SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2012
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No. 333-159517
PETROTERRA CORP.
(Exact name of registrant as specified in its charter)
190 Dzerjinskogo St., Ovidiopol
Odesska obl., 67801, Ukraine
Telephone Number: 38 (048) 5131902
(Address and telephone number of registrant's executive office)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether 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 [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
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 Act) Yes [X] No [ ]
As of July 12, 2012, the registrant had 106,048,000 shares of common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market has been established as of July 12, 2012.
TABLE OF CONTENTS
ITEM 1. DESCRIPTION OF BUSINESS
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
As used in this annual report, the terms "we", "us", "our", "the Company", mean PetroTerra Corp., unless otherwise indicated.
All dollar amounts refer to US dollars unless otherwise indicated.
GENERAL
PetroTerra Corp. was incorporated under the laws of the State of Nevada, U.S. on July 25, 2008 under the name “Loran Connection Corp.”. Our registration statement was originally filed with the Securities and Exchange Commission on May 28, 2009 and was declared effective on October 28, 2009.
We are in the business of organizing of individual and group tourism as well as business support in Ukraine. Our services include: reception, transportation, translating, organizing tourist trips, and business support. Our revenue will be earned from the fee for our services from our clients. We may also receive commissions from tourist companies to which we will refer our potential guests.
On January 25, 2012, we changed our corporate name from Loran Connection Corp. to PetroTerra Corp. in contemplation of an asset acquisition that did not subsequently complete. Accordingly, we intend to pursue our original business plan despite our recent name change.
CURRENT BUSINESS OPERATIONS
We are currently developing a website (http://www.lorantourist.com/) which will include a photo gallery, pricing and detailed description of our services. The website will allow our clients to review our services and place travel reservations online. The website will contain links to the tourist companies that we will enter into strategic alliances with. To date, the only operations we have engaged in are the development of a business plan, purchasing of online advertising, and the registration of the domain name for our new website.
We intend to provide the following services in the area of individual and group tourism and business support in Ukraine:
- Reception and support services (Any visa support needed; Arrangement of a qualified
interpreter);
- Transportation and driver services;
- Excursions and tourist activities;
- Apartment for rent in Odessa and other cities;
- Entertainment and other services;
- Business support (Search and background check of potential business partners; Assistance
in search, interviewing and selection of qualified employees; Assistance of office or
warehouse set up).
Our services will be offered in major cities of Ukraine, such as Kiev, Odessa, Kharkov and Lvov.
TRANSPORTATION & DRIVER SERVICES
If we are able to proceed with our business we will provide our clients with English speaking drivers to drive them from point of arrival to their hotel. Driver service will also be arranged to and from various tours and points of interest at the client's request. We will also assist in renting a car in Ukraine if clients wish to drive themselves.
EXCURSIONS AND TOURIST ACTIVITIES
If we are able to proceed with our business we will present our clients with a list of suggested activities and excursions in their destination city. We will describe each activity and help our clients in their selection. We will also assist in placing reservation and ticket purchase.
APARTMENTS FOR RENT IN ODESSA AND OTHER CITIES
In Ukraine, it is much more economical and convenient to rent an apartment than hotel. If we are able to proceed with our business we will assist our clients in renting apartments in city centers or in tourist areas. The apartments are furnished and are equipped with all modern appliances such as a fridge, stove or oven, bathtub and/or shower. Cost of electricity and local phone calls will be included in the price of the daily rentals.
ENTERTAINMENT AND OTHER SERVICES
If we are able to proceed with our business we will provide a list of local restaurants, nightclubs and casinos to visit while in Ukraine. We will also suggest family getaways such as cottage and beach house rentals.
BUSINESS SUPPORT IN ODESSA, UKRAINE
For clients who wish to conduct business in Ukraine, we intend to offer the following services:
* Search and background check of potential business partners;
* The organization of business meetings and presentations at convenient venues;
* Assistance in search, interviewing and selection of qualified employees;
* Assistance of office or warehouse set up; and
* Services of an interpreter in the clients desired language.
MARKETING OUR SERVICES
Our plan in the next 12 months is to conclude referral agreements with various tourist organizations and travel agencies in order to market our services to their clients. We also plan to advertise our services in travel brochures and newspapers as well as by sending out regular e-letters and special promotions to our new and existing clients.
WEBSITE MARKETING STRATEGY
We are in the process of developing a website to market and display our services. We have contacted an independent web designer who has agreed to create our site for between $1000 and $2000. Our website describes our services in detail, shows our contact information, and includes some general information and pictures of tourist sites in Ukraine.
