The accompanying notes are an integral part of these financial statements
F-3
Sino American Oil Company (formerly Raphael Industries Ltd.
(A Development Stage Company)
Statements of Cash Flows
| | | | | | | | Accumulated from |
| | | | Nine months | | Nine months | | October 31, 2005 |
| | | | ended | | ended | | (Date of Inception) |
| | | | June 30 | | June 30 | | June 30 |
| | | | 2010 | | 2009 | | 2010 |
| | | | $ | | $ | | $ |
| | | | | | | | |
Operating Activities | | | | | |
| | | | | | | | |
| Net Income (loss) | (84,627) | | (76,868) | | (418,796) |
| | | | | | | | |
| Adjustments to reconcile net loss of cash | | | | | |
| | Depreciation | 773 | | 6,001 | | 24,808 |
| | Donated services | 21,600 | | 43,200 | | 225,600 |
| | Option lapse | - | | - | | 50,000 |
| | | | | | | | |
| Change in operating assets and liabilities | | | | | |
| | Accounts receivable | - | | 11,048 | | - |
| | Prepaid expenses | 6 | | (175) | | (94) |
| | Accounts payable and accrued liabilities | 14,029 | | (4,094) | | 19,420 |
| | License fee payable | - | | 7,643 | | 43,410 |
| | | | | | | | |
Net Cash (Used In) Operating Activities | (48,219) | | (13,245) | | (55,652) |
| | | | | | | | |
Investing Activities | | | | | |
| | | | | | | | |
| Deposit on database list option | - | | - | | (50,000) |
| Website development | - | | - | | (22,000) |
| Purchase of equipment | (2,075) | | - | | (4,544) |
| | | | | | | | |
Net Cash Flows (Used) In Investing Activities | (2,075) | | - | | (76,544) |
| | | | | | | | |
Financing Activities | | | | | |
| | | | | | | | |
| Proceeds from issuance of common stock | - | | - | | 321,150 |
| | | | | | | | |
Net Cash Flows Provided By Financing Activities | - | | - | | 321,150 |
| | | | | | | | |
Increase (Decrease) in Cash | (50,294) | | (13,245) | | 188,954 |
| | | | | | | | |
Cash – Beginning of Period | 239,248 | | 241,589 | | - |
|
Cash - End of Period | 188,954 | | 228,344 | | 188,954 |
| | | | | | | | |
Supplemental Disclosure | | | | | |
| Interest paid | | 151 | | 8 | | 207 |
| Foreign exchange (gain) loss | (1,756) | | 15,435 | | 26,680 |
The accompanying notes are an integral part of these financial statements
F-4
Raphael Industries Ltd.)
(A Development Stage Company)
Statements of Stockholders’ Equity
For the Period from October 31, 2005 (Date of Inception) to June 30, 20102011
(Expressed in US dollars)
(Unaudited)
| | | | Additional | | | Total | | | Additional | Share | | | Total |
| | Common Stock | Paid-in | Donated | | Stockholder’s | | Common Stock | Paid-in | Subs | | | Stockholder’s |
| | Shares | Amount | Capital | Capital | Deficit | Equity | | Shares | Amount | Capital | Received | Capital | Deficit | Equity |
| | # | $ | $ | $ | $ | $ | | # | $ | $ | $ | $ | $ | $ |
| | | | | | | | | | | | | | | |
Balance on October 31, 2005 (Date of Inception) | Balance on October 31, 2005 (Date of Inception) | - | - | - | - | - | - | Balance on October 31, 2005 (Date of Inception) | - | - | - | | - | - | - |
| | | | | | | | | | | | | | | |
October 31, 2005 - issue of common stock for | October 31, 2005 - issue of common stock for | | | | | | | October 31, 2005 - issue of common stock for | | | | | | | |
| cash at $0.50 per share | 2 | 1 | - | - | - | 1 | cash at $1.00 per share | 1 | 1 | - | | - | - | 1 |
| | | | | | | | |
November 28, 2005 - cancellation of common | November 28, 2005 - cancellation of common | | | | | | November 28, 2005 - cancellation of common | | | | | | | |
| Stock | (2) | (1) | - | - | - | (1) | |
