UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K




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





For the fiscal year ended  July 31, 2011





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





For the transition period from _________ to ________





Commission file number:333-162597





PRIME ESTATES AND DEVELOPMENTS, INC.(Exact name of registrant as specified in its charter)





Nevada
27-0611758(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)200 South Wacker Drive, Suite 3100, Chicago, 60606, IL.
60606(Address of principal executive offices)
(Zip Code)Registrant’s telephone number:  (312) 674.4529Securities registered under Section 12(b) of the Exchange Act:Title of each class
Name of each exchange on which registeredNone
not applicableSecurities registered under Section 12(g) of the Exchange Act:Title of each class
Name of each exchange on which registeredCommon Stock, par value $0.001
not applicable





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes  ̈       No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yes x      No  ̈





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





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes  ̈       No  ̈





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ̈Nox





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





Large accelerated filer  ̈
Accelerated filer  ̈Non-accelerated filer  ̈
Smaller reporting company x





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


Yes o   No x





State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $4,916,916 as of Oct.19, 2011.





Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  24,514,282 as of October 31, 2011.





TABLEOF CONTENTS





PagePART IItem 1.
Business
3Item 2.
Properties
5Item 3.
Legal Proceedings
5Item 4.
Submission of Matters to a Vote of Security Holders
5PART IIItem 5.
Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
6Item 6.
Selected Financial Data
7Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
7Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
10Item 8.
Financial Statements and Supplementary Data
10Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
10Item 9A(T).
Controls and Procedures
10Item 9B.
Other Information
11PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
12Item 11.
Executive Compensation
13Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
15Item 13.
Certain Relationships and Related Transactions, and Director Independence
16Item 14.
Principal Accountant Fees and Services
16PART IVItem 15.
Exhibits, Financial Statement Schedules
17


2


PART I





Item 1.   Business





Company Overview





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





Our Business





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





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





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





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





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





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





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




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




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




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




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




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


3


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





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





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





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





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





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





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





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





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





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





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





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





Competition





We face significant competition both in acquiring properties, repositioning properties and in attracting renters. Our market area is highly competitive, and we will face direct competition from a significant number of real estate investors, many with a local, state-wide or regional presence and, in some cases, a national presence. Many of these investors are significantly larger and have greater financial resources than we do. We have significantly less capital, assets, revenues, employees and other resources than our local, regional and/or national and international competition.


4


We will compete based upon the following factors:  We intend to blend best-in-class, sell-side fundamental research with an established quantitative construction process. The team’s systematic approach strives to add excess return while targeting volatility and tracking error to help control risk.  The quantitative approach efficiently processes large volumes of information, analyzes complex interactions and removes behavioral biases from investment decisions. The research is provided by analysts that are selected by the team based on their quality of research, demonstrated record  of success, breadth and consistency of coverage.





Intellectual Property





At present, we do not have any patents, trademarks, licenses, franchises, concessions, and royalty agreements, labor contracts or other proprietary interests.





Employees





We have no employees.  The Company officers and directors are currently fulfilling their roles via consulting agreements.





Research and Development Expenditures





We have not incurred any research or development expenditures since our incorporation.





Subsidiaries





We do not have any subsidiaries.





Item 2.   Properties





Besides our leased office space, we do not presently lease or own any real property.





We rent the following property as our U.S. corporate office:





•
Address: City/State/Zip:  200 South Wacker Drive, Suite 3100, Chicago, Illinois 60606


•
Name of Landlord:  Regus


•
Term of Lease: One year commencing October 1, 2010


•
Monthly Rental: $1,140


•
Adequate for current needs: Yes





Item 3.   Legal Proceedings





We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.





Item 4.   Submission of Matters to a Vote of Security Holders





No matters were submitted to a vote of the Company's shareholders during the year ended July 31, 2010.


5


PART II





Item 5.    Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities





Market Information





Our common stock is quoted on the Over-The-Counter Bulletin Board under the symbol “PMLT.”





