Our offering is being made on a self-underwritten $100,000 minimum, $200,000 maximum basis. The table below sets forth the use of proceeds if $100,000 or $200,000 of the offering is sold.
Total offering expenses are $22,500 comprised of $20,000 for legal fees; $500 for our transfer agent; $21.42 for filing fee, and, $1,978.58 for state securities registrations.
Upon the completion of this offering, we intend to immediately initiate the development of our websitewww.chinabizhotel.com. We intend to hire an outside web designer to assist us in designing and building our website. We intend to develop and maintain a database of potential clients who have either established or have indicated a preference to travel in luxury. We will identify those travelers who would enable us to fulfill our objective -to provide unique luxury travel experiences for discriminating clients." The initial names to be inputted into the database will be culled from the past clients of our president, Mr. Yuan. We will identify other candidates for our database from information available from business journals, other Internet web sites, the business and travel sections of the newspapers, magazines, periodicals and information we accumulate and seek alliances and collaboration with hotels, lodges, resorts and travel agencies. The feasibility of collecting the data is high . We believe it will take approximately two months to create a workable database. We do not know how many individuals fit into the client profile that we have identified - business executives and other professionals seeking value-added services to their travel.
We intend to begin assembling our database with potential customers we locate throughout Western United States, Canada and China. The estimated cost to develop and maintain the database is $10,000 to $20,000.
Marketing and advertising will be focused on promoting our website to prospective travelers based on the list of prospects developed from our database and the market survey. The advertising campaign will include the design and printing of various sales materials. The cost of developing the campaign is estimated to be between $12,500 and $32,500.
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We intend to establish an office to maintain the website and database. This will include physical office space, computer equipment, telephones and other assets as required to maintain the operations.
If we raise the maximum amount under this offering, we intend to pay salaries to our officer, or, to outside employees or consultants to assist our officer in managing our business. In addition, we intend to hire one or two sales employees to handle Internet transactions with our clients.
Working capital is the cost related to operating our office. It is comprised of expenses for rent, telephone service, mail, stationary, accounting, acquisition of office equipment and supplies, expenses of filing reports with the SEC, travel, and general working capital.
DETERMINATION OF OFFERING PRICE
The price of the shares we are offering was arbitrarily determined in order for us to raise up to a total of $200,000 in this offering. The offering price bears no relationship whatsoever to our assets, earnings, book value or other criteria of value. Among the factors considered were:
* | our lack of operating history |
* | the proceeds to be raised by the offering |
* | the amount of capital to be contributed by purchasers in this offering in proportion to the amount of stock to be retained by our existing Stockholders, and |
* | our relative cash requirements. |
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders.
As of June 30, 2006, the net tangible book value of our shares of common stock was a deficit of $14,000 or $(0.0034) per share based upon 4,075,000 shares outstanding.
If 100% of the Shares Are Sold:
Upon completion of this offering, in the event all of the shares are sold, the net tangible book value of the 6,075,000 shares to be outstanding will be $173,500 or approximately $0.0286 per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.032 per share without any additional investment on their part. You will incur an immediate dilution from $0.10 per share to $0.0286 per share.
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After completion of this offering, if 2,000,000 shares are sold, you will own approximately 32.92% of the total number of shares then outstanding for which you will have made a cash investment of $200,000, or $0.10 per share. Our existing stockholders will own approximately 67.08% of the total number of shares then outstanding, for which they have made contributions of cash totaling $41 or $0.00001 per share.
If 1,500,000 Shares Are Sold:
Upon completion of this offering, in the event 1,500,000 shares are sold, the net tangible book value of the 5,575,000 shares to be outstanding will be $123,500, or approximately $0.0222 per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0256 per share without any additional investment on their part. You will incur an immediate dilution from $0.10 per share to $0.0222 per share.
After completion of this offering, if 1,500,000 shares are sold, you will own approximately 26.91% of the total number of shares then outstanding for which you will have made a cash investment of $150,000, or $0.10 per share. Our existing stockholders will own approximately 73.09% of the total number of shares then outstanding, for which they have made contributions of cash totaling $41 or $0.00001 per share.
If the Minimum Number of the Shares Are Sold:
Upon completion of this offering, in the event 1,000,000 of the shares are sold, the net tangible book value of the 5,075,000 shares to be outstanding will be $73,500, or approximately $0.0145 per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0179 per share without any additional investment on their part. You will incur an immediate dilution from $0.10 per share to $0.0145 per share.
After completion of this offering, if 1,000,000 shares are sold, you will own approximately 19.70% of the total number of shares then outstanding for which you will have made a cash investment of $100,000, or $0.10 per share. Our existing stockholders will own approximately 80.30% of the total number of shares then outstanding, for which they have made contributions of cash totaling $41 or $0.00001 per share.
The following table compares the differences of your investment in our shares with the investment of our existing stockholders.
Existing Stockholders if all Shares Sold
Price per share | $ | 0.10 |
Net tangible book value per share before offering | $ | (0.0034) |
Potential gain to existing shareholders | $ | 187,500 |
Net tangible book value per share after offering | $ | 0.0286 |
Increase to present stockholders in net tangible book value per share after offering | $ | 0.032 |
Capital contributions | $ | 41 |
Number of shares outstanding before the offering | | 4,075,000 |
Number of shares after offering | | 6,075000 |
Percentage of ownership after offering | | 67.08% |
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Purchasers of Shares in this Offering if all Shares Sold
Price per share | $ | 0.10 |
Dilution per share | $ | 0.0714 |
Capital contributions | $ | 200,000 |
Number of shares after offering held by public investors | | 2,000,000 |
Percentage of ownership after offering | | 32.92% |
Purchasers of Shares in this Offering if 75% of Shares Sold
Price per share | $ | 0.10 |
Dilution per share | $ | 0.0778 |
Capital contributions | $ | 150,000 |
Number of shares after offering held by public investors | | 1,500,000 |
Percentage of ownership after offering | | 26.91% |
Purchasers of Shares in this Offering if 50% of Shares Sold
Price per share | $ | 0.10 |
Dilution per share | $ | 0.0855 |
Capital contributions | $ | 100,000 |
Number of shares after offering held by public investors | | 1,000,000 |
Percentage of ownership after offering | | 19.70% |
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
We are offering 2,000,000 shares of common stock on a self-underwritten basis, 1,000,000 shares minimum, 2,000,000 shares maximum basis. The offering price is $0.10 per share. Funds from this offering will be placed in a separate bank account at Bank of America, 10300 Little Patuxent Parkway, Suite 3010, Columbia, Maryland 21044. Its telephone number is (410) 964-6040. The funds will be maintained in the separate bank until we receive a minimum of $100,000 at which time we will remove those funds and use the same as set forth in the Use of Proceeds section of this prospectus. This account is not an escrow, trust or similar account. Your subscription will only be deposited in a separate bank account under our name. As a result, if we are sued for any reason and a judgment is rendered against us, your subscription could be seized in a garnishment proceeding and you could lose your investment, even if we fail to raise the minimum amount in this offering. As a result, there is no assurance that your fund s will be returned to you if the minimum offering is not reached. Any funds received by us thereafter will immediately used by us. If we do not receive the minimum amount of $100,000 within 270 days of the effective date of our registration statement, all funds will be promptly returned to you without a deduction of any kind. During the 270 day period, no funds will be returned to you. You will only receive a refund of your subscription if we do not raise a minimum of $100,000 within the 270 day period referred to above. There are no finders involved in our distribution. Officers, directors, affiliates or anyone involved in marketing the shares will not be allowed to purchase shares in the offering. You will not have the right to withdraw your funds during the offering. You will only have the right to have your funds returned if we do not raise the minimum amount of the offering or there would be a change in the material terms of the offering. The following are material terms that would allow you to be entitled to a refund of your money:
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| * | extension of the offering period beyond 270 days; |
| * | change in the offering price; |
| * | change in the minimum sales requirement; |
| * | change to allow sales to affiliates in order to meet the minimum sales requirement; |
| * | change in the amount of proceeds necessary to release the proceeds held in the separate bank account; and, |
If the changes above occur, any new offering may be made by means of a post-effective amendment.
We will sell the shares in this offering through our sole officer and director, Mr. Xuezheng Yuan. He will receive no commission from the sale of any shares. He will not register as a broker/dealer under Section 15 of the Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker/dealer. The conditions are that:
1. The person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation; and,
2. The person is not compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
3. The person is not at the time of their participation, an associated person of a broker/dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities; and (B) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding twelve (12) months; and (C) do not participate in selling and offering of securities for any issuer more than once every twelve (12) months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Mr. Xuezheng Yuan, is not statutorily disqualified, is not being compensated, and is not associated with a broker/dealer. He is and will continue to be our sole officer and director at the end of the offering and has not been during the last twelve months and is currently not a broker/dealer or associated with a broker/dealer. He has not during the last twelve months and will not in the next twelve months offer or sell securities for another corporation.
We intend to advertise, through tombstones, and hold investment meetings in various states where the offering will be registered. We will not utilize the Internet to advertise our offering. We will also distribute the prospectus to potential investors at the meetings and to our friends and relatives who are interested in us and a possible investment in the offering.
We intend to sell our shares in the states of New York, Illinois, Georgia, Wyoming, Colorado, New Jersey, Washington D.C. and/or outside the United States of America.
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Section 15(g) of the Exchange Act
Our shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules 15g-1 through 15g-6 and Rule 15g-9 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $3,350,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to brokers-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approve the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, the NASD's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares.
Offering Period and Expiration Date
This offering will start on the date of this prospectus and continue for a period of up to 270 days.
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Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you must
- execute and deliver a subscription agreement
- deliver a check or certified funds to us for acceptance or rejection.
All checks for subscriptions must be made payable to CHINA UNITECH GROUP, INC.
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them.
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BUSINESS
General
We were incorporated in the State of Nevada on March 14, 2006. We have not started operations. We are developing a website (www.chinabizhotel.com) that will offer a comprehensive list of services that we can provide to the business traveler on a limited budget. We will specialize in the business of providing assistance to corporate entities and individuals to economize their travel experience and enable clients to profitability budget their travel expenses. We have not generated any revenues and the only operation we have engaged in is the development of a business plan. We maintain our statutory registered agent's office at 6100 Neil Road, Suite 500, Reno, Nevada 89511. Our business office is located at Suite 12B2, Guanghua Rd., Chaoyang District, Beijing, China 100004. Our telephone number is (86-10) 6530-6109. This is the office of our President, Xuezheng Yuan. We do not pay any rent to Mr. Yuan and there is no agreement to pay any rent in the future.
We have no plans to change our planned business activities or to combine with another business, and we are not aware of any events or circumstances that might cause these plans to change. We have not begun operations and will not begin operations until we have completed this offering. Our plan of operation is prospective and there is no assurance that we will ever begin operations. Our prospects for profitability are not favorable if you consider numerous Internet-based companies have failed to achieve profits with similar plans.
We have not conducted any market research into the likelihood of success of our operations or the acceptance of our products or services by the public.
Products/Services
We intend to position ourselves as a service provider for the limited budget traveler. We intend to offer the quality travel packages and concierge services to our clients. Our target market will be made up of business travelers with limited funds for travel. We intend to be defined by the quality of the unique aspects of our services. Those aspects ill include superior personal assistance, event and conference planning, travel consultation and arrangements, and concierge assistance.
We intend to offer the following services:
Corporate Concierge and Assistance
* | Leisure Activities Coordination |
* | Theater and Sporting Events Referral and Tickets |
* | Dinners and Spa Referral and Reservations |
* | Reminder Service |
* | Gift or Shopping Coordination |
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Event and Conference Planning
* | Corporate Retreats |
* | Executive Meetings |
* | Training Seminars |
* | Sales Conferences |
We will assist in organizing meetings and conferences. We will assist in site selection , room reservations, transportation and all other aspects of the meetings as required.
Corporate Travel Arrangements
* | Trip Itinerary Planning |
* | Customized Tour Packages to Luxury resorts and retreats |
* | Air and Ground Transportation |
We will book all aspects of the corporate and leisure travel for our clients on a limited budget and will create a database of information that will enable us to immediately identify the client's personal preferences. Our goal is not only to meet the travel needs of our clients, it is to anticipate them.
Website
Currently our website is undeveloped. We do not intend to initiate the development of our website until this offering is completed.
Upon completion of our public offering, we intend to hire an outside technology provider to develop our website. The IT company we hire will provide the following services and products for the website: disk space, bandwidth, 155 mbit backbone, pop mailboxes, e-mail forwarding, e-mailing aliasing, auto responder, front page support, unlimited FTP access, hotmetal/miva script, shopping cart, secure transactions signio support and cybercash support. The foregoing will allow us to transact the sale of our products/services, promote our products/services in an attractive fashion, and communicate with our clients on-line.
