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 February 28, 2010
[]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
SUPER LUCK, INC.
(Exact name of registrant as specified in its charter)
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Delaware | 000-51817 | 33-1123472 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
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Room 2213-14, 22nd Floor, Jardine House 1 Connaught Place, Central, Hong Kong |
(Address of principal executive offices) |
Registrant’s telephone number, including area code: 852-2806-8663 |
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 was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
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). Not Applicable.
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.
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Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | 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 [ X ] No
As of April 19, 2010, there were 30,908,960 shares of voting common stock, $0.001 par value, of Super Luck, Inc. issued and outstanding.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Super Luck, Inc. (“we”, “us”, “our”, “Super Luck”, the “Company”, or the “Registrant”) a Delaware corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended November 30, 2009.
SUPER LUCK INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010
Index to condensed consolidated financial statements
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| Pages |
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Condensed consolidated balance sheets | 3 |
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Condensed consolidated statements of operations and | 4 |
comprehensive income (loss) | |
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Condensed consolidated statements of cash flows | 5 |
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Notes to condensed consolidated financial statements | 6-16 |
2
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF FEBRUARY 28, 2010 AND NOVEMBER 30, 2009
| | | | | | |
| | | As of | | As of | |
| | | February 28, | | November 30, | |
| | | 2010 | | 2009 | |
| | | (Unaudited) | | (Audited) | |
| | | US$ | | US$ | |
ASSETS | | | | | | |
Current assets | | | | | | |
Cash and cash equivalents | | | 30,089 | | 28,759 | |
| | | | | | |
Total assets | | | 30,089 | | 28,759 | |
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LIABILITIES AND STOCKHOLDERS DEFICIT | | | | | | |
Current liabilities | | | | | | |
Accrued expenses | | | 19,895 | | 20,360 | |
Amounts due to stockholders (Note 5) | | | 94,915 | | 88,478 | |
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Total liabilities | | | 114,810 | | 108,838 | |
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Commitments and contingencies (Note 6) | | | | | | |
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Stockholders deficit | | | | | | |
Common stock - US$0.001 par value (Note 7) : | | | | | | |
Authorized 100,000,000 shares; 30,908,960 | | | | | | |
shares issued and outstanding | | | 30,909 | | 30,909 | |
Additional paid-in capital | | | (21,636 | ) | (21,636 | ) |
Accumulated deficit during the development stage | | | (94,006 | ) | (89,220 | ) |
Accumulated other comprehensive loss | | | 12 | | (132 | ) |
| | | | | | |
Total stockholders' deficit | | | (84,721 | ) | (80,079 | ) |
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Total liabilities and stockholders' deficit | | | 30,089 | | 28,759 | |
See accompanying notes to condensed consolidated financial statements.
3
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
AND FROM INCEPTION ON AUGUST 10, 2005 THROUGH FEBRUARY 28, 2010
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| For the three months ended February 28, 2010 | | For the three months ended February 28, 2009 | | Cumulative total since inception | |
| (Unaudited) | | (Unaudited) | | (Unaudited) | |
| US$ | | US$ | | US$ | |
Revenue | - | | - | | - | |
| | | | | | |
Expenses | | | | | | |
Formation expenses | - | | - | | 1,069 | |
General and administrative expenses | 4,786 | | 1,673 | | 72,072 | |
| | | | | | |
Loss from operations | (4,786 | ) | (1,673 | ) | (73,141 | ) |
Other income | - | | 3,167 | | 3,167 | |
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Loss from operations income (loss) before income taxes | (4,786 | ) | 1,484 | | (69,974 | ) |
Income taxes (Note 4) | - | | - | | - | |
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Net income (loss) | (4,786 | ) | 1,494 | | (69,974 | ) |
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Other comprehensive loss | | | | | | |
Foreign currency translation adjustment | 144 | | (11 | ) | 12 | |
| | | | | | |
Comprehensive income (loss) | (4,642 | ) | 1,483 | | (69,962 | ) |
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Net income (loss) per share : | | | | | | |
Basic and diluted
| (0.00015 | ) | 0.00005 | | (0.00287 | ) |
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Weighted average number of shares: | | | | | | |
Basic and diluted | 30,908,960 | | 30,908,960 | | 24,405,819 | |
See accompanying notes to condensed consolidated financial statements.
