Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the quarterly period ended May 31,
2010
|
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Commission
file number: 000-53511
EVERTON CAPITAL
CORPORATION
(Exact
name of registrant as specified in its charter)
Nevada
|
|
98-0516425
|
(State
or other jurisdiction of incorporation
or
organization)
|
|
(IRS
Employer Identification No.)
|
C District, Maoshan Industrial
Park,
Tieling Economic Development
Zone,
Tieling, Liaoning Province,
China
|
|
112616
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
(86) 0410-6129922 (PRC)
|
(Registrant’s
telephone number, including area code)
|
|
|
(Former
name or former address, if changed since last
report)
|
Indicate
by checkmark 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 such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the last 90 days. YES x NO ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer, “accelerated filer,”
“non-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
|
(do not check if a smaller
reporting company)
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES x NO ¨
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: As of July 13, 2010, the registrant
had 19,130,000 shares of common stock, $.00001 par value, issued and
outstanding.
EXPLANATORY
NOTE
This Form
10-Q is being filed to show the financial results for Everton Capital
Corporation for the quarterly period ended May 31, 2010.
Because
we changed our name and completed a share exchange with our operating subsidiary
after the close of our last quarter covered by this filing, please note the
following:
1. This Form 10-Q does not reflect the
consolidated financial statements of Liaoning Creative Bellows Co., Ltd.
(“Creative Bellows”), our operating company in China, with whom we merged with
on July 2, 2010;
2. This Form 10-Q does not reflect the
change of our name to CleanTech Innovations, Inc. (“CleanTech”), which occurred
on June 18, 2010;
3. This Form
10-Q does not reflect the 8-for-1 forward stock split of CleanTech's common
stock, effective July 2, 2010; and
4. This Form
10-Q does not reflect the change in CleanTech's fiscal year end from August to
December.
In order
to review the most recent description of CleanTech’s current business and the
combined financial reporting of CleanTech and Creative Bellows, please refer to
our Current Report on Form 8-K filed with the Securities and Exchange Commission
on July 2, 2010.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
TABLE
OF CONTENTS
|
|
Page
|
PART I.
FINANCIAL INFORMATION
|
|
|
Item 1.
|
Financial
Statements
|
|
2
|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
9
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
11
|
Item 4T.
|
Controls
and Procedures
|
|
11
|
PART
II. OTHER INFORMATION
|
|
|
Item 1.
|
Legal
Proceedings
|
|
12
|
Item 1A.
|
Risk
Factors
|
|
12
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
12
|
Item 3.
|
Defaults
Upon Senior Securities
|
|
12
|
Item 5.
|
Other
Information
|
|
12
|
Item 6.
|
Exhibits
|
|
12
|
SIGNATURES
|
|
13
|
PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
BALANCE
SHEETS
|
|
As of May 31,
|
|
|
As of August 31,
|
|
|
|
2010 (Unaudited)
|
|
|
2009
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
& cash equivalents
|
|
$ |
2,725 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
2,725 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable & accrued liabilities
|
|
$ |
15,250 |
|
|
$ |
4,750 |
|
Loan
payable
|
|
|
5,015 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
20,265 |
|
|
|
4,750 |
|
|
|
|
|
|
|
|
|
|
COMMITMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
Preferred
stock, $.00001 par value; 100,000,000 shares authorized; none
issued and outstanding
|
|
|
- |
|
|
|
- |
|
Common
stock, $.00001 par value; 100,000,000 shares
authorized; 5,501,000 shares issued and outstanding
|
|
|
55 |
|
|
|
55 |
|
Additional
paid in capital
|
|
|
105,111 |
|
|
|
105,111 |
|
Deficit
accumulated during the pre-exploration stage
|
|
|
(122,706 |
) |
|
|
(109,916 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders' deficit
|
|
|
(17,540 |
) |
|