Bid Information*





Quarter Ended

High


LowOctober 31, 2009


-



-January 31, 2010


-



-April 30, 2010


-



-July 31, 2010

$
1.25


$
1.25October 31, 2010

$
1.25


$
0.25January 31, 2011


1.01



0.45April 30, 2011


1.01



0.30July 31, 2011


1.09



0.21





* The quotation do not reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.





Penny Stock





The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.





The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.





In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.





These disclosure requirements may have the effect of reducing the trading activity for our common stock should our stock ever be traded on a public market. Therefore, stockholders may have difficulty selling our securities.


6


Holders of Our Common Stock





As of July 31, 2011, we had 24,514,282 shares of our common stock issued and outstanding, held by approximately 71 persons.





Dividends





We have not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of our business.





Securities Authorized for Issuance under Equity Compensation Plans





We do not have any equity compensation plans.





Item 6.   Selected Financial Data





A smaller reporting company is not required to provide the information required by this Item.





Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations





Forward-Looking Statements





Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.





Plan of Operation in the Next Twelve Months





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





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





·
From today until the end of 2011 we plan to raise additional funds in order to be able to cover our operational expenses and have the needed financing to acquire our first pieces of real estate. We believe that the proceeds raised in our prior Private Placements will satisfy our cash requirements only until we finish our efforts for additional financing at the end of 2011. If we will not be able to raise any additional funds by the end of 2011 we do not anticipate having the ability to continue our operations. We may need to obtain debt financing to implement our business plan. However, we initially contemplate pursuing equity financing only to cover our expenses and finance our first acquisitions of real estate properties. Of course, there is no assurance that we will be able to raise any future capital in any amount and if we fail to do so investors could lose their entire investment.  We estimate the cost of this equity financing if we are able to secure it to be about $6,000, primarily legal and accounting costs and filing fees associated with such an offering.


7


·
By the end of 2011 we also plan to focus our efforts in order to locate the proper properties for acquisition and do a full estimation and due diligence on them. We also plan to collaborate with existing real estate agents in order to be able to locate more properties and receive offers from properties that are getting sold at opportunistic prices. We also plan to create collaborations with freelancers who will have specific experience and knowledge in certain specialized real estate areas such as appraisers, engineers, archeologists, etc. The freelancers will be used in case by case scenario whenever there is a need for their specialty. We wish to create such collaborations with freelancers in order to have accurate real estate estimations and development plans, and in order to have these services at discount prices. The cost that we estimate to have in order to locate the freelancers will be about $2,000.




·
Moreover, by the end of 2011 we believe that we will be able to locate enough real estate opportunities and do a full estimation and due diligence on them so that we will be able to take our first decision to acquire our first property. We estimate that the cost in order to locate a property at an opportunistic price and the cost of the needed due diligence for the first property will be about $3,000.




·
By the end of 2011, or the first quarter of 2012, we believe that we will be able to close our first deal, do the necessary paperwork and therefore acquire our first property. Moreover, in order to have a diversified portfolio of properties we plan to locate and acquire at least three more properties. Among the properties that we intend to buy are those that generate or will within a period of three months generate income from rent. Overall we plan to spend about 80% of the capital that we will have raised in order to acquire real estate properties in the next twelve months. Assuming that we will manage to raise about $10,000,000 until the end of 2011, we will invest about $8,000,000 in real estate assets. Specifically, we plan to invest a portion of these funds, no more than $1,200,000, in order to possibly develop the forest that we have acquired its rights in the Amazonas, Brazil. Moreover, we plan to invest up to 5% of our raised funds in more liquid types of assets such as real estate related securities, primarily such as bonds backed by real estate.  We plan to keep the rest of our funds in cash. We estimate that the rest of our cash position will be enough to cover all operational expenses of the company at least until the end of the first quarter of 2012.




·
As soon as we succeed with the above-mentioned targets we intend to continue our business with more efforts to raise additional funds in order to be able to acquire more real estate assets.





Significant Equipment





We do not intend to purchase any significant equipment for the next twelve months.





Employees





We do not have plans to change the number of our employees during the next twelve months.





Results of Operations for the year ended July 31, 2011 versus 2010





We have not earned any revenues since our inception on July 21, 2009 aside from a de minimus amount of interest income.  We do not anticipate earning revenues until such a time that we will be able to close our first real estate transaction.





We incurred operating expenses in the amount of $169,245, including related-party interest of $835 for the year ended July 31, 2011 versus $3,788,229 for the same period in 2010.  The majority of the cost in 2010 is non-cash in nature and consists of shares issued to eight consultants (3,811,960 shares issued with a corresponding general and administrative expense of $3,720,196).  The year ended July 31, 2011 contained only $63,200 of non-cash costs.





We anticipate our operating expenses will increase as we more fully implement our business plan. The increase will be attributable to expenses to operating our business, and the professional fees to be incurred in connection with our reporting obligations as a public company as our business activity increases.





Liquidity and Capital Resources





As of July 31, 2011, we had $15,238 of cash and a working capital deficit of $4,762.  We currently do not engage nor intend to engage in any business activities that provide cash flow until we enter into our first real estate transaction.


8


Off Balance Sheet Arrangements





As of July 31, 2011, there were no off balance sheet arrangements.





Going Concern





Our financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  We have had no operating revenues and have generated no operations.





In order to continue as a going concern and achieve a profitable level of operation, we will need, among other things, additional capital resources and to develop a consistent source of revenues.  Management's plans include seeking capital to acquire operating real estate that should provide cash flows from operations.





Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our goals and eventually attain profitable operations.  The accompanying financial statements in this report do not include any adjustments that might be necessary if we are unable to continue as a going concern.





Critical Accounting Policies





In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.





Recently Issued Accounting Pronouncements





In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.





In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.





In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.


9


In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.





In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our financial statements.





In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.





Item 7A.   Quantitative and Qualitative Disclosures About Market Risk





A smaller reporting company is not required to provide the information required by this Item.





Item 8.   Financial Statements and Supplementary Data





See the financial statements annexed to this annual report.





Item 9.   Changes In and Disagreements with Accountants on Accounting and Financial Disclosure





None.





Item 9A(T).  Controls and Procedures





Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This rule defines internal control over financial reporting as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:





•
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions;





•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and





•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.


10


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





With the participation of the Chief Executive Officer and the Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting.   Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective as of July 31, 2011, as the result of a material weakness.   The material weakness results from significant deficiencies in internal control that collectively constitute a material weakness.





A significant deficiency is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting. We had the following significant deficiencies at July 31, 2010:





·
We have only one consultant to oversee bank reconciliations, posting payables, and so forth, so there are no checks and balances on internal controls.





Remediation of Material Weakness





We are unable to remedy the material weakness in our internal controls until we are able to hire additional employees, so that we may then introduce checks and balances on internal controls.





Limitations on the Effectiveness of Internal Controls





Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors or all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements, due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns may occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risk.





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.





During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.





Item 9B.   Other Information





None


11


PART III





Item 10.  Directors, Executive Officers and Corporate Governance





The following information sets forth the name of our sole executive officers and directors and their ages as of July 31, 2011 and their present positions.





Name

Age

Position Held with the CompanyPanagiotis Drakopoulos

39

Chief Executive Officer and Board ChairmanVasileios Mavrogiannis

39

Chief Financial Officer and Director





Set forth below is a brief description of the background and business experience of our executive officers and directors.





Vasileios Mavrogiannis





Vasileios Mavrogiannis joined us as Treasurer and Director upon formation.  Since June 2006, he has been Director and Vice-President of Dynamic Investments Ltd., a business consulting firm.  Prior to June 2006, he was unemployed.





Panagiotis Drakopoulos





Panagiotis Drakopoulos joined us as Secretary and Director upon formation.  Since June 2006, he has been Director and President of Dynamic Investments Ltd., a business consulting firm.  From June 2006 to July 2009 he was also Director of Sea Star Shipping SA, involved in the management of ships.  Prior to June 2006, he was unemployed.





Directors





Our bylaws authorize no less than one (1) and more than nine (9) directors.  As of July 31, 2011, we had two directors:  Vasileios Mavrogiannis and Panagiotis Drakopoulos.  On October 25, 2010, Mr. Sinnis, who was a director and CEO upon formation, was replaced by Panagiotis Drakopoulos as Chairman of the Board.





Term of Office





Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until removed by the board.





Family Relationships





There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.





Legal Proceedings





No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:





·
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,





·
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),





·
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,





12





·
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.





·
Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.





·
Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.





·
Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.





Audit Committee





We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee, including approving the selection of our independent accountants.





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company.  Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.  To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us during or with respect to the year ended July 31, 2011, the following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended July 31, 2011:





Name and principal position

Number of late

reports


Transactions not

timely reported


Known failures to file a

required formPanagiotis Drakopoulos, Chief Executive Officer and Board Chairman


1



0



1Vasileios Mavrogiannis, Chief Financial Officer and Director


1



0



1





Code of Ethics





As of July 31, 2011, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.





Item 11.  Executive Compensation





Summary Compensation Table





The table below summarizes all compensation awarded to, earned by, or paid to both to our officers and to our directors for all services rendered in all capacities to us for our fiscal year ended July 31, 2011 and 2010.


13





SUMMARY COMPENSATION TABLEName

YE

7/31

Salary($)


Bonus

($)


Stock

Awards

($)


Option

Awards

($)


Non-Equity

Incentive Plan

Compensation

($)


Nonqualified

Deferred

Compensation

Earnings ($)


All Other

Compensation

($)


Total

($)Vasileios Mavrogiannis

2011


20,000



-



-



-



-



-



-



20,0002010


-



-



-



-



-



-



-



-Panagiotis Drakopoulos

2011


20,000



-



-



-



-



-



-



20,0002010


-



-



-



-



-



-



-



-





Mr. Drakopoulos is the Chief Executive Officer and Board Chairman


Mr. Mavrogiannis is the Chief Financial Officer and a Director





Narrative Disclosure to the Summary Compensation Table





On April 1, 2011, we entered into oral arrangements with Messrs. Mavrogiannis and Drakopoulos to provide compensation in the amount of $5,000 per month. There are no arrangements or plans in which we provide pension, retirement or similar benefits for executive officers.





Outstanding Equity Awards at Fiscal Year-End





The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of July 31, 2011.





OUTSTANDING EQUITY AWARDS AT YEAR ENDName

Number of Securities

Underlying Unexercised

Options (#)


Option

Exercise

Price ($)


Option

Expiration

Date


Option

Expiration

Date


No. of Shares

or Units of

Stock that

Have Not

Vested (#)


Market Value

of Shares or

Units of Stock

that Have Not

Vested ($)


Market Value

of Shares or

Units of Stock

that Have Not

Vested ($)


Equity

Incentive Plan

Awards: No.

of Unearned

Shares, Units

or Other

Rights That

Have Not

VestedExercisable


UnexercisableVasileios Mavrogiannis


-



-



-



-



-



-



-



-



-Panagiotis Drakopoulos


-



-



-



-



-



-



-



-



-





Stock Option Grants





We have not granted any stock options to the executive officers or directors since our inception.





Director Compensation





The table below summarizes all compensation awarded to, earned by, or paid to our director for all services rendered in all capacities to us for the period from inception (July 21, 2009) through July 31, 2011.





DIRECTOR COMPENSATIONName

Fees Earned

or

Paid in

Cash

($)


Stock

Awards

($)


Option

Awards

($)


Non-Equity

Incentive

Plan

Compensation

($)


Non-Qualified

Deferred

Compensation

Earnings

($)


All

Other

Compensation

($)


Total

($)Vasileios Mavrogiannis


0



0



0



0



0



0



0Panagiotis Drakopoulos


0



0



0



0



0



0



0


14


Narrative Disclosure to the Director Compensation Table





We do not pay any compensation to our directors at this time. However, we reserve the right to compensate our directors in the future with cash, stock, options, or some combination of the above.





We have not reimbursed our directors for expenses incurred in connection with attending board meetings nor have we paid any directors fees or other cash compensation for services rendered as a director for the period from inception (July 21, 2009) to July 31, 2011.





We have no formal plan for compensating our directors for their services in their capacity as directors.  In the future we may grant options to our directors to purchase shares of common stock as determined by our Board of Directors or a compensation committee that may be established.