4
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
AND FROM INCEPTION ON AUGUST 10, 2005 THROUGH FEBRUARY 28, 2010
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| For the three months ended February 28, 2010 | | For the three months ended February 28, 2009 | | Cumulative total since inception | |
| (Unaudited) | | (Unaudited) | | (Unaudited) | |
| US$ | | US$ | | US$ | |
Cash flows from operating activities: | | | | | | |
Net income (loss) | (4,786 | ) | 1,494 | | (69,974 | ) |
Change in liabilities: | | | | | | |
Accrued expenses | 465 | | (14,256 | ) | 16,529 | |
| | | | | | |
Net cash used in operating activities | (5,251 | ) | (12,762 | ) | (53,445 | ) |
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Cash flows from investing activities: | | | | | | |
Cash acquired from the RTO | - | | - | | 511 | |
| | | | | | |
Net cash provided by investing activities | - | | - | | 511 | |
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Cash flows from financing activities: | | | | | | |
Advances from (Repayment to) stockholders | 6,437 | | (7,600 | ) | 82,668 | |
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Net cash provided by (used in) financing activities | 6,437 | | (7,600 | ) | 82,668 | |
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Effect of exchange rate changes on cash and cash equivalents | 144 | | (59 | ) | 355 | |
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Net change in cash and cash equivalents | 1,330 | | (20,421 | ) | 30,089 | |
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Cash and cash equivalents, beginning of period | 28,759 | | 49,553 | | - | |
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Cash and cash equivalents, end of period | 30,089 | | 29,132 | | 30,089 | |
Cash paid for : | | | | | | |
Income taxes | - | | - | | - | |
Interest | - | | - | | - | |
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See accompanying notes to condensed consolidated financial statements.
5
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
1.
CORPORATE INFORMATION
Super Luck, Inc. (the “Company”) was incorporated in the State of Delaware on August 10, 2005 for the purpose of exploring business opportunities including reselling software products. The Company currently has two wholly-owned subsidiaries, namely, Galaxies River Limited (“Galaxies”), a company incorporated in the British Virgin Islands (the “BVI”) on April 23, 2008 and Beijing ShijiJiayu Technology Limited (“BSTL”), a company established in the People’s Republic of China (the “PRC”) on September 12, 2008.
On October 20, 2008, the Company, Galaxies and the then sole stockholder of Galaxies (the “Stockholder”) entered into a Share Exchange Agreement (the “Exchange Agreement”). Pursuant to the terms of the Exchange Agreement, the Stockholder agreed to transfer all of the issued and outstanding share of common stock in Galaxies to the Company in exchange for the issuance of an aggregate of 21,636,272 shares of the Company’s common stock to him, thereby causing Galaxies and BSTL to become wholly-owned subsidiaries of the Company (the “Share Exchange”). The Share Exchange was consummated on the same day.
Following the Share Exchange, the Stockholder became the controlling stockholder of the Company and holds 70% of the Company’s issued and outstanding common stock post-exchange.
The Share Exchange constituted a reverse takeover transaction (the “RTO”) since the Stockholder owns a majority of the outstanding shares of the Company’s common stock immediately following the Share Exchange. Accordingly, the Company (the legal acquirer) is considered the accounting acquiree and Galaxies (the legal acquiree) is considered the accounting acquirer. The assets and liabilities and the historical operations that are reflected in the consolidated financial statements for periods prior to the Share Exchange are those of Galaxies and BSTL, and are recorded at the historical cost basis of Galaxies and BSTL.
2.
BASIS OF PRESENTATION
The Company is a development stage company and did not generate any revenue during the reporting periods.
Galaxies is an investment holding whose major asset is the 100% equity interest in BSTL.
BSTL has obtained the Intellectual Property Rights, the distribution rights and the production rights of the First Chinese Medicine Acquired Immunodeficiency Syndrome Capsules (“AIDS Medication Capsule”) developed by Century Health Medical Limited (“CHML”), a Chinese corporation. CHML engages in the research and development of the AIDS Medication Capsule, as well as related medicines designed to combat AIDS and other pharmaceutical products in the PRC.
6
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
2.
BASIS OF PRESENTATION (CON’D)
The Company’s major stockholder, who is also the director, together with his family members owns 100% equity interest in CHML.
As reflected in the accompanying financial statements, the Company has a net lossof $4,786 and net cash used in operations of $5,251 for the three months ended February 28, 2010; and a working capital deficit of $84,721, deficit accumulated during the development stage of $94,006 and a stockholder’s deficit of $84,721 at February 28, 2010. In addition, the Company is in the development stage and has not yet generated any revenues. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and to continue to raise funds through debt or equity raises. The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to cont inue as a going concern.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Method of Accounting
The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The consolidated financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America (“US GAAP”) and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.
(b) Principles of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated on consolidation.
(c) Use of estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation of useful lives of property, plant and equipment. Actual results could differ from those estimates.
7
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d) Net loss per stock
Basis loss per stock is calculated by dividing net loss by the weighted-average number of common stocks outstanding during the year, and does not include the impact of any potentially dilutive common stock equivalents. Potential common stocks are not included in the computation of loss per stock, if their effect is anti-dilutive.
(e) Economic and political risks
The Group’s operations are conducted in Hong Kong and the PRC. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Group’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
(f) Concentration of risk
The Company keeps cash in Hong Kong dollar (“HKD”) and Renminbi (“RMB”) and maintains a HKD savings account with a commercial bank in Hong Kong, which are financial instruments that are potentially subject to concentration of credit risk. During the reporting periods, the Company did not engage in any hedging activities.
(g) Cash and cash equivalents
The Company considers all highly liquid investments purchases with original maturities of three months or loss to be cash equivalents. The Company maintains bank accounts only in the Hong Kong. The Company does not maintain any bank accounts in the United States of America. At February 28, 2010 November 30, 2009, the company had US$19,895 and US$28,759 in cash equivalents respectively.
(h) Foreign currency translation
The functional currency of the Company and Galaxies is HKD while that of BSTL is RMB. The Company and its subsidiaries maintain their financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
8
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Foreign currency translation (Cont’d)
For financial reporting purposes, the financial statements of the Company which are prepared using the functional currency have been translated into United States dollars. Assets, liabilities and stockholders’ equity are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.
| | | | |
| | | | |
| | 28.02.2010 | | 30.11.2009 |
Three months end RMB : US$ exchange rate | | 6.8367 | | 6.8285 |
| | | | |
| | 28.02.2010 | | 28.02.2009 |
Average 3-month RMB : US$ exchange rate | | 6.8361 | | 6.8488 |
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.
(i) Income tax
The Company uses the asset and liability method of accounting for income taxes pursuant to SFAS No. 109 “Accounting for Income Taxes”. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
(j) Comprehensive income
The Company has adopted SFAS 130, “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances.
Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company.
9
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(k) Fair values of financial instruments
The carrying values of the Company’s financial instruments, including cash and cash equivalents, prepayment, deposit and other receivables approximate their fair values due to the short-term maturity of such instruments.
It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.
The Company did not have any hedging activities during the reporting period. As the functional currencies of the Company are RMB$ the exchange difference on translation to US dollars for reporting purpose is taken to other comprehensive income.
(l) Commitments and contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
(m) Recent Accounting Pronouncements
In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (an amendment to SFAS No. 133). This statement is effective for financial statements issued for fiscal year and interim periods beginning after November 15, 2008 and requires enhanced disclosures with respect to derivative and hedging activities. The Company will comply with the disclosure requirements of this statement if it utilizes derivative instruments or engages in hedging activities upon its effectiveness.
In April 2008, the FASB issued FASB Staff Position No. 142-3, DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS (“FSP No. 142-3”) to improve the consistency between the useful life of a recognized intangible asset (under SFAS No. 142) and the period of expected cash flows used to measure the fair value of the intangible asset (under SFAS No. 141(R)). FSP No. 142-3 amends the factors to be considered when developing renewal or extension assumptions that are used to estimate an intangible asset’s useful life under SFAS No. 142. The guidance in the new staff position is to be applied prospectively to intangible assets acquired after December 31, 2008. In addition, FSP No.142-3 increases the disclosure requirements related to renewal or extension assumptions. The Company does not believe implementation of FSP No. 142-3 have a material impact on its financial statements.
10
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Recent Accounting Pronouncements (Cont'd)
In May 2008, the FASB issued statement No. 162, THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “the Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”.
In May 2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. As we do not have convertible debt at this time, we currently believe the adoption of FSP APB 14-1 will have no effect on our combined results of operations and financial condition.
In May 2008, the FASB issued Statement No. 163, ACCOUNTING FOR FINANCE GUARANTEE INSURANCE CONTRACTS - AN INTERPRETATION OF FASB STATEMENT NO. 60. The premium revenue recognition approach for a financial guarantee insurance contract links premium revenue recognition to the amount of insurance protection and the period in which it is provided. For purposes of this statement, the amount of insurance protection provided is assumed to be a function of the insured principal amount outstanding, since the premium received requires the insurance enterprise to stand ready to protect holders of an insured financial obligation from loss due to default over the period of the insured financial obligation. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008.
In June 2008, the FASB issued FASB Staff Position Emerging Issues Task Force (EITF) No. 03-6-1, DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES (“FSP EITF No. 03-6-1”). Under FSP EITF No. 03-6-1, unvested share-based payment awards that contain rights to receive no forfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS. FSP EITF No. 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those years, and is not expected to have a significant impact on the Company’s financial statements.
11
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Recent Accounting Pronouncements (Cont'd)
In April 2009, the FASB issued FSP 157-4, DETERMINING FAIR VALUE WHEN THE VOLUME AND LEVEL OF ACTIVITY FOR THE ASSET OR LIABILITY HAVE SIGNIFICANTLY DECREASED AND IDENTIFYING TRANSACTIONS THAT ARE NOT ORDERLY (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP 157-4 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP 157-4 requires comparative disclosures only for periods ending after initial adoption. The adoption of the provisions of FSP 157-4 is not anticipated to materially impact on the Company’s results of operations or the fair values of its assets and liabilities.
In May 2009, the FASB issued SFAS No. 165, SUBSEQUENT EVENTS (“SFAS 165”). SFAS 165 establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued and was effective for interim and annual periods ending after June 15, 2009. The adoption of SFAS No. 165 did not have an impact on the Company’s results of operations or financial condition. The Company evaluated all subsequent events that occurred from January 1, 2010 through January 30, 2010, inclusive, and does not found any material subsequent events are required to disclose.
In June 2009, the FASB issued SFAS No. 166 ACCOUNTING FOR TRANSFERS OF FINANCIAL ASSETS (“SFAS 166). This statement is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and is required to be adopted by the Company in the first quarter of fiscal year 2011. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date. The Company does not expect the adoption of SFAS 166 to have a material impact on the Company’ s financial position, results of operations and cash flows.
12
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Recent Accounting Pronouncements (Cont'd)
In June 2009, the FASB issued SFAS No.167, “Amendments to FASB Interpretation No.46(R)”, which is codified as ASC 810. ASC 810 amends FASB Interpretation No.46(R), “Variable Interest Entities” for determining whether an entity is a variable interest entity (“VIE”) and requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a VIE. Under ASC 810, an enterprise has a controlling financial interest when it has a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. ASC 810 also requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as desi gned when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance. ASC 810 also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. ASC 810 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. ASC 810 is effective for the Company in the first quarter of fiscal 2011. The Company is currently evaluating the effect of ASC 810 on its financial statements and results of operation and is currently not yet in a position to determine such effects.