|
(4,750 |
) |
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$ |
2,725 |
|
|
$ |
- |
|
The
accompanying notes are an integral part of these financial
statements.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
STATEMENT
OF EXPENSES
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from May 10, 2006
|
|
|
|
Nine Months Ended
|
|
|
Three Months Ended
|
|
|
(inception) Through
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
$ |
12,790 |
|
|
$ |
35,342 |
|
|
$ |
4,000 |
|
|
$ |
11,610 |
|
|
$ |
117,664 |
|
Interest
expense
|
|
|
- |
|
|
|
130 |
|
|
|
- |
|
|
|
- |
|
|
|
5,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(12,790 |
) |
|
|
(35,472 |
) |
|
|
(4,000 |
) |
|
|
(11,610 |
) |
|
|
(122,706 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(12,790 |
) |
|
$ |
(35,472 |
) |
|
$ |
(4,000 |
) |
|
$ |
(11,610 |
) |
|
$ |
(122,706 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding
|
|
|
5,501,000 |
|
|
|
5,501,000 |
|
|
|
5,501,000 |
|
|
|
5,501,000 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share
|
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
N/A |
|
The
accompanying notes are an integral part of these financial
statements.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
STATEMENT
OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
Period from May 10, 2006
|
|
|
|
Nine Months Ended
|
|
|
(inception) Through
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
$ |
(12,790 |
) |
|
$ |
(35,472 |
) |
|
$ |
(122,706 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred offering costs
|
|
|
- |
|
|
|
- |
|
|
|
12,500 |
|
Imputed
consulting expense
|
|
|
- |
|
|
|
1,750 |
|
|
|
8,750 |
|
Imputed
rent expense
|
|
|
- |
|
|
|
- |
|
|
|
7,000 |
|
Imputed
interest
|
|
|
- |
|
|
|
- |
|
|
|
4,912 |
|
Changes
in
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
Expenses
|
|
|
- |
|
|
|
7,500 |
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
10,500 |
|
|
|
(1,418 |
) |
|
|
5,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(2,290 |
) |
|
|
(27,640 |
) |
|
|
(83,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from short term loan
|
|
|
5,015 |
|
|
|
|
|
|
|
5,015 |
|
Proceeds
from issuance of common stock
|
|
|
- |
|
|
|
- |
|
|
|
50,150 |
|
Payment
of deferred offering costs
|
|
|
- |
|
|
|
- |
|
|
|
(12,500 |
) |
Increase
in related party loan
|
|
|
- |
|
|
|
460 |
|
|
|
43,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
5,015 |
|
|
|
460 |
|
|
|
86,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(DECREASE)
INCREASE IN CASH & CASH EQUIVALENTS
|
|
|
2,725 |
|
|
|
(27,180 |
) |
|
|
2,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
& CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
- |
|
|
|
27,180 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
& CASH EQUIVALENTS, END OF PERIOD
|
|
$ |
2,725 |
|
|
$ |
- |
|
|
$ |
2,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Cash flow data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Interest
paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
by former officer
|
|
$ |
- |
|
|
$ |
1,750 |
|
|
$ |
15,750 |
|
Liabilities
assumed by former officer
|
|
$ |
- |
|
|
$ |
51,766 |
|
|
$ |
51,766 |
|
The
accompanying notes are an integral part of these financial
statements.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
NOTES
TO FINANCIAL STATEMENTS
May
31, 2010 (Unaudited) and August 31, 2009
NOTE
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Everton
Capital Corporation (“Everton” or the “Company”) was incorporated in Nevada on
May 9, 2006, and is in the exploration stage. The Company acquired a mineral
property in British Columbia and determined the property contained reserves that
were economically recoverable. The recoverability of amounts from the property
depended upon the discovery of economically recoverable reserves, confirmation
of the Company’s interest in the underlying property, ability to obtain
necessary financing to satisfy the expenditure requirements under the property
agreement and to complete the development of the property and upon future
profitable production or proceeds for the sale thereof.
Pursuant
to a Majority Stock Purchase Agreement (MSPA) dated April 23, 2009, the
Company’s former majority stockholder and officer sold an individual 5,000,000
shares of the Company’s common stock for $25,000; the former majority
stockholder assumed any and all liabilities and obligations of the Company that
existed prior to closing of the stock purchase. Pursuant to the terms of the
MSPA and effective as of the closing of the transactions contemplated by the
MSPA, the new shareholder owns 5,000,000 shares of the Company’s common stock
out of 5,501,000 shares issued and outstanding, or 90.89%.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of
Estimates
The
preparation of these financial statements in conformity with United States
Generally Accepted Accounting Principles (“US GAAP”) 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.
Income
Taxes
The
Company utilizes Statement of Financial Accounting Standards (“SFAS”) No. 109,
“Accounting for Income Taxes,” codified in Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 740, which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that were included in the financial statements or tax
returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, (codified in FASB ASC Topic 740) on January 1,
2007. As a result of the implementation of FIN 48, the Company made a
comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by FIN 48. As a result of implementing FIN 48,
the Company recognized no material adjustments to liabilities or stockholders’
equity (deficit). When tax returns are filed, it is likely that some positions
taken would be sustained upon examination by the taxing authorities, while
others are subject to uncertainty about the merits of the position taken or the
amount of the position that would be ultimately sustained. The benefit of a tax
position is recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more likely than not
that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset
or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority. The portion of the benefits
associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheets along with any associated interest and penalties
that would be payable to the taxing authorities upon examination. Interest
associated with unrecognized tax benefits is classified as interest expense and
penalties are classified in selling, general and administrative expenses in the
statements of expenses. At May 31, 2010, the Company did not take any uncertain
positions that would necessitate recording of tax related
liability.
Statement of Cash
Flows
In
accordance with SFAS No. 95, “Statement of Cash Flows” (codified in FASB ASC
Topic 230), cash flows from the Company's operations are calculated based upon
local currencies. As a result, amounts related to assets and
liabilities reported on the statement of cash flows may not necessarily agree
with changes in the corresponding balances on the balance
sheet.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
NOTES
TO FINANCIAL STATEMENTS
May
31, 2010 (Unaudited) and August 31, 2009
Basic and Diluted Earnings
(Loss) per Share (EPS)
Basic EPS
(Loss) is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
is computed similarly to basic net income (loss) per share except the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted EPS is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period. For the nine and three months ended May 31, 2010 and 2009, the
Company had no dilutive securities.
Fair Value of Financial
Instruments
For
certain of the Company’s financial instruments, including cash and cash
equivalents, accounts payable, accrued liabilities and short-term debt, the
carrying amounts approximate their fair values due to their short
maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,”
requires disclosure of the fair value of financial instruments held by the
Company. ASC Topic 825, “Financial Instruments,” defines fair value, and
establishes a three-level valuation hierarchy for disclosures of fair value
measurement that enhances disclosure requirements for fair value
measures. The carrying amounts reported in the balance sheets for
current liabilities qualify as financial instruments and are a reasonable
estimate of their fair values because of the short period of time between the
origination of such instruments and their expected realization and their current
market rate of interest. The three levels of valuation hierarchy are defined as
follows:
Level 1
inputs to the valuation methodology are quoted prices for identical assets or
liabilities in active markets.
Level 2
inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the
financial instrument.
Level 3
inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The
Company analyzes all financial instruments with features of both liabilities and
equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC
815.
As of May
31, 2010, the Company did not identify any assets and liabilities that are
required to be presented on the balance sheet at fair value.
