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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Period Ended
September 30, 2007 Commission File No. 333-131722
PAWFECT FOODS, INC.
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(Exact name of small business issuer as specified in its charter)
Florida 20-3823853
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(State or jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
31-51 Steinway Street, Long Island City, New York 11103
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (718) 545-6406
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6334 Winfield Blvd., Margate, Florida 33063
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) 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 a 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 [_]
The number of shares outstanding of the Registrant's Common Stock, $0.0001 par
value, as of November 14, 2007 was 2,181,000.
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PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)
Condensed Balance Sheet .................................................. 3
Condensed Statements of Operations ....................................... 4
Condensed Statements of Cash Flows ....................................... 5
Notes to the Condensed Financial Statements .............................. 7
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PAWFECT FOODS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
BALANCE SHEET
SEPTEMBER 30, 2007
UNAUDITED
ASSETS
Current Assets
Cash $ 322
Property Plant & Equipment - Net 2,826
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Total Assets $ 3,148
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LIABILITIES AND STOCKHOLDERS EQUITY (DEFIFIENCY)
Current Liabilities
Accrued Expenses $ 2,163
Accounts Payable 2,498
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Total Current Liabilities 4,661
Stockholders' Equity
Common Stock, $.0001 par value; 50,000,000 authorized
2,181,000 issued and outstanding 2,181
Additional Paid in Capital 26,811
Accumulated Deficit during Development Stage (30,505)
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Total Stockholders' Equity (Deficiency) (1,513)
Total Liabilities and Stockholders' Equity $ 3,148
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See accompanying notes to financial statements.
3
PAWFECT FOODS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
AND CUMULATIVELY FROM NOVEMBER 15, 2005 (INCEPTION) TO SEPTEMBER 30, 2007
(UNAUDITED)
November
15, 2005
Nine Months Ended Three Months Ended (Inception) to
September 30, September 30, September 30,
2007 2006 2007 2006 2007
------------ ------------ ------------ ------------ ------------
REVENUE $ -- $ -- $ -- $ -- $ --
OPERATING EXPENSES 10,288 13,822 5,088 1,000 30,505
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NET INCOME (LOSS) $ (10,288) $ (13,822) $ (5,088) $ (1,000) $ (30,505)
============ ============ ============ ============ ============
NET INCOME (LOSS) PER
COMMON SHARES
OUTSTANDING - BASIC
AND DILUTED $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
WEIGHTED AVERAGE OF
SHARES OUTSTANDING 2,181,000 2,181,000 2,181,000 2,181,000 2,181,000
See accompanying notes to financial statements.
4
PAWFECT FOODS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
AND CUMULATIVELY FROM NOVEMBER 15, 2005 (INCEPTION) TO SEPTMBER 30, 2007
(UNAUDITED)
Nine Three November 15,
Months Ended Months Ended 2005
September 30 September 30 (Inception) to
September 30,
2007 2006 2007 2006 2007
---------- ---------- ---------- ---------- ----------
Cash Flows form Operations:
Net Income (Loss) (10,288) (13,822) $ (5,088) $ (1,000) $ (30,505)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 504 168 560
Changes in operating liabilities:
Increase (decrease) in accrued
Liabilities (2,836) 1,000 663 1,000 4,661
Increase (decrease) in Accounts
Payable 2,498 954
Advances from Shareholder (6,709)
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Net Cash (used) by Operating
Activities (10,122) (12,822) (10,012) (0) (25,284)
Cash Flow from Financing
Activities:
Purchase of Fixed Assets (3,386)
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Net Cash (used) by Investing
Activities (3,386)
See accompanying notes to financial statements.
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PAWFECT FOODS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
AND CUMULATIVELY FROM NOVEMBER 15, 2005 (INCEPTION) TO SEPTEMBER 30, 2007
(UNAUDITED)
Cash Flow from Financing
Activities
Issuance of Common Stock to
Founder -- -- 2,181
Issuance of Common Stock for
Cash -- -- 17,919
Additional Paid In Capital from
Stockholder forgiveness of advances 8,892 8,892 8,892
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Net Cash Provided by Financing
Activities 8,892 8,892 -- 28,992
Net Increase (Decrease) in Cash (1,230) (12,822) (1,120) (0) 322
Cash, Beginning 1,552 20,084 1,442 7,262 --
Cash, Ending 322 7,262 322 7,262 322
Supplemental Disclosure:
Interest Paid $ -- $ -- $ -- $ -- $ --
Taxes Paid $ -- $ -- $ -- $ -- $ --
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PAWFECT FOODS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Organization and Operations
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The Company was organized under the laws of the State of Florida on November 15,
2005.
The Company is in the development stage. The Company plans to develop a
distribution channel in the pet food industry selling a comprehensive supply of
products utilizing the World Wide Web. The Company currently has no operations.
On July 16, 2007, Charles Monahan, the Company's former President, Treasurer,
Secretary and principal shareholder entered into a Capital Stock Purchase
Agreement (the "Stock Purchase Agreement") with Biotech Initiative of Chelsea,
Ltd., a private investment fund based in London, England. All conditions to the
closing were fulfilled and funds released to Mr. Monahan on July 17, 2007.