Stock Option Plans





We did not have a stock option plan as of July 31, 2011.





Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters





The following table sets forth certain information known to us with respect to the beneficial ownership of our Common Stock as of July 31,2011  , by (1) all persons who are beneficial owners of 5% or more of our voting securities, (2) each director, (3) each executive officer, and (4) all directors and executive officers as a group. The information regarding beneficial ownership of our common stock has been presented in accordance with the rules of the Securities and Exchange Commission. Under these rules, a person may be deemed to beneficially own any shares of capital stock as to which such person, directly or indirectly, has or shares voting power or investment power, and to beneficially own any shares of our capital stock as to which such person has the right to acquire voting or investment power within 60 days through the exercise of any stock option or other right. The percentage of beneficial ownership as to any person as of a particular date is calculated by dividing (a) (i) the number of shares beneficially owned by such person plus (ii) the number of shares as to which such person has the right to acquire voting or investment power within 60 days by (b) the total number of shares outstanding as of such date, plus any shares that such person has the right to acquire from us within 60 days. Including those shares in the tables does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of capital stock listed as owned by that person or entity.





Except as otherwise indicated, all Shares are owned directly and the percentage shown is based on 24,514,282   shares of common stock issued and outstanding as of July 31, 2011.





Name and Address of Beneficial Owners of Common Stock1

Title of

Class

Amount and

Nature of

Beneficial

Ownership


% of

Common

StockVasileios Mavrogiannis

200 South Wacker Drive, Suite 3100, Chicago, 60606, IL.

Common Stock


11,291,727



46
%Panagiotis Drakopoulos

200 South Wacker Drive, Suite 3100, Chicago, 60606, IL.

Common Stock


11,291,727



46
%DIRECTORS AND OFFICERS as a group [2 persons] – TOTAL




17,958,394



73.3
%





[1]  Includes 4,625,061 shares of common stock owned by Dynamic Investments, Ltd. of which Mr. Drakopoulos and Mr. Mavrogiannis are both beneficial owners.





Other than the shareholders listed above, we know of no other person who is the beneficial owner of more than five percent (5%) of our common stock.


15


Item 13.   Certain Relationships and Related Transactions, and Director Independence





On the date of our inception, we issued 20 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in Common Stock and Additional Paid in Capital).





In January, 2010, certain shareholders paid expenses on behalf of the company totaling $15,872.  This contribution is not evidenced by a promissory note and bears no interest.  We therefore imputed interest expense of $952, charging income with that amount and increasing Additional Paid in Capital.





At July 31, 2011, we owed $20,000 to GreenEra, Ltd., a company in which our directors, Messrs. Panagiotis Drakopoulos and Vasileios Mavrogiannis are shareholders (see Note 6).





We believe that all related party transactions were on terms at least as favorable as we would have secured in arm’s-length transactions with third parties.  Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.





Item 14.   Principal Accounting Fees and Services





Below is the table of Audit Fees (amounts in US$) billed by our auditor in connection with the audit of the Company’s annual financial statements for the years ended:





Financial Statements for the

Year Ended July 31,

Audit Services


Audit Related

Fees


Tax Fees


Other Fees2011

$
9,100


$
0


$
0


$
02010

$
8,700


$
0


$
0


$
0Inception (7/21/09) to 7/31/09

$
0


$
0


$
0


$
0


16


PART IV





Item 15.   Exhibits, Financial Statements Schedules





Index to Financial Statements Required by Article 8 of Regulation S-X:





Audited Financial Statements:F-1
Report of Independent Registered Public Accounting FirmF-2
Consolidated Balance Sheets as of July 31, 2011 and 2010;F-3
Statements of Operations for the year ended July 31, 2011 and 2010, and the periods from inception (July 21, 2009) to July 31, 2011;F-4
Statement of Stockholders’ Deficit for period from inception to July 31, 2011;F-5
Statements of Cash Flows for the year ended July 31, 2011 and 2010, and the periods from inception (July 21, 2009) to July 31, 2011;F-6
Notes to Financial Statements





Exhibit

No.
Description3.1
Articles of Incorporation, as amended(1)3.2
Bylaws, as amended(1)31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





1   Incorporated by reference to the Registration Statement on Form S-1 filed on October 20, 2009.





In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





Prime Estates and Developments, Inc.





By:
/s/ Panagiotis DrakopoulosPanagiotis Drakopoulos

Chief Executive Officer and Board ChairmanOctober 31 , 2011





In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:





By:
Vasileios MavrogiannisVasileios Mavrogiannis

Chief Financial Officer and DirectorOctober 31 , 2011


17


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors


Prime Estates and Developments, Inc.


(A Development Stage Company)





We have audited the accompanying balance sheets of Prime Estates and Developments, Inc.(A Development Stage Company) as of July 31, 2011 and 2010 and the related statements of operations, changes in shareholders' equity (deficit) and cash flows for the periods then ended and from inception (July 21, 2009) through July 31, 2011. 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 audits.





We conducted our audits in accordance with 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 consideration 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 Prime Estates and Developments, Inc. as of July 31, 2011 and 2010, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statement, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ M&K CPAS, PLLCwww.mkacpas.comHouston, TexasNovember 2, 2011


18


PRIME ESTATES AND DEVELOPMENTS, INC.


(A Development Stage Company)


Balance Sheets





07/31/11


07/31/10ASSETSCash and equivalents

$
15,238


$
470TOTAL ASSETS

$
15,238


$
470CURRENT LIABILITIESAccounts payable and accrued expenses

$
-


$
2,079Accrued expenses - related party


20,000



-Note payable - related party


-



15,872TOTAL CURRENT LIABILITIES


20,000



17,951SHAREHOLDERS' EQUITYPreferred stock, par value $0.001, authorized 100 million shares, none issued and outstanding at 10/31/09.


-



-Common stock, par value $0.001, authorized 200 million, 24,514,282 and 24,218,960 issued and outstanding at July 31, 2011 and 2010, respectively.


24,514



24,219Additional paid-in capital


3,932,798



3,751,129Deficit accumulated during the development phase


(3,962,074
)


(3,792,829
)TOTAL SHAREHOLDERS' EQUITY


(4,762
)


(17,481
)TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$
15,238


$
470





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


19


PRIME ESTATES AND DEVELOPMENTS, INC.


(A Development Stage Company)


Statements of Operations





Year Ended July 31,


From2011


2010


Inception

(7/21/09) to

Jul 30, 2011Interest income

$
-


$
52


$
52General and administrative expenses


168,410



3,787,329



3,960,339Interest expense - related parties


835



952



1,787Net operating loss


(169,245
)


(3,788,229
)


(3,962,074
)NET LOSS

$
(169,245
)

$
(3,788,229
)

$
(3,962,074
)Net loss per share, basic and fully diluted

$
(0.01
)

$
(0.18
)Weighted average number of shares outstanding


24,436,238



20,908,152





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


20


PRIME ESTATES AND DEVELOPMENTS, INC.


(A Development Stage Company)


Statements of Shareholders' Equity (Deficit)





Common Stock, Par Value

$0.001Date

Shares


Amount


Additional

Paid In

Capital


Develop.

Stage

Deficit


Total

Shareholders'

DeficitBalances at inception




-


$
-


$
-


$
-


$
-Founders' shares

07/31/09


20,000,000



20,000



(20,000
)


-



-Net loss, 7/21/09 to 7/31/09
















(4,600
)


(4,600
)Balances, 7/31/09




20,000,000



20,000



(20,000
)


(4,600
)


(4,600
)Shares issued for services

08/04/09


101,960



102



10,094







10,196Shares issued for cash

09/15/09


392,000



392



38,808







39,20002/03/10


15,000



15



14,985







15,000Imputed interest on related-party debt












952







952Shares issued for services

06/16/10


3,710,000



3,710



3,706,290







3,710,000Net loss, year ended 7/31/10
















(3,788,229
)


(3,788,229
)Balances, 7/31/10




24,218,960



24,219



3,751,129



(3,792,829
)


(17,481
)Shares issued for services

04/28/11


80,000



80



63,120







63,200Shares issued for cash

10/30/10


56,322



56



22,473







22,52903/16/11


10,000



10



5,990







6,00003/18/11


100,000



100



59,900







60,00003/31/11


14,000



14



8,386







8,40004/01/11


35,000



35



20,965







21,000Imputed interest on related-party debt












835







835Net loss, year ended 7/31/11
















(169,245
)


(169,245
)Balances, 7/31/11




24,514,282


$
24,514


$
3,932,798


$
(3,962,074
)

$
(4,762
)





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


21


PRIME ESTATES AND DEVELOPMENTS, INC.