In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Measuring Liabilities at Fair Value”, which is codified as ASC 820, “Fair Value Measurements and Disclosures”. This Update provides amendments to ASC 820-10, Fair Value Measurements and Disclosures –Overall, for the fair value measurement of liabilities. This Update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using a valuation technique that uses the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities when traded as assets, or that is consistent with the principles of ASC 820. The amendments in this Update also clarify that when estimating the fair value of a liability, a reporting entity is not required to in clude a separate input or adjustment to other inputs relating to the existence of a restriction that prevents transfer of the liability. The amendments in this Update also clarify that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the assets are required are Level 1 fair value measurements. ASC 820 is effective for the first reporting period (including interim periods) beginning after August 28, 2009. The adoption of this Update did not have a significant impact to the Company’s financial statements.
13
SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Recent Accounting Pronouncements (Cont'd)
In December 2009, the FASB issued ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (“ASU 2009-17”)”. ASU 2009-17 amends the variable-interest entity guidance in FASB ASC 810-10-05-8 to clarify the accounting treatment for legal entities in which equity investors do not have sufficient equity at risk for the entity to finance its activities without financial support. ASU 2009-17 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. ASU 2009-17 is effective for the Company in the first quarter of fiscal 2011. The Company is currently evaluating the effect of ASU 2009-17 on its financial statements and results of operation and is currently not yet in a position to determine such effects.
None of the above new pronouncements has current application to the Company, but may be applicable to the Company’s future financial reporting.
4.
INCOME TAXES
United States Tax
The Company is subject to income tax in the United States. No provision for income tax in the United States has been made as the Company had no taxable income for the reporting periods. The statutory tax rate is 34%.
BVI Tax
Galaxies was incorporated in the BVI and, under the current laws of the BVI, is not subject to income taxes.
PRC Tax
BSTL is operating in the PRC, and in accordance with the relevant tax laws and regulations of PRC, the corporation income tax rate is 25%. No provision for enterprise income tax in the PRC has been made as BSTL had no taxable income for the current reporting period.
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SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
4.
INCOME TAXES (CON'D)
A reconciliation of income taxes at statutory rate in the United States is as follows:
| | | | | | |
| For the three months ended February 28, 2010 | | For the three months ended February 28, 2009 | | Cumulative total since inception | |
| (Unaudited) | | (Unaudited) | | (Unaudited) | |
| US$ | | US$ | | US$ | |
| | | | | | |
Income (loss) before income taxes | (4,786 | ) | 1,494 | | (69,974 | ) |
| | | | | | |
Expected benefit at statutory rate of 34% | (1,627 | ) | 507 | | (23,790 | ) |
| | | | | | |
Non-deductible items for tax | - | | 13 | | 6,766 | |
| | | | | | |
Non-taxable items for tax | - | | - | | - | |
| | | | | | |
Valuation allowance | 1,627 | | (520 | ) | 17,024 | |
| | | | | | |
| - | | - | | - | |
As of February 28, 2010, the Company and its subsidiary had incurred operating loss of US$50,074 which, if unutilized, US$49,051 will expire through to 2028 and US$1,023 will expire through to 2013. Future tax benefits arising as a result of these losses have been offset by valuation allowances.
5.
AMOUNTS DUE TO STOCKHOLDERS
The amounts due to stockholders is unsecured, interest-free and repayable on demand.
6.
COMMITMENTS AND CONTINGENCIES
There is no foreseeable commitments or contingencies for the three months ended February 28, 2010.
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SUPER LUCK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
7.
COMMON STOCK
The Company was incorporated on August 10, 2005 with authorized capital of 100,000,000 shares of common stock of US$0.001 par value. On August 25, 2005, 8,500,000 shares of common stock of US$0.001 par value totaling US$8,500 were issued for cash.
