax credit carryforwards. SFAS 109 additionally
requires the establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets.
The Company has a net operating loss carryforward for tax purposes totaling
$701,602 at March 31, 2008, expiring through the year 2028. Internal Revenue
Code Section 382 places a limitation on the amount of taxable income that can be
offset by carryforwards after a change in control (generally greater than a 50%
change in ownership). Temporary differences, which give rise to a net deferred
tax asset, are as follows:
Significant deferred tax assets at March 31, 2008 are as follows:
Gross deferred tax assets:
Net operating loss carryforwards $315,944
-------------
Total deferred tax assets 315,944
Less: valuation allowance (315,944)
-------------
Net deferred tax asset recorded $ -
=============
The valuation allowance at January 7, 2008 (Inception of the "C" corporation)
was $0. The net change in valuation allowance during the period ended March 31,
2008, was an increase of $315,944. In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not that some
portion or all of the deferred income tax assets will not be realized. The
ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred income tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. Based on consideration of these
items, management has determined that enough uncertainty exists relative to the
realization of the deferred income tax asset balances to warrant the application
of a full valuation allowance as of March 31, 2008.
The actual tax benefit differs from the expected tax benefit for the period
ended March 31, 2008 (computed by applying the U.S. Federal Corporate tax rate
of 34% to income before taxes and 16.72 % for New York State/City income taxes,
a blended rate of 45.03%) as follows:
Expected tax expense (benefit) - Federal - As restated $ (403,520)
Expected tax expense (benefit) - State/City - As restated (238,191)
Non-deductible stock and warrant compensation - As restated 321,472
Meals and entertainment 4,295
Change in valuation allowance 315,944
---------------
Actual tax expense (benefit) $ -
===============
21
Perf-Go Green, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2008
Note 9 Subsequent Event
-----------------------
In April 2008, the Company entered into a one-year agreement with a third party
to provide public relations services. The Company is required to pay
$12,000/month over the term of the agreement as well as certain related
expenses.
22
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Perf-Go Green Holdings, Inc.
August 15, 2008 By: /s/ Anthony Tracy
-------------------------
Anthony Tracy
Chief Executive Officer
23