(A Development Stage Company)


Statements of Cash Flows





From InceptionYear Ended July 31,


(7/21/09) to July2011


2010


31, 2011CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(169,245
)

$
(3,788,229
)

$
(3,962,074
)Adjustments to reconcile net loss with cash used in operations:Stock based compensation


63,200



3,720,196



3,783,396Imputed interest


835



952



1,787Change in operating assets and liabilities:Accounts payable and accrued expenses


(2,079
)


(2,521
)


-Accrued expenses, related-party


20,000



-



20,000Net cash used in operating activities


(87,289
)


(69,602
)


(156,891
)CASH FLOWS FROM INVESTING ACTIVITIES-







-Net cash provided by / used in investing activities


-



-



-CASH FLOWS FROM FINANCING ACTIVITIESProceeds from related party note payable


1,650



15,872



17,522Principal payments on related-party note payable


(17,522
)


-



(17,522
)Proceeds from the sale of common stock


117,929



54,200



172,129Net cash provided by financing activities


102,057



70,072



172,129NET INCREASE / (DECREASE) IN CASH


14,768



470



15,238Cash at beginning of period


470



-



-Cash at end of period

$
15,238


$
470


$
15,238SUPPLEMENTAL DISCLOSURESCash paid for interest


-



-



-Cash paid for income taxes


-



-



-





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


22


PRIME ESTATES AND DEVELOPMENTS, INC.


(A Development Stage Company)


Notes to Financial Statements


July 31, 2011 and 2010





NOTE 1 – NATURE OF ORGANIZATION





Business and Organization





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





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis of Presentation





The Company follows accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.





Use of Estimates





The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.





Cash and Cash Equivalents





The Company considers all highly liquid debt instruments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents. There are no cash equivalents at July 31, 2011 nor 2010.





Revenue Recognition





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





Basic and Diluted Net Loss Per Share





The Company follows ASC No. 260, “Earnings Per Share” (ASC No. 260) that requires the reporting of both basic and diluted earnings (loss) per share.  Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares  outstanding for the period.  The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC No. 260, any anti-dilutive effects on net earnings (loss) per share are excluded.  For the periods ended July 31, 2011 and 2010, there were no common stock equivalents.





As of the year ended July 31, 2011 and 2010, there were no potentially dilutive securities outstanding.


23


Fair Value of Financial Instruments





Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of July 31, 2011. The Company’s financial instruments consist of cash, accounts payable and notes payable to a related party.  The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.





Income Taxes





The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered.  The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely.





Recent Accounting Pronouncements





In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.





In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.





In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.





In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.


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In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our financial statements.





In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.





NOTE 3 - GOING CONCERN





The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.   The Company has had no revenues and has generated from operations.





In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and developing a consistent source of operating revenues.   Management's plans include seeking financing to acquire productive real estate properties.





The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





NOTE 4 – CAPITAL STRUCTURE





Common Stock


The Company is authorized to issue 200 million common shares and has issued 24,514,282 as of July 31, 2011.





On August 4, 2009, we issued 101,960 shares to three consultants related to our statutory filings.  These shares were valued at $0.10 per share which reflects the price at which our common stock was issued pursuant to a private placement in September, 2009 (see below).  These costs were recorded as a charge to general and administrative expense.





During September, 2009, we issued 392,000 shares at $0.10 per share to 43 accredited investors for $39,200 in cash.  This price was used to value the stock based compensation described in the previous paragraph.





In February, 2010, we issued 15,000 shares to an accredited investor for $15,000 in cash.