On June 22, 2006 and October 5, 2006, 566,888 and 5,800 shares of common stock of US$0.001 par value totaling US$567 and US$6 respectively were issued to 13 investors for cash.
On January 9, 2007, 200,000 shares of common stock of US$0.001 par value totaling US$200 were issued to 43 investors for cash.
On October 20, 2008, the Company issued 21,636,272 shares of common stock of US$0.001 par value totaling US$21,626 to the Stockholder to affect the RTO.
The common stock in the consolidated balance sheets reflects the recapitalization of the Company in the RTO as if it occurred as of the beginning of the first period presented.
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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Special Note of Caution Regarding Forward Looking Statements
CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS" AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.
Company Overview
Super Luck, Inc. was incorporated under the laws of the State of Delaware on August 10, 2005. On October 20, 2008, Super Luck, Inc. completed a share exchange transaction with Galaxies River Limited (“Galaxies”), a corporation incorporated under the laws of the British Virgin Islands, and the shareholder of Galaxies (the “Shareholder”). Upon completion of the share exchange transaction, Galaxies and its wholly-owned subsidiary, Beijing ShijiJiayu Technology Limited (“BSTL”), a company incorporated under the laws of People’s Republic of China (“PRC”) became wholly-owned subsidiaries of the Company (the “Share Exchange”). Following completion of the Share Exchange, the Company now carries on the business of Galaxies’s subsidiary, BSTL as its sole line of business.
BSTL is engaged in holding the intellectual property rights, production rights, and sales rights of theFirstChinese Medicine Acquired Immunodeficiency Syndrome (“AIDS”) Capsules (hereinafter referred to as the “AIDS Medication Capsule”) developed by Century Health Medical Limited (“CHML”), a Chinese company. CHML engages in the research and development of theAIDS Medication Capsule, as well as related medicines and pharmaceutical products in China.
BSTL’s business model is oriented towards collecting revenue generated from the sales of the AIDS Medication Capsule. BSTL’s business operations are structured around a series of contractual agreements, all of which were discussed and filed as Exhibits to Forms 8-K filed by the Company with the Securities and Exchange Commission on October 23, 2008 and March 8, 2010 (the contractual agreements and all amendments thereto are collectively referred to herein as the “Contractual Agreements”). Pursuant to the Contractual Agreements, BSTL is entitled to receive 9% of the revenue that CHML generates through sales of the AIDS Medication Capsule. BSTL’s business plan and the contractual agreements discussed herein relate only to the PRC.
CHML is in the process of undertaking the preparation work of the clinical trials for the AIDS Medication Capsule in an effort to obtain a Drug Registration License from the Chinese government. Once CHML receives the necessary governmental approval for nationwide production and distribution of the AIDS Medication Capsule, it is anticipated that CHML will enter into contracts with both manufacturers and wholesale distributors for the large scale production and distribution of the AIDS Medication Capsule
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throughout the PRC. As of the date of this quarterly report, CHML has not received government approval for the AIDS Medication Capsule and has not generated any revenue from the sale of the AIDS Medication Capsule.
The chart below depicts the current and anticipated corporate and business structure of the Registrant. The Registrant owns 100% of the capital stock of Galaxies River Limited and has no other direct subsidiaries. Galaxies owns 100% of the capital stock of BSTL and has no other direct subsidiaries. BSTL has no subsidiaries.