New Accounting
Pronouncements
In
October 2009, the FASB issued an Accounting Standards Update (“ASU”) regarding
accounting for own-share lending arrangements in contemplation of convertible
debt issuance or other financing. This ASU requires that at the date
of issuance of the shares in a share-lending arrangement entered into in
contemplation of a convertible debt offering or other financing, the shares
issued shall be measured at fair value and be recognized as an issuance cost,
with an offset to additional paid-in capital. Further, loaned shares are
excluded from basic and diluted earnings per share unless default of the
share-lending arrangement occurs, at which time the loaned shares would be
included in the basic and diluted earnings-per-share
calculation. This ASU is effective for fiscal years beginning on or
after December 15, 2009, and interim periods within those fiscal years for
arrangements outstanding as of the beginning of those fiscal years. The Company
is currently evaluating the impact of this ASU on its financial
statements.
In August
2009, the FASB issued an ASU regarding measuring liabilities at fair value. This
ASU provides additional guidance clarifying the measurement of liabilities at
fair value in circumstances in which a quoted price in an active market for the
identical liability is not available; under those circumstances, a reporting
entity is required to measure fair value using one or more of valuation
techniques, as defined. This ASU is effective for the first reporting period,
including interim periods, beginning after the issuance of this ASU. The
adoption of this ASU did not have a material impact on the Company’s financial
statements.
On July
1, 2009, the Company adopted ASU No. 2009-01, “Topic 105 - Generally Accepted
Accounting Principles - amendments based on Statement of Financial Accounting
Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles.” ASU No. 2009-01
re-defines authoritative GAAP for nongovernmental entities to be only comprised
of the FASB Accounting Standards Codification (“Codification”) and, for SEC
registrants, guidance issued by the SEC. The Codification is a
reorganization and compilation of all then-existing authoritative GAAP for
nongovernmental entities, except for guidance issued by the SEC. The
Codification is amended to effect non-SEC changes to authoritative
GAAP. Adoption of ASU No. 2009-01 only changed the referencing
convention of GAAP in these Notes to the Financial Statements.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
NOTES
TO FINANCIAL STATEMENTS
May
31, 2010 (Unaudited) and August 31, 2009
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R),” codified as FASB ASC Topic 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. SFAS 167
clarifies the determination of whether a company is required to consolidate an
entity is based on, among other things, an entity’s purpose and design and a
company’s ability to direct the activities of the entity that most significantly
impact the entity’s economic performance. SFAS 167 requires an ongoing
reassessment of whether a company is the primary beneficiary of a variable
interest entity. SFAS 167 also requires additional disclosures about a company’s
involvement in variable interest entities and any significant changes in risk
exposure due to that involvement. SFAS 167 is effective for fiscal years
beginning after November 15, 2009. The Company does not believe the adoption of
SFAS 167 will have an impact on its financial condition, results of operations
or cash flows.
In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets — an amendment of FASB Statement No. 140,” codified as FASB Topic ASC
860, which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. SFAS 166 eliminates the concept of a “qualifying special-purpose
entity,” changes the requirements for derecognizing financial assets and
requires additional disclosures. SFAS 166 is effective for fiscal years
beginning after November 15, 2009. The Company does not believe the adoption of
SFAS 166 will have an impact on its financial condition, results of operations
or cash flows.
NOTE
3. GOING CONCERN
These
financial statements were prepared on a going concern basis, which assumes the
Company will continue to meet its obligations and continue its operations for
the next fiscal year. 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 the Company be
unable to continue as a going concern. As of May 31, 2010, the Company has not
generated revenues and has accumulated losses since inception. The continuation
of the Company as a going concern depends upon the continued financial support
from its shareholders, the ability of the Company to obtain necessary equity
financing to continue operations, and the attainment of profitable operations.
The
Company raised $10 million on July 12, 2010, through a private placement
offering. See Note 8.
NOTE
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Pursuant
to the MSPA dated April 23, 2009, the former majority shareholder is liable for
accounts payable and accrued liabilities of $8,236 that occurred prior to
closing of the stock purchase. This was recorded as a contribution to
capital.
At May
31, 2010 and August 31, 2009, accounts payable and accrued liabilities mainly
consisted of payables for audit, accounting and accrued consulting
expenses.
NOTE
5. LOAN PAYABLE
Loan
payable represented short term cash advance from a third party for paying the
Company’s operating expenses. The loan payable was interest-free, no
collateral and payable upon demand.
NOTE
6. STOCKHOLDERS’ EQUITY
On July
6, 2006, the Company issued 5,000,000 common founder shares to the President of
the Company for $50, or $0.00001 per share.
During
fiscal 2008, the Company issued 501,000 shares to 46 investors for $50,100 at
$0.10 per share. The Company paid $12,500 as part of the offering of common
stock and going public. These costs were recorded as a reduction of proceeds
from the fiscal 2008 capital raise.
EVERTON
CAPITAL CORPORATION
(An
Exploration Stage Company)
NOTES
TO FINANCIAL STATEMENTS
May
31, 2010 (Unaudited) and August 31, 2009
On April
23, 2009, pursuant to the MSPA, the Company’s former majority stockholder and
officer sold an individual 5,000,000 shares of the Company’s common stock for
$25,000; the former majority stockholder assumed any and all liabilities and
obligations of the Company that occurred prior to closing of the stock purchase.
Pursuant to the terms of the MSPA and effective as of the closing of the
transactions contemplated by the MSPA, the new shareholder owns 5,000,000 shares
of the Company’s common stock out of 5,501,000 shares issued and outstanding, or
90.89%.
NOTE
7. INCOME TAXES
The
significant components of the Company’s deferred tax assets are as
follows:
|
|
May 31,
2010
(Unaudited)
|
|
|
August 31,
2009
|
|
Deferred
tax assets
|
|
|
|
|
|
|
Non-capital
loss carry forward
|
|
$
|
18,024
|
|
|
$
|
13,675
|
|
Less:
valuation allowance for deferred tax asset
|
|
|
(18,024
|
)
|
|
|
(13,675
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
The
amount taken into income as deferred tax assets reflects that portion of the
income tax loss carry forwards that is more likely-than-not to be realized from
future operations. The Company has a valuation allowance of 100% against all
available income tax loss carry forwards.
No
provision for income taxes was provided in these financial statements due to the
net loss. At May 31, 2010, the Company has net operating loss carry forwards,
which expire in 2026 through 2030, of approximately $107,000, the benefit of
which was not recorded in the financial statements.
NOTE
8. SUBSEQUENT EVENTS
On June
18, 2010, the Company, changed its name from Everton Capital Corporation to
CleanTech Innovations, Inc. and authorized an 8-for-1 forward split of its
common stock, effective July 2, 2010. Simultaneously, the Company changed its
year end from August to December.
On July
2, 2010, the Company signed a share exchange agreement with Liaoning Creative
Bellows Co., Ltd. and subsidiary (“Creative Bellows”), whereby the Company
issued the shareholders of Creative Bellows 15,122,000 shares in the Company.
Concurrent with the share exchange agreement, the Company’s principal
shareholder cancelled 40,000,000 shares of the Company’s common stock for
$40,000. The cancelled shares were retired. The Company had 4,008,000 shares
outstanding after the cancellation. The shareholders of Creative Bellows ended
up owning 79.05% of the 19,130,000 total shares outstanding of the Company after
giving effect to the share exchange agreement. The transaction will be
accounted for as a recapitalization of the Company and not as a business
combination. Since the Company has no operations, no pro forma information is
presented. The financial statements of Creative Bellows for the years ended
December 31, 2009 and 2008 and for the three months ended March 31, 2010 and
2009 are included in the Company’s Current Report on Form 8-K filed with the SEC
on July 2, 2010.
On July
12, 2010, the Company completed a closing of a private placement offering of
Units (as defined below) pursuant to which the Company sold an aggregate of
3,333,333 Units at an offering price of $3.00 per Unit for aggregate gross
proceeds of $10,000,000. Each “Unit” consisted of one share of the Company’s
common stock and a three-year warrant to purchase 15% of one share of the
Company’s common stock at an exercise price of $3.00 per share. The warrants are
immediately exercisable, expire on the third anniversary of their issuance, and
entitle the purchasers of the Units, in the aggregate, to purchase up to 500,000
shares of the Company’s common stock at an exercise price of $3.00 per share.