| | | | | | | | stock | (1) | (1) | - | | - | - | (1) |
November 28, 2005 - issue of common stock | November 28, 2005 - issue of common stock | | | | | | November 28, 2005 - issue of common stock | | | | | | | |
| for cash at $0.005 per share | 1,000,000 | 100 | 4,900 | - | - | 5,000 | for cash at $0.01 per share | 1,000,000 | 100 | 4,900 | | - | - | 5,000 |
| | | | | | | | |
April 30, 2006 - issue of common stock | April 30, 2006 - issue of common stock | | | | | | | April 30, 2006 - issue of common stock | | | | | | | |
| for cash at $0.005 per share | 13,000,000 | 1,300 | 63,700 | - | - | 65,000 | for cash at $0.01 per share | 13,000,000 | 1,300 | 63,700 | | - | - | 65,000 |
| | | | | | | | |
Donated services | Donated services | - | - | - | 52,800 | - | 52,800 | Donated services | - | - | - | | 52,800 | - | 52,800 |
| | | | | | | | |
Net loss and comprehensive loss | Net loss and comprehensive loss | - | - | | - | (22,650) | (22,650) | Net loss and comprehensive loss | - | - | | | - | (22,650) | (22,650) |
| | | | | | | | | | | | | | | |
Balance - September 30, 2006 | Balance - September 30, 2006 | 14,000,000 | 1,400 | 68,600 | 52,800 | (22,650) | 100,150 | Balance - September 30, 2006 | 14,000,000 | 1,400 | 68,600 | | 52,800 | (22,650) | 100,150 |
| | | | | | | | | | | | | | | |
April 30, 2007 - issue of common stock | April 30, 2007 - issue of common stock | | | | | | | April 30, 2007 - issue of common stock | | | | | | | |
| for cash at $0.10 per share | 5,023,000 | 502 | 250,648 | - | - | 251,150 | for cash at $0.10 per share | 5,023,000 | 502 | 250,648 | | - | - | 251,150 |
| | | | | | | | |
Donated services | Donated services | - | - | - | 57,600 | - | 57,600 | Donated services | - | - | - | | 57,600 | - | 57,600 |
| | | | | | | |
Net loss and comprehensive loss | Net loss and comprehensive loss | - | - | | - | (148,789) | (148,789) | Net loss and comprehensive loss | - | - | | | - | (148,789) | (148,789) |
| | | | | | | | | | | | | | | |
Balance - September 30, 2007 | Balance - September 30, 2007 | 19,023,000 | 1,902 | 319,248 | 110,400 | (171,439) | 260,111 | Balance - September 30, 2007 | 19,023,000 | 1,902 | 319,248 | | 110,400 | (171,439) | 260,111 |
| | | | | | | | | | | | | | | |
Donated Services | Donated Services | - | - | - | 57,600 | - | 57,600 | Donated Services | - | - | - | | 57,600 | - | 57,600 |
| | | | | | | |
Net loss and comprehensive loss | Net loss and comprehensive loss | - | - | | - | (93,376) | (93,376) | Net loss and comprehensive loss | - | - | | | - | (93,376) | (93,376) |
| | | | | | | | | | | | | | | |
Balance – September 30, 2008 | Balance – September 30, 2008 | 19,023,000 | 1,902 | 319,248 | 168,000 | (264,815) | 224,335 | Balance – September 30, 2008 | 19,023,000 | 1,902 | 319,248 | | 168,000 | (264,815) | 224,335 |
| | | | | | | | | | | | | | | |
Donated Services | Donated Services | - | - | - | 36,000 | - | 36,000 | Donated Services | - | - | - | | 36,000 | - | 36,000 |
| | | | | | | |
Net loss and comprehensive loss | Net loss and comprehensive loss | - | - | | - | (69,354) | (69,354) | Net loss and comprehensive loss | - | - | | | - | (69,354) | (69,354) |
| | | | | | | | | | | | | | | |
Balance – September 30, 2009 | Balance – September 30, 2009 | 19,023,000 | 1,902 | 319,248 | 204,000 | (334,169) | 190,981 | Balance – September 30, 2009 | 19,023,000 | 1,902 | 319,248 | | 204,000 | (334,169) | 190,981 |
| | | | | | | | | | | | | | | |
Donated Services | Donated Services | - | - | - | 21,600 | - | 21,600 | Donated Services | - | - | - | | 28,800 | - | 28,800 |