In June, 2010 we issued 3,710,000 shares to eight consultants.  We valued these shares at the grant date ($1.00) and recorded a charge to general and administrative expense of $3,710,000.





On April 28, 2011, we issued 80,000 shares of common stock to a consultant for services.  We valued the shares at the closing price on the grant date ($0.79 per share) and charged general and administrative expenses with $63,200.





During the year ended  July 31, 2011, we entered into the following private placements for cash:





Date

Price

Per

Share


Shares


Proceeds10/30/11

$
0.40



56,322


$
22,52903/16/11


0.60



10,000



6,00003/18/11


0.60



100,000



60,00003/31/11


0.60



14,000



8,40004/01/11


0.60



35,000



21,000


25


Preferred Stock


The Company is authorized to issue 100 million shares of preferred stock which has preferential liquidation rights over common stock and is non-voting.  As of July 31, 2011, no shares have been issued.





Potentially Dilutive Securities


No options, warrants or other potentially dilutive securities have been issued as of July 31, 2011.





NOTE 5 – INCOME TAXES





Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities.  Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return.  Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.





The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the periods ended July 31, 2011 and 2010 due to the following:





2011


2010Net operating loss carryforwards

$
62,537


$
25,422Valuation allowance


(62,537
)


(25,422
)$
-


$
-





At July 31, 2011, the Company had net operating loss forwards of approximately $178,600 that may be offset against future taxable income through 2026.  No tax benefit has been reported in the July 31, 2011 or 2010 financial statements due to the uncertainty surrounding the realizability of the benefit.  The potential tax benefit is offset by a valuation allowance of the same amount.





NOTE 6 – AGREEMENT WITH GREENERA LTD.





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





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




·
Prime Estates will obtain financing sufficient to pay for all costs associated with obtaining the carbon credits, but not to exceed $1.2 million. There is no due date for the payment of this amount. Prime Estates has the right to cancel the agreement.  Upon such cancellation, no future obligation to GreenEra would exist.




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





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





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




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


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





We need to raise sufficient financing in order to begin the development of any project related to the above forest land. We are researching and studying the carbon credit market and the needed process, including the companies we might need to hire for the needed studies, in case that we will proceed with the issuance of carbon credits that could be produced by the specific forest land.





NOTE 7 – RELATED PARTY TRANSACTIONS





On the date of our inception, we issued 20 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in Common Stock and Additional Paid in Capital).





In January, 2010, certain shareholders paid expenses on behalf of the company totaling $15,872.  This contribution is not evidenced by a promissory note and bears no interest.  We therefore imputed interest expense of $952, charging income with that amount and increasing Additional Paid in Capital.





At July 31, 2011, we owed $20,000 to GreenEra, Ltd., a company in which our directors, Messrs. Panagiotis Drakopoulos and Vasileios Mavrogiannis are shareholders (see Note 6).





We believe that all related party transactions were on terms at least as favorable as we would have secured in arm’s-length transactions with third parties.  Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.





NOTE 8 – LEASES





The Company conducts its operations from facilities located in Chicago, Illinois for which we pay approximately $1,400 per month. Rent expense for the years ended July 31, 2011 and 2010 were $13,883 and zero, respectively.





The following is a schedule of future lease payments as of July 31, 2011:





Year

Amount2012

$
13,6632013


2,277





Note 9 - SUBSEQUENT EVENTS





The Company has evaluated subsequent events through the date these financial statements were issued.


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Item 15. Exhibits





Exhibit

No.
Document Description31.1
CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.31.2
CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.32.1
CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 200232.2
CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002


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SIGNATURES




In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




Prime Estates and Developments, Inc.Date: November 2, 2011
By:
/s/ Panagiotis DrakopoulosPanagiotis DrakopoulosChairman and Chief Executive Officer




In accordance with the Exchange Act , this report has been duly signed by the following persons on behalf of the Company and in the capacities and on the dates indicated.




/s/Vasileios MavrogiannisVasileios Mavrogiannis

Date: November 2, 2011Chief Financial Officer and Director/s/  Panagiotis DrakopoulosPanagiotis Drakopoulos

Date: November 2, 2011Corporate Secretary and Director


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