Under the Stock Purchase Agreement:
o Biotech Initiative purchased an aggregate of 2,000,000 restricted
shares of the Company's common stock from Mr. Monahan for
approximately $624,000
o Mr. Monahan resigned as an officer and director of the Company.
Biotech Initiative, acting in its capacity as our principal shareholder,
appointed Pietro Gattini to serve as sole director, filling the vacancy created
by the resignation of Mr. Monahan. Mr. Gattini also became the Company's
President, Secretary and Treasurer.
The 2,000,000 shares represent approximately 89% of the Company's outstanding
shares. The source of funds for Biotech Initiative's purchase was from its own
capital resources and no funds were borrowed.
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Current Operations
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The Company is in its development stage. The Company, since it's inception
(November 15, 2005) has not commenced its full operations, nor has generated
sufficient working capital to pursue its business objectives. The accumulated
deficit during its development stage is $30,505 at September 30, 2007.
Basis of Accounting
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The Company's policy is to prepare its financial statements using the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Company has retained December 31 as its annual year end.
Use of Estimates
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The preparation of 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, the 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 equivalent
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Cash and cash equivalent include cash and cash in banks. The company maintains
cash and cash equivalent balances at a financial institution that is insured by
the federal deposit Insurance Corporations up to $100,000. At September 30,
2007, there is no concentration of credit risk from uninsured bank balances.
Fixed Assets
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Fixed assets are recorded at cost. Depreciation is computed on the straight-line
method, based on the estimated useful lives of the assets of generally five or
ten years. Expenditures for maintenance and repairs are charged to operations as
incurred. Depreciation expense was $56 for the year ended December 31, 2006 and
$0 for year ended December 31, 2005.
Recent Accounting Pronouncements
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In September 2006, the FASB issued SFAS No. 157 Fair Value Measurements ("SFAS
No. 157"), which defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosures about
fair value measurements, SFAS No. 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. In June
2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes: An interpretation of FASB Statement No. 109 ("FIN No. 48"). This
interpretation clarifies the accounting for uncertainty in income taxes
recognized in an entity #146s financial statements in accordance with SFAS No.
109. FIN No. 48 prescribes a recognition threshold and measurement principles
for the financial statement recognition and measurement of tax positions taken
or expected to be taken on a tax return. This interpretation is effective for
fiscal years beginning after December 15, 2006.
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In February 2007, the FASB issued SFAS No., 159, The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment to FASB
Statements No. 115 ("SFAS No. 159"), SFAS No. 159 permits entities to choose to
measure many financial instruments, and certain other items, at fair value that
are not currently required to be measured at fair value, SFAS No. 159 is
effective as of the beginning of an entity #146s first fiscal year that begins
after November 15, 2007, however early adoption is permitted.
NOTE 2: INCOME TAXES
In February 1992, the Financial Standards Board issued Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under SFAS No. 109,
deferred assets and liabilities are recognized for the estimated future tax
consequences between the financial statement carrying amounts of the existing
assets and their respective basis.
Deferred assets and liabilities are measured using enacted tax rates in effect
for the year in which temporary differences are expected to be recorded or
settled. Under SFAS No. 109 the effect on deferred assets and liabilities of a
change in tax rates is recognized in the period that includes the enactment
date.
As of December 31, 2006, the Company had net operating losses (NOL's) of
approximately $20,218 that expire in 15 years commencing in 2007.
Statutory federal income taxes 34%
Valuation allowance (34)
Effective tax rate 0%
No tax benefit is being accrued due to no current expectation of profits.
NOTE 3: CAPITAL TRANSACTIONS
At inception November 15, 2005, 2,000,000 shares of common stock were sold to
the founder for $2,000 cash. In December 2005, the Company offered 181,000
shares of their common stock under Rule 504 of Regulation D and section 4 (2) of
the Securities Act. The Common shares were offered at a per share price of $.10
for the aggregate sum of $18,100. All of the thirty-two (32) investors were of
non-accredited status.
NOTE 4: RELATED PARTY TRANSACTIONS
The Company's former President, Treasurer, Secretary and principal shareholder
loaned the Company an aggregate of $8,892 by paying third party expenses on the
Company's behalf. The advances were unsecured obligations due on demand.On
August 15, 2007, effective as of July 17, 2007 Mr. Monahan released the Company
from any obligation to pay back advances made by him to pay third party expenses
incurred by the Company in the aggregate amount of $8,892.
The Company is leasing approximately 70 square feet of office space on a month
to month basis from Steinway Group, LLC in L.I.C. , New York. This facility
serves as the Company's
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principal executive and administrative office. Rental for the facility is
approximately $2,400 per annum payable in equal monthly installments. Mr.
Gattini is the Managing Member of Steinway Group, LLC with a 78% ownership
interest.
NOTE 5: EXECUTIVE COMPENSATION
The Company has retained Mr. Pietro Gattini as the Company's President, Chairman
and Chief Executive Officer and is currently the only Director, Officer and
Employee. Compensation will be accrued at the rate of $500 per month and paid at
the earlier of the Company receiving more than $500,000 of financing or change
of the ownership of a majority of the Company's outstanding shares..
NOTE 6: COMMITMENTS AND LEASES
The Company is leasing approximately 70 square feet of office space on a month
to month basis from Steinway Group, LLC in L.I.C. , New York. This facility
serves as the Company's principal executive and administrative office. Rental
for the facility is approximately $2,400 per annum payable in equal monthly
installments. Rent will accrue and be payable upon the termination of the lease.
NOTE 7: SUBSEQUENT EVENTS
The employment of Mr. Gattini described in Note 5 and the lease described in
Note 6 were entered into on November 13, 2007. Each provided that the payments
would be accrued from September 1, 2007.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Pawfect Foods, Inc.'s business is to become actively engaged in providing an
online marketplace for premium and holistic pet food, via the Internet.
Currently we have obtained a domain name called www.Pawfectfoods.com. We have
also obtained a web hosting provider, to provide us with the necessary disk
space capacity for our website and email capability for the next 12 months. We
have also posted our nearly completed e-commerce website, to introduce ourselves
to potential customers with a modest array of introductory products. Although we
had set up a merchant payment gateway, in 2006, we suspended the account in
December 2006 pending our gauging consumer demand and developing reliable
sources of supply. Our new management is considering our current business plan
and we determine if paying the nominal fee to reactivate the account in the near
term is advisable. During the next twelve months we plan to satisfy our cash
requirement by current cash on hand and loans from our principal shareholders.
STOCK PURCHASE AGREEMENT
On July 16, 2007, Charles Monahan, our former President, Treasurer, Secretary
and principal shareholder entered into a Capital Stock Purchase Agreement (the
"Stock Purchase Agreement") with Biotech Initiative of Chelsea, Ltd., a private
investment fund based in London, England. All conditions to the closing were
fulfilled and funds released to Mr. Monahan on July 17, 2007.
Under the Stock Purchase Agreement:
o Biotech Initiative purchased an aggregate of 2,000,000 restricted
shares of our common stock from Mr. Monahan for approximately
$624,000
o Mr. Monahan resigned as an officer and director of the Company.
Biotech Initiative, acting in its capacity as our principal
shareholder, appointed Pietro Gattini to serve as sole director, filling the
vacancy created by the resignation of Mr. Monahan. Mr. Gattini also became our
President, Secretary and Treasurer.
The 2,000,000 shares represent approximately 89% of our outstanding shares. The
source of funds for Biotech Initiative's purchase was from its own capital
resources and no funds were borrowed.
We filed a Form 8-K Report reporting this transaction on July 20, 2007.
Mr. Gattini is evaluating our current business plan, prospectus and financial
requirements. He may also consider the acquisition of one or more companies in
either skilled fields of endeavor unrelated activities for potential
acquisitions or merger. There are no agreements or understandings regarding any
such acquisitions. If we enter into any such agreement we will promptly disclose
the terms of the agreement and other information concerning the company by
filing a Report on Form 8-K, including a copy of the agreement as an exhibit.
Such an acquisition will require the issuance of a substantial number of shares
of our common stock and financing.
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ITEM 3: CONTROLS AND PROCEDURES
Our new chief executive and financial officer, based on evaluation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934, as amended) required by paragraph (b) of
Rule 13a-15 or Rule 15d-15, as of June 30, 2007, concluded that our disclosure
controls and procedures were not effective in ensuring that information required
to be disclosed by us in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and forms. He also concluded that, as of
June 30, 2007, our disclosure controls and procedures were effective in ensuring
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, to allow
timely decisions regarding required disclosure. He determined that, due to the
inexperience of our former management in accounting procedures and our former
management's practice of paying third parties directly rather than paying all
expenses out our bank accounts, approximately $2,500 of expenses (which were
subsequently discharged) were not recorded in the correct accounting period. Our
current chief executive and financial officer, took control of the company's
accounting and control systems and believes that the changes made in the quarter
ending September 30, 2007 will be sufficient to make our disclosure controls and
procedures effective going forward. He is assessing the impact of these
deficiencies on information that was reported for prior periods and will take
appropriate remedial action.
There were no changes in our internal controls over financial reporting that
occurred during the three months ended September 30, 2007 that materially
affected or are reasonably likely to materially affect our internal controls
over financial reporting.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
EXHIBIT NUMBER DOCUMENT DESCRIPTION
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10.1* Offer letter between the registrant and Pietro Gattini
dated November 13, 2007
10.2 Month to month lease between the registrant and
Steinway Group LLC dated November 13,2007
31.1 Certificate of Chief Financial Officer pursuant to
Securities Exchange Act Rules 13a-15(e) and 15d-15(e)
as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
32.1 Certificate of Chief Executive Officer and Chief
Financial Officer pursuant to Section 18 U.S.C.
Section 1350
*Indicates the exhibit relates to management contract or compensatory plan,
contract or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: November 19, 2007 PAWFECT FOODS, INC.
By: /s/ Pietro Gattini
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Pietro Gattini, President
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