The Company also issued warrants to purchase 333,333 shares of common stock to
the placement agents in the offering.
CAUTIONARY
STATEMENT FOR FORWARD-LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “would,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the
negative of such terms or other similar expressions. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those listed
under the heading “Risk Factors” and those listed in our other SEC filings. The
following discussion should be read in conjunction with our Financial Statements
and related Notes thereto included elsewhere in this report. Throughout this
Quarterly Report, we will refer to Everton Capital Corporation as “Everton,” the
“Company,” “we,” “us,” and “our.”
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Plan
of Operation
We are a
start-up, exploration stage corporation. We have not yet generated or
realized any revenues from our business operations.
In May
2006, Maryna Bilynska, our former president, acquired one mineral property in
trust for us, containing one mining claim in British Columbia, Canada. The
property was staked by Lloyd Brewer. Mr. Brewer was paid $2,500 to stake the
claims. Mr. Brewer is a staking agent located in Vancouver, British
Columbia.
We
conducted research in the form of exploration of the property. An exploration
stage corporation is one engaged in the search for mineral deposits or reserves
which are not in either the development or production stage.
There is
substantial doubt we can continue as an on-going business for the next twelve
months unless we obtain additional capital to pay our bills. This is because we
have not generated any revenues and no revenues are anticipated. If we cannot or
do not raise more money, we will cease operations. We do not intend
to hire additional employees at this time. We are not going to buy or sell any
plant or significant equipment during the next twelve months.
Milestones
We
completed Phase 1A exploration stage on the property in August 2008 and were
advised by Madman Mining, our consultant, that, "Due to the shattered nature of
the jade/nephrite material present (due to previous blasting), and the numerous
amount of inclusions (of talc) within the matrix of the jade itself, it is
recommended that no further exploration be conducted on this project and that
the project should be dropped." Our management is looking for new
business opportunities, which may include a change of control of the
Company.
On April
23, 2009, the Company’s former majority stockholder sold an individual 5,000,000
shares of the Company’s common stock for $25,000 pursuant to a Majority Stock
Purchase Agreement (MSPA); the former majority stockholder assumed any and all
liabilities and obligations of the Company that occurred prior to the stock
purchase transaction. Pursuant to the terms of the MSPA and effective as of the
closing of the transactions contemplated by the MSPA, the new shareholder owned
5,000,000 shares of the Company’s common stock out of 5,501,000
shares issued and outstanding, or approximately 90.89%.
On June
18, 2010, we changed our name from Everton Capital Corporation to
CleanTech Innovations, Inc. and authorized an 8-for-1 forward split of our
common stock, effective July 2, 2010. Simultaneously, we changed our year end
from August to December.
On July
2, 2010, the Company signed a share exchange agreement with Liaoning Creative
Bellows Co., Ltd. and subsidiary (“Creative Bellows”), whereby the Company
issued the shareholders of Creative Bellows 15,122,000 shares in the Company.
Concurrent with the share exchange agreement, the Company’s principal
shareholder cancelled 40,000,000 shares of the Company’s common stock for
$40,000. The cancelled shares were retired. The Company had 4,008,000 shares
outstanding after the cancellation. The shareholders of Creative Bellows ended
up owning 79.05% of the 19,130,000 total shares outstanding of the Company after
giving effect to the share exchange agreement. The transaction will be
accounted for as a recapitalization of the Company and not as a business
combination. Since the Company has no operations, no pro forma information is
presented.
Limited
Operating History; Need for Additional Capital
There is
no historical financial information about us upon which to base an evaluation of
our performance. We are an exploration stage corporation and have not generated
any revenues from operations. We cannot guarantee we will be successful in our
business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital
resources.
Results
of Operations
From
Inception on May 10, 2006
The
Shulaps jade project is located approximately 25 kilometers from Lillooet,
southwestern British Columbia. The jade project is on the southeastern extension
of the Shulaps Range just north of Carpenter Lake. Access to the property is
reached by gravel road along the Yalakom River. A turnoff just past La Rochelle
Creek leads to the head waters of Hell Creek, the location of the jade project.
Access to the project can also be reached by helicopter, a 20 minute flight one
way.
In August
2008, we obtained samples from the property and identified the location of jade
outcrops.
The
landing site for the helicopter was beside an old cabin in a flat area at
approximately 551390E 5630890N 2100 m zone 10. The afternoon of the 30th was
spent walking southeast of the cabin along the road. A number of trenches were
found along the road cut but no exposed outcrops of jade were observed. The
road, however, switch backed between the serpentine of the Permian and older
Shulaps Ultramafic complex on the west and the metamorphosed argillaceous
sediments of the Mississippian to Jurassic age Bridge River Complex on the east.
The ultramafic complex is light green to black with variable degrees of
hardness. The Bridge River complex is dark brown to rusty red with obvious
sedimentary layering. The contact between the two units is typically buried by
overburden but can be identified to within five meters.
Three
samples, obtained using a diamond bladed generated powered rock saw, were taken
from boulders that contained talc, serpentine and variable amounts of
jade.
Due to
the shattered nature of the jade/nephrite material present (due to previous
blasting), and the numerous amount of inclusions (of talc) within the matrix of
the jade itself, Madman recommended that no further exploration be conducted on
this project and that the project should be dropped.
During
the period of December 1, 2008 through May 31, 2010, no activity was conducted
on the property.
Since
inception, Maryna Bilynska, our former sole officer and director, paid all our
expenses to stake the property, to incorporate us, and for legal and accounting
expenses. Net cash provided by Ms. Bilynska from inception on May 10, 2006
through the date of selling her 5,000,000 shares of the Company’s common stock
pursuant to the MSPA was $43,654.
Liquidity
and Capital Resources
We do not
have sufficient cash to operate for the next 12 months. Our former
sole officer and director loaned us money for our operations as needed prior to
consummation of the Majority Stock Purchase Agreement dated April 23, 2009. At
the present time, we have not made any arrangements to raise additional cash. If
we need additional cash and cannot raise it, we will either have to suspend
operations until we do raise the cash, or cease operations
entirely.
In July
2006, we issued 5,000,000 shares of common stock to Maryna Bilynska, our sole
officer and director, pursuant to the exemption from registration contained in
Regulation S of the Securities Act of 1933. This was accounted for as a purchase
of shares of common stock, in consideration of $50.
In August
2008, we completed our public offering by selling 501,000 shares of common stock
and raising $50,100.
On April
23, 2009, Ms. Bilynska sold her 5,000,000 shares to an individual for
$25,000. Ms. Bilynska assumed all the liabilities and obligation that
occurred prior to the stock purchase transaction.
Recent
Accounting Pronouncements
In
October 2009, the Financial Accounting Standards Board (“FASB”) issued an
Accounting Standards Update (“ASU”) regarding accounting for own-share lending
arrangements in contemplation of convertible debt issuance or other
financing. This ASU requires that at the date of issuance of the
shares in a share-lending arrangement entered into in contemplation of a
convertible debt offering or other financing, the shares issued shall be
measured at fair value and be recognized as an issuance cost, with an offset to
additional paid-in capital. Further, loaned shares are excluded from basic and
diluted earnings per share unless default of the share-lending arrangement
occurs, at which time the loaned shares would be included in the basic and
diluted earnings-per-share calculation. This ASU is effective for
fiscal years beginning on or after December 15, 2009, and interim periods within
those fiscal years for arrangements outstanding as of the beginning of those
fiscal years. The Company is currently evaluating the impact of this ASU on its
financial statements.
In August
2009, the FASB issued an ASU regarding measuring liabilities at fair value. This
ASU provides additional guidance clarifying the measurement of liabilities at
fair value in circumstances in which a quoted price in an active market for the
identical liability is not available; under those circumstances, a reporting
entity is required to measure fair value using one or more of valuation
techniques, as defined. This ASU is effective for the first reporting period,
including interim periods, beginning after the issuance of this ASU. The
adoption of this ASU did not have a material impact on the Company’s financial
statements.
On July
1, 2009, the Company adopted ASU No. 2009-01, “Topic 105 - Generally Accepted
Accounting Principles - amendments based on Statement of Financial Accounting
Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles” (“ASU No. 2009-01”). ASU
No. 2009-01 re-defines authoritative GAAP for nongovernmental entities to be
only comprised of the FASB Accounting Standards Codification (“Codification”)
and, for SEC registrants, guidance issued by the SEC. The
Codification is a reorganization and compilation of all then-existing
authoritative GAAP for nongovernmental entities, except for guidance issued by
the SEC. The Codification is amended to effect non-SEC changes to
authoritative GAAP. Adoption of ASU No. 2009-01 only changed the
referencing convention of GAAP in Notes to the Financial
Statements.
In June
2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”), codified as
FASB ASC Topic 810-10, which modifies how a company determines when an entity
that is insufficiently capitalized or is not controlled through voting (or
similar rights) should be consolidated. SFAS 167 clarifies the determination of
whether a company is required to consolidate an entity is based on, among other
things, an entity’s purpose and design and a company’s ability to direct the
activities of the entity that most significantly impact the entity’s economic
performance. SFAS 167 requires an ongoing reassessment of whether a company is
the primary beneficiary of a variable interest entity. SFAS 167 also requires
additional disclosures about a company’s involvement in variable interest
entities and any significant changes in risk exposure due to that involvement.
SFAS 167 is effective for fiscal years beginning after November 15, 2009. The
Company does not believe the adoption of SFAS 167 will have an impact on its
financial condition, results of operations or cash flows.
In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets — an amendment of FASB Statement No. 140” (“SFAS 166”), codified as FASB
Topic ASC 860, which requires entities to provide more information regarding
sales of securitized financial assets and similar transactions, particularly if
the entity has continuing exposure to the risks related to transferred financial
assets. SFAS 166 eliminates the concept of a “qualifying special-purpose
entity,” changes the requirements for derecognizing financial assets and
requires additional disclosures. SFAS 166 is effective for fiscal years
beginning after November 15, 2009. The Company does not believe the adoption of
SFAS 166 will have an impact on its financial condition, results of operations
or cash flows.
Item 3. Quantitative and Qualitative
Disclosures about Market Risk
Not
required.
Item
4T. Controls and Procedures
Disclosure
Controls and Procedures
As of the
end of the period covered by this report, the Company conducted an evaluation
under the supervision and with the participation of the Company’s management,
including the Chief Executive Officer (“CEO”), its principal executive officer,
and Chief Financial Officer (“CFO”), its principal financial officer, of the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based on that evaluation, the CEO and CFO concluded that the
Company’s disclosure controls and procedures were effective as of the date of
that evaluation to ensure that information required to be disclosed in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
Changes
in Internal Controls over Financial Reporting
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may have an adverse affect on our business,
financial conditions or operating results. We are currently not aware of any
such legal proceedings or claims that will have, individually or in the
aggregate, a material adverse affect on our business, financial condition or
operating results.
Not
required.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds
None.
None.
None.
Exhibit No.
|
|
Document
Description
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, as signed by the Chief Executive
Officer
|
32.2
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, as signed by the Chief Financial
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.
|
EVERTON CAPITAL
CORPORATION
|
|
(Registrant)
|
|
|
Date:
July 15, 2010
|
By:
|
/s/ Bei Lu
|
|
|
Bei
Lu
Chief
Executive Officer
|