![[sulu10qfinal002.gif]](https://capedge.com/proxy/10-Q/0001137050-10-000071/sulu10qfinal002.gif)
Plan of Operation
As noted above, the Company is currently undertaking the preparation work of the clinical trials in Beijing in an effort to obtain a Drug Registration License for the AIDS Medication Capsule; the Drug Registration License will provide the Company with the authority to produce and distribute the AIDS Medication Capsule throughout the PRC. The Company’s plan of operation for the next twelve months is to work towards obtaining the Drug Registration License from the Chinese Safe Food and Drug Administration (“SFDA”), and then promoting the production and nationwide distribution of the AIDS Medication Capsule. The Company estimates that the clinical trials will be completed within approximately 6-9 months, and that the costs the Company will incur relating to the clinical trials will be approximately US$2 million dollars. Currently, the Company has not yet earned any revenue from its business operations and has no cur rent source of liquidity other than cash on hand and potential revenue from business operations. The Company believes that it may not have sufficient funds to meet the working capital requirements to sustain its business operations for the next twelve months. Prior to the receipt of any revenue from its business operations, the Company anticipates that it will rely on the cash on
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hand, which was made available by an interest-free, unsecured advance by the Company’s majority stockholder Yan Tsang, to pay expenses on its behalf. Additionally, we anticipate raising the necessary funds for the clinical trials of the AIDS Medication Capsule through a private placement offering of the Company’s common stock; the specific details of such an offering have not yet been determined. If the Company is unable to generate any revenue or raise additional funds, it may not be able to sustain its business operations.
Liquidity and Capital Resources
As of February 28, 2010, the Company’s balance sheet reflects total assets of $30,089 in the form of cash and cash equivalents, and total liabilities of $114,810. As noted above, the Company has not yet earned any revenue from its business operations and has no current source of liquidity other than cash on hand and potential revenue from business operations. The Company believes that it may not have sufficient funds to meet the working capital requirements to sustain its business operations for the next twelve months. Prior to the receipt of any revenue from its business operations, the Company anticipates that it will rely on the cash on hand, which was made available by an interest-free, unsecured advance by the Company’s majority stockholder Yan Tsang, to pay expenses on its behalf. Additionally, we anticipate raising the necessary funds for the clinical trials of the AIDS Medi cation Capsule through a private placement offering of the Company’s common stock; the specific details of such an offering have not yet been determined. If the Company is unable to generate any revenue or raise additional funds, it may not be able to sustain its business operations.
Off Balance Sheet Arrangements
As of February 28, 2010, the Company did not have any off balance sheet arrangements
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4T.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. &nbs p;The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to chief executive and chief financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported
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with the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.
Changes in Internal Control over Financial Reporting
There was no change in the Company's internal control over financial reporting during the quarter ended February 28, 2010, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
ITEM 1A. RISK FACTORS.
Not Applicable.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.
(REMOVED AND RESERVED)
ITEM 5.
OTHER INFORMATION.
As disclosed in the Definitive 14C Information Statement filed with the Securities and Exchange Commission on March 19, 2010, on March 5, 2010, the Company’s Board of Directors and the consenting majority shareholders adopted and approved resolutions to amend the Company’s Certificate of Incorporation to change the Company’s name “Beijing Century Health Medical, Inc.” The Company has not yet filed the Certificate of Amendment with the Delaware Secretary of State. Subsequent to the filing of the Certificate of Amendment with the Secretary of State of Delaware, the Company will submit the required documentation to the Financial Industry Regulatory Authority to obtain a new trading symbol pursuant to the Company’s name change.
ITEM 6.
EXHIBITS.
The following exhibits are filed herewith:
3(i)
Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on February 22, 2006).
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3(ii)
Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on February 22, 2006).
10.2
IP Transfer Agreement, dated September 16, 2008 by and between CHML and BSTL (incorporated by reference from Form 8-K filed with the Securities and Exchange Commission on October 23, 2008).
10.3
Sales and Production Authorization Agreement dated September 17, 2008 by and between CHML and BSTL (incorporated by reference from Form 8-K filed with the Securities and Exchange Commission on October 23, 2008).
10.4
Amended Sales and Production Authorization Agreement dated February 28, 2010 by and between CHML and BSTL (incorporated by reference from Form 8-K filed with the Securities and Exchange Commission on March 8, 2010).
31.1
Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2
Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
* Filed Herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUPER LUCK, INC.
By: /s/ Wilson Cheung
Wilson Cheung, Director, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer
Date: April 19, 2010
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