| | | | | | | |
Net loss and comprehensive loss | Net loss and comprehensive loss | - | - | - | - | (84,627) | (84,627) | Net loss and comprehensive loss | - | - | - | | - | (49,476) | (49,476) |
| | | | | | | | | | | | | | | |
Balance – June 30, 2010 | 19,023,000 | 1,902 | 319,248 | 225,600 | (418,796) | 127,954 | |
Balance – September 30, 2010 | | Balance – September 30, 2010 | 19,023,000 | 1,902 | 319,248 | 856,387 | 232,800 | (432,478) | 977,859 |
| | | | | | | | | |
October 1, 2010 – issue of common stock | | October 1, 2010 – issue of common stock | | | | | | | |
For cash at $0.10 per share | | For cash at $0.10 per share | 10,000,000 | 1,000 | 999,000 | (856,387) | - | - | 143,613 |
Donated Services | | Donated Services | - | - | - | - | 21,600 | - | 21,600 |
Stock Dividend – March 1, 2011 | | Stock Dividend – March 1, 2011 | 14,511,500 | 1,451 | - | - | - | (1,451) | - |
Net loss and comprehensive loss | | Net loss and comprehensive loss | - | - | - | - | - | (49,170) | (49,170) |
| | | | | | | | | |
| | | | | | | | | |
Balance – June 30, 2011 | | Balance – June 30, 2011 | 43,534,500 | 4,353 | 1318,248 | - | 254,400 | (483,099) | 1,093,902 |
The accompanying notes are an integral part of these financial statements
F-5F-4
Sino American Oil Company (formerly Raphael Industries Ltd.)
(A Development Stage Company)
Notes to the Interim Financial Statements
June 30, 20102011
(Expressed in US dollars)
(Unaudited)
NOTE 1 - NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS
Raphael Industries Ltd. (“the Company”) was incorporated on October 31, 2005 under the laws of the State of Nevada. Its principal business iswas to market database for commercial use in newsletters, direct mail, and internet marketing promotions. On November 11, 2010 the company changed its name to Sino American Oil Company in anticipation of the company’s new business direction which is exploration for oil and gas.
The financial statements are prepared in accordance with generally accepted accounting principles in the United States on a going concern basis which contemplates the realization of assets and discharge of liabilities and commitments in the normal course of business. To date the Company has funded operations through the issuance of capital stock and the limited generation of revenues. The Company has limited operating history, has generated limited revenues from operations, and may require additional capital requirements. As at June 30, 2010,2011, the Company has an accumulated deficit of $418,796.$483,099. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Management’s plan is to continue raising additional funds through future equity or debt financings, as needed, until it can generate sufficient revenues to maintain sustainable profitable operations. On October 25, 2006, the Company filed an amended SB-2 Registration Statement with the United States Securities and Exchange Commission and raised $251,150. On June 3, 2010 the Company filed an S-1 registration statement to register 10,000,000 shares for sale at $0.10 per share. The registration statement was declared effective by the Securities and Exchange Commission on June 11, 2010. As of the balance sheet date no funds have been2010 and raised pursuant to the registration statement. It$1,000,000. The Company has sufficient capital to maintain operations for the next 12 months.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation and Fiscal Year
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is September 30.
(b) Interim Financial Statements
The interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations, changes in equity and cash flows for the periods shown. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. Accordingly, it is suggested that these interim financial statements be read in conjunction with the Company’s September 30, 2010. The results of operations for suchthe periods disclosed are not necessary indicative of the results expected for a full year or for any future period.
(c) Recent Accounting Pronouncements
The Company adopts new accounting pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective adoption date. Management does not believe that any recently issued but not yet effective standards, if currently adopted, would have a material effect on these financial statements.
NOTE 3 – PROPERTY AND EQUIPMENT
| | | June 30, | September 30, |
| | | 2010 | 2009 |
| | Accumulated | Net Carrying | Net Carrying |
| Cost | amortization | Value | Value |
| $ | $ | $ | $ |
| | | | |
Computer hardware | 4,545 | 2,808 | 1,736 | 434 |
| | | March 31, | September 30, |
| | | 2011 | 2010 |
| | Accumulated | Net Carrying | Net Carrying |
| Cost | amortization | Value | Value |
| $ | $ | $ | $ |
| | | | |
Computer hardware | 9,792 | 4,627 | 5,135 | 1,477 |
F-5
Sino American Oil Company (formerly Raphael Industries Ltd.)
(A Development Stage Company)
Notes to the Interim Financial Statements
June 30, 2011
(Expressed in US dollars)
(Unaudited)
NOTE 4 – WEBSITE DEVELOPMENT
| | | March 31, | September 30, |
| | | 2011 | 2010 |
| | Accumulated | Net Carrying | Net Carrying |
| Cost | amortization | Value | Value |
| $ | $ | $ | $ |
| | | | |
Website Development | 24,390 | 22,000 | 2,390 | - |
NOTE 5 - COMMON STOCK
On November 28, 2005, the Company issued 1,000,000 shares of common stock to the President of the Company at $0.01 per share for cash proceeds of $5,000.
On October 31, 2005, the Company issued 1 share of common stock to the President of the Company at $1.00 per share for cash proceeds of $1. The share of common stock was cancelled on November 28, 2005.
On April 30, 2006, the Company issued 13,000,000 shares of common stock to the President of the Company at $0.01 per share for cash proceeds of $65,000.
On April 30, 2007, the Company issued 5,023,000 shares of common stock pursuant to the Company’s SB-2 registration statement at $0.10 per share for cash proceeds of $251,150.
On March 8, 2010, the Company completed a 2-1 stock split. These financial statements give retroactive application to this event.
On October 1, 2010 the company completed a fully registered offering for 10,000,000 shares at $0.10 per share for cash proceeds of $1,000,000.
On March 1, 2011, the Company issued a stock dividend to shareholders of record February 10, 2011 on a 1.5:1 basis. The increase in shares did not affect the stock price and as a result, only the par value of the shares issued was recorded as an increase to common stock and an increase to deficit accumulated during the development stage. The earnings per share calculation gives retroactive effect to this stock dividend.
As at June 30, 2011, there were no shares subject to options, warrants or other agreements.
NOTE 46 – RELATED PARTY TRANSACTIONS
Consulting fees of $14,400$21,600 ($21,600 in 2010) were recorded as donated services by the previous President of the Company for consulting services provided to the Company during the six month period ended March 31, 2010 and consulting fees of $7,200 were recorded as donated services by the current President of the Company for consulting services provided to the Company during the threenine month period ended June 30, 2010.2011. These fees are included in general and administrative, and recorded as donated capital.
NOTE 5 -7 – COMMITMENTS
On March 14, 2011, the Company completed an Option Agreement with Sentry Petroleum (Australia) Pty. Ltd. The option was an exclusive right to earn an undivided 70% interest in Sentry Petroleum (Australia) Pt. Ltd. ATP 865 & ATP 866 in Queensland. To earn its interest, Sino American was to pay 100% of the cost to drill and complete one well and provide funding up to USD$1,000,000 for additional geological, geophysical, and engineering work. On June 26, 2011, the agreement was jointly terminated and the Company entered into a license agreement dated December 1, 2007 for the exclusive use of a database for a period of 24 months. The license agreement lapsed and has not been renewed.was released from any obligation.
F-6
Raphael Industries Ltd. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
(Unaudited)
NOTE 6 – COMMON STOCK
On March 17, 2010 the Board of Directors passed a resolution approving a 2:1 forward stock split of the outstanding common shares of the Company’s common stock. The split was effected by a stock dividend to each of the Company’s stockholders of 1 additional common share of common stock for each 1 share of common stock held on January 18, 2010.
On February 15, 2010 the Board of Directors authorized an increase in the number of authorized shares of common stock from 50,000,000 to 100,000,000.
These financial statements give retroactive effect to each of these events.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This Form 10-Q includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this Form 10-Q, other than statements of historical facts, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including operating costs, future capital expenditures (including the amount and nature thereof), and other such matters are forward-looking statements. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Becau se our stock is a penny stock, each time we refer to the Litigation Reform Act, the safe harbor does not apply.
Factors that could cause actual results to differ materially from those in forward-looking statements include: the change of business focus; continued availability of capital and financing; general economic, market or business conditions; acquisition opportunities or lack of opportunities; changes in laws or regulations; risk factors listed from time to time in our reports filed with the Securities and Exchange Commission; and other factors.
Raphael Industries Ltd is a Nevada company incorporated on October 31, 2005. We are a startup company providing list management and marketing services in the direct mail marketing industry. To date we have had limited revenues and have been issued a going concern opinion from our auditors. Our registered office and agent for service is located at 5190 Neil Road Suite 430 Reno NV 89502. Our telephone and fax numbers are 1-866-261-8853 and 1-302-288-8853, respectively and our corporate website is www.raphaelindustries.net.
Employees and Consultants
The Registrant has no employees. The company's President, Ronald Hughes, is retained as a consultant.
(b)(a) Results of Operations
During the three monthsfiscal quarter ending June 30, 2010,2011, we realized revenuesno revenue compared to $0 for the quarter ending June 30, 2010. Gross profit for the quarter was $0 as compared to a profit of $nil (2009: $nil) and we$0 in 2010. We incurred an operating loss before taxesof $25,914 compared to a loss of $35,151 compared to an operating loss of $9,222 for 2009. Total operating expenses for the three months endedquarter ending June 30, 2010 were $35,151 (2009 - $9,222).2010. The major components to expenses faced by the company during the three monthslast quarter were general and administrative of $28,966 (2009$21,919 (2010 - $20,853)$28,966), foreign currency loss of $6,185 (2009 – gain of $11,631). The change in general and administrative expenses was as a result of legal fees associated with our S-1 registration statement and additional travel expenses related to business development.
During the nine months ending June 30, 2010, we realized revenues of $nil compared to $9,390 for the same period of 2009 and we incurred an operating loss before taxes of $84,627 compared to an operating loss of $76,868 for 2009. Total operating expenses for the nine months ended June 30, 2010 were $84,627 (2009 - $81,379). The major components to expenses faced by the company during the nine months were general and administrative of $86,383 (2009 - $65,944), foreign currency gain of $1,756 (2009 – loss of $15,435), and cost of sales of $nil (2009$0 (2010 - $0), and foreign exchange loss of $3,995 (2010 – $4,879)loss of $6,185). The foreign exchange loss was caused by the fluctuation of the US dollar vs. the Canadian dollar. The Company has been maintaining a portion of its cash in Canadian dollars.
As of June 30, 20102011 the Company had $188,954$1,129,795 (March 31, 2011 - $1,163,498) in cash (September 30, 2009cash. $0 (March 31, 2011 - $239,248), $94$0) in prepaid expenses, (September 30, 2009$5,135 (March 31, 2011 - $100), and $1,736$5,047) in property and equipment, (September 30, 2009$8 (March 31, 2011 - $434).
The Company further had $19,420$14,909) in accounts payable and accrued liabilities (September 30, 2009$43,410 (March 31, 2011 - $5,391), and $43,410$43,410) in licensee fee payable (September 30, 2009 - $43,410).payable. There is no long-term debt. The Company may in the future invest in short-term investments from time to time but there can be no assurance that these investments will result in profit or loss.
On February 10, 2010 we received the resignation from Craig Wacaser as a Director. On February 11, 2010 we appointed Ronald Hughes as an interim Director and our Chief Executive and Chief Financial Officer.
On March 24, 2010 we filed an S-1 registration statement with the Securities and Exchange Commission related to the sale of a maximum of 10,000,000 shares of our common stock at an offering price of $0.10 per share, with a no minimum required for us to accept funds. The registration statement was declared effective by the Securities and Exchange Commission on April 4th, 2010. On May 27, 2010 Heather Grant resigned as the Company’s corporate Secretary. Mr. Hughes has assumed the responsibilities. The Company filed a post effective amendment to the S-1 registration statement to reflect the change in corporate secretary. The Securities and Exchange Commission declared the amended S-1 registration statement effective on June 11, 2010. As of the balance sheet date an d the date of the 10Q, no funds have been raised pursuant to the registration statement.
Our future growth and success will be dependent on our ability to marketexplore for and discover hydrocarbons in commercial quantities. We do not have sufficient capital to satisfy the lists forpotential future exploration expenditures and we will rely principally on the issuance of Common Stock to raise funds to finance the expenditures that we expect to incur. Failure to raise additional funds will result in the failure to meet our clientsobligations and the relinquishment of our interest in our acquired permits. We have relied principally on the issuance of Common Stock in public placements to secureraise funds to support our business but there can be no assurance that we will be successful in raising additional lists. If we cannot succeed in marketing licensed lists and to secure contracts to market lists then our prospects for growth are limited. We are in discussions with list brokers to secure list agreements and other possible business opportunities.funds through the issuance of additional equity.
As of June 30, 2010the date of this report, our sole source of revenue has been list rentalis the discovery and brokerage services.sale of commercial quantities of hydrocarbons. Accordingly, no table showing percentage breakdown of revenue by business segment or product line is included.
Liquidity and Capital Resources
On April 8, 2010 the British Columbia Securities Commission (the “BCSC”) in Canada issued a cease trade orderCash on the Company’s securities. The cease trade order has the effecthand is currently our only source of prohibiting all trading of our securities in British Columbia until the cease trade order has been revoked. On May 17, 2010 the British Columbia Securities Commission revoked the cease trade order.
Off balance-sheet arrangements
liquidity. We do not have any off balance-sheetlending arrangements in place with banking or financial institutions and we do not anticipate that have or are reasonably likelywe will be able to have a current or future effect onsecure these funding arrangements in the small business issuer's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.near future.
Recent accounting pronouncements
The Company adopts new pronouncements relatingWe have sufficient cash to generally accepted accounting principles applicablecarry out nominal operations during our current fiscal year. However we will require additional cash to complete on our farm-in obligations. To the Company as they are issued, whichextent that we may require additional funds to support our operations or the expansion of our business, we may sell additional equity or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. There can be in advance of their effective date. Management does not believeno assurance that any recently issued, but not yet effective accounting standards,additional financing, if currently adopted, would have a material effectrequired, will be available to our company or on the accompanying financial statements.acceptable terms.
We do not expect any significant purchases of plant and equipment or any increase in the number of employees in the near future.
(b) Off-balance sheet arrangements
We do not have any off-balance sheet arrangements
ItemITEM 3. QuantitativeQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and Qualitative Disclosures About Market Risk.are not required to provide the information under this item.