We intend to promote our website by displaying it on our business cards. We will refer our potential clients and partners to our website to showcase the services and opportunities that we offer. We intend to attract traffic to our website by a variety of online marketing tactics such as registering with top search engines and advertising on related websites.
We have purchased advertising from the US - Ukraine Foundation of Washington, DC (the “Foundation”). The Foundation has agreed to display our banner advertising on their websites for a period of six months for a fee of $500. The websites where our banner advertisement will be displayed are www.traveltoukraine.org, www.businessukraine.org, and www.buyukraine.org. By clicking on our banner the visitors of such websites will be diverted to our homepage.
The US - Ukraine Foundation is a nonprofit, non-governmental organization established in 1991 to facilitate democratic development, encourage free market reform, and enhance human rights in Ukraine. The Foundation creates and sustains channels of communication between the United States and Ukraine for the purpose of building peace and prosperity through shared democratic values. The Foundation is dedicated to strengthening the mutual objectives of both nations while advancing
Ukraine as a cornerstone of regional stability and as a full partner in the community of nations.
REVENUE
The Company's revenue will be generated from the fee we charge our clients for our tourist services and business support. Generally our services will consist of a comprehensive package starting with an interview with a potential visitor to find out their needs. Our tourist package of services will include: greeting at the point of arrival, arrangement of transportation and accommodations, and assistance in organizing of two tourist activities and excursions. We plan to charge our clients $400 for such package of services. Our business package of services will include: assistance of office or warehouse set up, locate an interpreter in the client's desired language, organization of two business presentations and assistance in search of up to five employees. We plan to charge our clients $1,500 for the business package of services. We will also offer separate services to meet each client's individual needs. We may also receive commission from tourist companies to which we refer our clients. The commission may range from 10% to 15% of the total amount paid by our clients.
COMPETITION
The tourist service market is highly competitive. We expect competition to continue to intensify in the future. Competitors include companies with substantial customer bases and working history. There can be no assurance that we can maintain a competitive position against current or future competitors, particularly those with greater financial, marketing, service, support, technical and other resources. Our failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our business, financial condition and results of operations.
INSURANCE
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a personal injury action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any other research or development expenditures since our incorporation.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not own any property.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
ITEM 5. MARKET FOR EQUITY SECURITIES AND OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
Our shares of common stock are quoted for trading on the OTC Bulletin Board. As of the date of this Annual report we had 37 shareholders of record.
DIVIDENDS
We have never paid or declared any dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We currently do not have any equity compensation plans.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
RESULTS OF OPERATIONS
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Our net loss for the fiscal year ended March 31, 2012 was $17,315 compared to a net loss of $10,436 during the fiscal year ended March 31, 2011. During fiscal year ended March 31, 2012, we did not generated any revenue.
During the fiscal year ended March 31, 2012, we incurred expenses of $17,315 compared to $10,436 incurred during fiscal year ended March 31, 2011. These expenses incurred during the fiscal year ended March 31, 2012 consisted of general and administrative expenses of $17,155 and compensation consulting fee expense at a deemed value of $160.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2012, our current assets were $32 and our total liabilities were $34,760. As of March 31, 2012, current assets were comprised of $32 in cash and total liabilities were comprised of $2,095 in accounts payable and accrued liabilities and of $32,665 in advances from a director. Stockholders’ deficit decreased from ($17,573) as of March 31, 2011 to ($34,728) as of March 31, 2012.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the fiscal year ended March 31, 2012, net cash flows used in operating activities was ($2,950) consisting of a net loss of ($17,315), which was adjusted for the following non-cash items: common stock issued for services of $160, accounts payables and accrued liabilities of $2,040 and related party loans paid directly to vendors on the Company’s behalf of $12,165. For the fiscal year ended March 31, 2011, net cash flows used in operating activities was ($13,381) consisting of a net loss of ($10,436) and change in accounts payables and accrued liabilities of ($2,945). Net cash flows used in operating activities was ($42,268) for the period from our inception on July 25, 2008 to March 31, 2012.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the fiscal year ended March 31, 2012, net cash from financing activities was $0. For the fiscal year ended March 31, 2011, net cash from financing activities was $11,300, consisting of advances from a director. For the period from our inception on July 25, 2008 to March 31, 2012, net cash provided by financing activities was $42,300, consisting of $21,800 in proceeds that we received from issuances of common stock and $20,500 in advances from a director.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
MATERIAL COMMITMENTS
As of the date of this Annual Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our March 31, 2012 and March 31, 2011 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS