UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
_______________
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2009
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______to______.
ARTCRAFT V, INC.
(Exact name of registrant as specified in Charter
| Delaware | | 000-50818 | | 26-0744863 |
(State or other jurisdiction of incorporation or organization) | | (Commission File No.) | | (IRS Employee Identification No.) |
Room 1131, XianKeJiDian Building
BaGuaSi Road Futian District
Shenzhen City, China 518029
(Address of Principal Executive Offices)
_______________
011-86775 23990959
(Issuer Telephone number)
_______________
(Former Name or Former Address if Changed Since Last Report)
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company 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 Filero Smaller Reporting Companyx
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes x No£
As of June 12, 2009 the Company had 10,250,000 shares of common stock outstanding.
ARTCRAFT V, INC.
FORM 10-Q
March 31, 2009
INDEX
PART I-- FINANCIAL INFORMATION
| Item 1. | Financial Statements |
| Item 2. | Management’s Discussion and Analysis of Financial Condition |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk |
| Item 4T. | Control and Procedures |
PART II-- OTHER INFORMATION
| Item 1 | Legal Proceedings |
| Item 1A. | Risk Factors |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 3. | Defaults Upon Senior Securities |
| Item 4. | Submission of Matters to a Vote of Security Holders |
| Item 5. | Other Information |
| Item 6. | Exhibits and Reports on Form 8-K |
SIGNATURE
ITEM 1. FINANCIAL INFORMATION
The financial statements of the Company are included following the signature page of this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
BUSINESS OVERVIEW
Artcraft V, Inc. was incorporated under the laws of the State of Delaware on June 7, 2004. On November 7, 2005, the Company entered into an Exchange Agreement with Top Interest International Limited (“Top Interest”). Top Interest owned 70% equity interest of Shenzhen Xin Kai Yuan Info Consult Co., Ltd. (“188info.com”) which operates 188info.com, a professional information searching platform that is engaged in the business of providing information search engine, online web application and image designing, digital network service, online market research, online promotion and advertising services, and query searches for both individuals and businesses. Top Interest was incorporated under the laws of the British Virgin Islands. 188info.com was legally established under the laws of the People’s Republic of China. When used in these notes, the terms “Company”, “we”, “our” or “us” mean Artcraft V, Inc. and its subsidiary.
Pursuant to the Stock Purchase and Share Exchange Agreement, the Company purchased all of the issued and outstanding shares of Top Interest from the shareholders for issuance of a total of 10,000,000 shares of the Company’s common stock, or approximately 99% of the total issued and outstanding shares. This transaction closed on November 7, 2005 and has been accounted for as a reverse acquisition.
We operated our business through our wholly owned subsidiary, Top Interest International Limited, which owned a 70% interest in 188info.com, which operates "188Info" service in the PRC.
On September 22, 2008 the Company’s board of directors agreed to sell the Company’s 70% interest in 188info.com in order to protect its shareholders’ interest as “188info.com” continues to generate operating losses and negative cash flow. The Company entered into an agreement with Shenzhen Dingyi Investment Consulting Company Co., Ltd on September 22, 2008 to sell them its 70% interest in 188info.com for $0.15 (RMB1) and the assumption of all assets and liabilities of 188info.com. The transaction was completed and approved by the PRC on October 17, 2008.
Due to the sale of 188info.com we do not expect to generate any revenues over the next twelve months. Our principal business objective for the next twelve months will be to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for our shareholders.
During the next twelve months we anticipate incurring costs related to filing of Exchange Act reports, general administrative costs and costs relating to consummating an acquisition. We believe we will be able to meet these costs through loans by our stockholders, management or other outside investors. We have no specific plans, understandings or agreements with respect to the raising of such funds, and we may seek to raise the required capital by the issuance of equity or debt securities or by other means. Since we have no such arrangements or plans currently in effect, our inability to raise funds for the consummation of an acquisition may have a severe negative impact on our ability to become a viable company.
In the future, we will attempt to acquire other assets or business operations that will maximize shareholder value. No specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or any transactions will be consummated.
We expect that we will need to raise funds in order to effectuate our business plan. We will seek to establish or acquire businesses or assets with funds raised either via the issuance of shares or debt. There can be no assurance that additional capital will be available to us. We may seek to raise the required capital by other means. We may have to issue debt or equity or enter into a strategic arrangement with a third party. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds will have a severe negative impact on our ability to remain a viable company. In pursuing the foregoing goals, we may seek to expand or change the composition of the Board or make changes to our current capital structure, including issuing additional shares or debt and adopting a stock option plan.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008
The following table presents certain consolidated statement of operations information for the three month periods ended March 31, 2009 and 2008. The discussion following the table is based on these results. Certain columns may not add due to rounding.
| | | Three month ended March 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue, net | | $ | - | | | $ | - | |
| | | | | | | | | |
| Operating Expenses: | | | | | | | | |
| General and administrative expenses | | | 10,514 | | | | 7,986 | |
| | | | | | | | | |
| Loss from operations | | | (10,514 | ) | | | (7,986 | ) |
| | | | | | | | | |
| Loss from continued operations | | | | | | | | |
| | | | | | | | | |
| Discontinued Operation | | | | | | | | |
| Loss from operations of entity disposed | | | | | | | (903 | ) |
| | | | | | | | | |
| Net loss | | | (10,514 | ) | | | (8,889 | ) |
| | | | | | | | | |
| Other comprehensive income | | | | | | | | |
| Foreign currency translation | | | - | | | | 530 | |
| | | | | | | | | |
| Comprehensive loss | | | (10,514 | ) | | | (8,359 | ) |
| | | | | | | | | |
Net Revenue
Net sales for the three months ended March 31, 2009 totaled $0 compared to $0 (after reclassification of $7,389 revenue related to the discontinued entity) for the three months ended March 31, 2008. Revenue reduced to $0 in the current quarter compared to same period last year after discontinued operation. The decrease in revenue is due to the fact that the Company became dormant after the sale of the subsidiary 188info.com.
Operating Expense
General and administrative expenses for the three month period ended March 31, 2009 totaled $10,514 compared to $7,986 (after reclassification of $8,184 expenses related to the discontinued entity) for the three month ended March 31, 2008. The increase in operating expense of $2,528 after discontinued operations was due to the increase in professional fees.
Loss from Continued Operations
Loss from operations for the three month period ended March 31, 2009 totaled $10,514 compared to $7,986 for the three month ended March 31, 2008 (after reclassification of discontinued operations). The increase in loss from operations of $2,528 or approximately 32% was due to the increase in expenses and no revenue as the Company disposed its subsidiary 188info.com.
Net Loss
Net loss for the three month period ended March 31, 2009 totaled $10,514 compared to $8,889 for the three month period ended March 31, 2008, an increase of $1,625 or approximately 18%. The increase in net loss was primarily due to the increase in professional fees and decrease in revenue as described above.
LIQUIDTY AND CAPITAL RESOURCES
Cash has historically been generated from operations. Operations and liquidity needs are funded primarily through cash flows from operations and short-term borrowings. Cash and cash equivalents were $1,091 at March 31, 2009 and current assets totaled $1,091 at March 31, 2009. The Company's total current liabilities were $422,642 at March 31, 2009. Working capital at March 31, 2009 was $(421,551). During the three month ended March 31, 2009, net cash used in operating activities was $(6,000).
We will continue to evaluate alternative sources of capital to meet our growth requirements, including other asset or debt financing, issuing equity securities and entering into other financing arrangements. There can be no assurance, however, that any of the contemplated financing arrangements described herein will be available and, if available, can be obtained on terms favorable to us.
Our operations and short term financing does not currently meet our cash needs. We believe we will be able to generate revenues from sales and raise capital through private placement offerings of its equity securities to provide the necessary cash flow to meet anticipated working capital requirements. Our actual working capital needs for the long and short term will depend upon numerous factors, including our operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Our future expansion will depend on operating results and will be limited by its ability to enter into financings and raise capital.
WORKING CAPITAL REQUIREMENTS
Historically operations and short term financing have been sufficient to meet our cash needs. We believe that we will be able to generate revenues from sales and raise capital through private placement offerings of its equity securities to provide the necessary cash flow to meet anticipated working capital requirements. However, our actual working capital needs for the long and short term will depend upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Future expansion will be limited by the availability of financing products and raising capital.
OFF-BALANCE SHEET ARRANGEMENTS
We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 4T. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There have been no changes in the Company’s internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Currently we are not aware of any litigation pending or threatened by or against the Company.
Item 1A. Risk Factors.
Not Applicable because we are a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports of Form 8-K.
(a) Exhibits
31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002
(b) Reports of Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | ARTCRAFT V, INC | |
| | | |
| Date: June 12, 2009 | By: | By: /s/ Li Te Xiao | |
| | | Li Te Xiao |
| | | President, Chief Executive Officer, | |
| | | Chief Financial Officer and Director | |
ARTCRAFT V, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2009
(UNAUDITED)
TABLE OF CONTENTS
| Consolidated Balance Sheets (Unaudited) | F-2 |
| | |
| Consolidated Statements of Operations (Unaudited) | F-3 |
| | |
| Consolidated Statements of Cash Flows (Unaudited) | F-4 |
| | |
| Notes to Consolidated Financial Statements | F-5 - F-8 |
| ARTCRAFT V, INC. AND SUBSIDIARIES | |
| CONSOLIDATED BALANCE SHEETS | |
| (UNAUDITED) | |
| | | | | |
| | | | | | | |
| ASSETS | |
| | | | | | | |
| | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | $ | 1,091 | | | $ | 91 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 45,514 | | | $ | 41,001 | |
| Loan payable to related party | | | 377,128 | | | | 370,128 | |
| Total Current Liabilities | | | 422,642 | | | | 411,129 | |
| | | | | | | | | |
| Stockholders' Deficit | | | | | | | | |
| | | | | | | | | |
| Common stock, $.001 par value, 100,000,000 | | | | | | | | |
| shares authorized, 10,250,000 issued and outstanding | | | 10,250 | | | | 10,250 | |
| Additional paid in capital | | | 115,159 | | | | 115,159 | |
| Subscription receivable | | | - | | | | (50,000 | ) |
| Accumulated deficit | | | (546,961 | ) | | | (486,447 | ) |
| Total Stockholders' Deficit | | | (421,551 | ) | | | (411,038 | ) |
| | | | | | | | | |
| | | $ | 1,091 | | | $ | 91 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements
| ARTCRAFT V, INC. AND SUBSIDIARIES | |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008 | |
| (UNAUDITED) | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue, net | | $ | - | | | $ | - | |
| | | | | | | | | |
| Operating Expenses: | | | | | | | | |
| General and administrative expenses | | | 10,514 | | | | 7,986 | |
| | | | | | | | | |
| Loss from continued operations | | | (10,514 | ) | | | (7,986 | ) |
| | | | | | | | | |
| Discontinued Operation | | | | | | | | |
| Loss from operations of entity disposed | | | - | | | | (903 | ) |
| | | | | | | | | |
| Net loss | | | (10,514 | ) | | | (8,889 | ) |
| | | | | | | | | |
| Other comprehensive income | | | | | | | | |
| Foreign currency translation | | | - | | | | 530 | |
| | | | | | | | | |
| Comprehensive loss | | $ | (10,514 | ) | | $ | (8,359 | ) |
| | | | | | | | | |
| Loss per share: | | | | | | | | |
| Basic & diluted | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | | |
| Weighted average number of shares outstanding: | | | | | | | | |
| Basic & diluted | | | 10,250,000 | | | | 10,250,000 | |
| | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| ARTCRAFT V, INC. AND SUBSIDIARIES | |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008 | |
| (UNAUDITED) | |
| | | | | | | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net Loss | | $ | (10,514 | ) | | $ | (8,889 | ) |
Decrease in current assets: | | | | | | | | |
Other receivables | | | - | | | | 26,250 | |
Increase/ (decrease) in current liabilities: | | | | | | | | |
Accounts payable and accrued expenses | | | 4,514 | | | | (10,719 | ) |
| Net cash provided by (used in) operating activities of continued operations | | | (6,000 | ) | | | 6,642 | |
| Net cash provided by operating activities of discontinued operations | | | - | | | | 10,849 | |
| Net cash provided by (used in) operating activities | | | (6,000 | ) | | | 17,491 | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| | | | | | | | | |
| Loan from related party | | | 7,000 | | | | 88,912 | |
| | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | - | | | | 355 | |
| | | | | | | | | |
| Net increase in cash and cash equivalents | | | 1,000 | | | | 106,759 | |
| | | | | | | | | |
| Cash and cash equivalents, beginning balance | | | 91 | | | | 18,070 | |
| | | | | | | | | |
| Cash and cash equivalents, ending balance | | $ | 1,091 | | | $ | 124,829 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURES: | | | | | | | | |
| | | | | | | | | |
| Cash paid during the year for: | | | | | | | | |
| | | | | | | | | |
| Income tax payments | | $ | - | | | $ | - | |
| Interest payments | | $ | - | | | $ | - | |
| | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
ARTCRAFT V, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – ORGANIZATION
Artcraft V, Inc. was incorporated under the laws of the State of Delaware on June 7, 2004. On November 7, 2005, the Company entered into an Exchange Agreement with Top Interest International Limited (“Top Interest”). Top Interest owns 70% equity interest of Shenzhen Xin Kai Yuan Info Consult Co., Ltd. (“188info.com”) which operates 188info.com, a professional information searching platform that is engaged in the business of providing information search engine, online web application and image designing, digital network service, online market research, online promotion and advertising services, and query searches for both individuals and businesses. Top Interest was incorporated under the laws of the British Virgin Islands. 188info.com was legally established under the laws of the People’s Republic of China.
Pursuant to the Stock Purchase and Share Exchange Agreement, the Company purchased all of the issued and outstanding shares of Top Interest from the shareholder for issuance of a total of 10,000,000 shares of the Company’s common stock, or approximately 99% of the total issued and outstanding shares. This transaction closed on November 7, 2005 and has been accounted for as a reverse acquisition.
On September 22, 2008 the Company’s board of directors agreed to sell the Company’s 70% interest in 188info.com. The Company entered into an agreement with Shenzhen Dingyi Investment Consulting Company Co., Ltd on September 22, 2008 to sell our 70% interest in 188info.com for $0.15 (RMB1) and the assumption of all assets and liabilities of 188info.com. The transaction was completed and approved by the PRC on October 17, 2008.
When used in these notes, the terms “Company”, “we”, “our” or “us” mean Artcraft V, Inc. and its subsidiary.
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company’s functional currency is the Chinese Renminbi (CNY); however the accompanying consolidated financial statements have been translated and presented in United States Dollars.
Principles of Consolidation
The consolidated financial statements include the accounts of Artcraft V, Inc. and its wholly owned subsidiary, collectively referred to within as the Company. All material intercompany accounts, transactions and profits have been eliminated in consolidation.
Exchange Gain (Loss)
During the periods ended March 31, 2009 and 2008, the transactions of Shenzhen were denominated in foreign currency and were recorded in CNY at the rates of exchange in effect when the transactions occur. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.
Translation Adjustment
As of March 31, 2009 and 2008, the accounts of Shenzhen were maintained, and its financial statements were expressed, in CNY. Such financial statements were translated into U.S. Dollars (USD) in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation,” with the CNY as the functional currency. According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholder’s equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, “Reporting Comprehensive Income” as a component of shareholders’ equity.
ARTCRAFT V, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.
Revenue Recognition
The Company’s revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Revenue from marketing services through World Wide Web is recognized when services are rendered. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue. Revenue for the three month period ended March 31, 2009 and 2008 were $0 and $7,389 respectively.
Income Taxes
The Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Basic and Diluted Earnings (Loss) Per Share
Earnings (loss) per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net income (loss) per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted loss per share were $(0.00) and $(0.00) for the three month periods ended March 31, 2009 and 2008 respectively.
ARTCRAFT V, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recent accounting pronouncements
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company’s fiscal year beginning October 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after September 30, 2009.
On December 30, 2008 FASB issued FIN 48-3, “Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises”. This FSP defers the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for certain non-public enterprises as defined in paragraph 289, as amended, of FASB Statement No. 109, Accounting for Income Taxes, including non-public not-for-profit organizations. However, non-public consolidated entities of public enterprises that apply U. S. GAAP are not eligible for the deferral. Nonpublic enterprises that have applied the recognition, measurement, and disclosure provisions of Interpretation 48 in a full set of annual financial statements issued prior to the issuance of this FSP also are not eligible for the deferral. This FSP shall be effective upon issuance. The Company does not believe this pronouncement will impact its financial statements.
Reclassification
Certain items in the financial statements have been reclassified to confirm to the current period presentation.
Note 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
As of March 31, 2009, account payable and accrued expenses were $45,514, including accrued legal, audit, and accounting expenses.
As of December 31, 2008, account payable and accrued expenses were $41,001, including accrued legal, audit, and accounting expenses.
Note 4 – LOAN PAYBLE TO RELATED PARTIES
As of March 31, 2009, total loan payable to related parties were $377,128, including a non interest-bearing, unsecured and due on demand note payable to an officer of a subsidiary for $168,000 and a non interest-bearing, unsecured and due on demand note payable to a shareholder of the Company in the amount of $209,128.
As of December 31, 2008, total loan payable to related parties were $370,128,, including a non interest-bearing, unsecured and due on demand note payable to an officer of a subsidiary amounting $168,000 and a non interest-bearing, unsecured and due on demand note payable to a shareholder of the Company in the amount of $202,128.
Note 5 – STOCKHOLDER’S EQUITY
Subscription receivable from the share holder of Top Interest International Limited amounted to $50,000. The Company during the period ended March 31, 2009 recorded deemed dividend of $50,000 to the major shareholder by utilizing the subscription receivable.
ARTCRAFT V, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
No new shares have been issued during the three month period ended March 31, 2009.
The Company utilized office space arranged by an officer of the Company in 188info.com, free of charge. The fair market rent value amounting $0 and $6,287 have been taken as a contribution to the capital from the officer and credited to the additional paid in capital as of March 31, 2009 and December 31, 2008 respectively.
Note 6 – GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the company as a going concern. However, the Company has an accumulated deficit of $496,961 and $486,447 as of March 31, 2009 and December 31, 2008 including losses of $10,514 and $8,359 for the periods ended March 31, 2009 and 2008. The Company’s current liabilities exceed its current assets by $421,551 and $411,038 as of March 31, 2009 and December 31, 2008. The Company disposed its operating entity in China during the year ended December 31, 2008 and currently does not have any operations. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and succeed in its future operations, The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort from inception through March 31, 2009, towards obtaining additional equity and management of accrued expenses and accounts payable.
Management believes that actions presently being taken to obtain additional funding to implement its strategic plans provide the opportunity for the Company to continue as a going concern.