Our website will become the virtual business card and portfolio for us as well as its online "home." It will showcase past and current clients, subject to their consent, and the variety of services that we offer.
The website will further exhibit links to the service providers that we have entered into strategic alliances with. The links would provide the client with a virtual view of the destinations that we represent and events taking place in the area they are intending to visit. In the future, the website may also offer links to area restaurants and spas.
The website will be a simple, well-designed site that is in keeping with the latest trends in user interface design. A site that is too flashy or tries to use too much of the latest Shockwave of Flash technology can be overdone and cause potential clients to look elsewhere. To those prospective clients that we are targeting, time is valuable and a website that takes too long to load or is difficult to navigate would not appeal to them.
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We believe that the lack of financial security on the Internet has been hindering economic activity. To ensure the security of transactions occurring over the Internet, U.S. federal regulations require that any computer software used within the United States contain a 128-bit encoding encryption, while any computer software exported to a foreign country contain a 40-bit encoding encryption.
There is uncertainty as to whether the 128-bit encoding encryption required by the U.S. is sufficient security for transactions occurring over the Internet. Accordingly, there is a danger that any financial (credit card) transaction via the Internet will not be a secure transaction. We are now considering risks such as the loss of data or loss of service on the Internet from technical failure or criminal acts in our system specifications and in the security precautions in the development of our website. There is no assurance that such security precautions will be successful.
Other than investigating potential technologies in support of our business purpose and the preparation of our plan of operations, we have had no material business operations since inception in March 2006. At present, we have yet to acquire or develop the necessary technology assets in support of our business purpose to become an Internet-based service provider of luxury travel to corporate clients, business executives and other professionals.
The Internet is a worldwide medium of interconnected electronic and/or computer networks. Individuals and companies have recently recognized that the communication capabilities of the Internet provide a medium for not only the promotion and communication of ideas and concepts, but also for the presentation and sale of information, goods and services.
Marketing Strategy
We intend to negotiate strategic alliances with larger service providers such as hotels and resorts. We will offer direct advertising of those resorts that we enter into strategic alliances with through a link on our website, through flyers and promotional material that we create, and through personal selling in exchange for a commission based percentage of the sale of rooms, tours or other services booked by a client introduced by us.
Strategic relationships will also be developed with travel agents, convention centers and spas for a similar commission based percentage of any booking made by a client introduced by us.
We plan to attend industry trade shows that are oriented towards creating opportunities for us to develop important strategic alliances with luxury properties in China. This would be an opportunity to meet and network with hundreds of luxury service providers.
Initially we will aggressively court the key database of corporate contacts provided by our President, Xuezheng Yuan in order to attract initial clients and strategic partners. We also intend to attract and add new clients through our website with a strong technical support capable of recording leads.
Other methods of communication will include:
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* | Email mailings - regular e-mailings to potential customers with updated company information and special offers |
* | Direct mail - brochures and newsletters |
* | Sampling - occasionally a discounted service package may be offered as a trade-in-kind to a visible and vocal trendsetter such as an advertising agent for a magazine or radio station. |
* | Informal marketing/networking - activities such as joining organizations or attending tradeshows and conferences. |
Customer-based marketing will include:
* | Emphasizing repeat sales to clients who have used our services |
* | Exploring additional sales tactics to increase the total revenue per client through the sale of extra services |
* | Additional sales facilitated by links to our website |
* | Strategic partnerships such as cooperative advertising |
* | Special offers and promotions such as limited time offers or seasonal promotions. |
Website Marketing Strategy
Web marketing will start with our known contacts whom we will ask to recommend our site. We will continue the strategy with long-term efforts to develop recognition in professional forums. We intend to attract traffic to our website by a variety of online marketing tactics such as registering with top search engines using selected key words (meta tags) and utilizing link and banner exchange options.
Revenue
Initially, we intend to generate revenue from two sources:
- By entering into strategic alliances with resorts and hotels to receive a percentage based commission of the room or travel package booking generated by us;
- By charging a fee to the customer for arranging travel assistance and/or concierge service.
We intend to develop and maintain a database of all our clients so that we can anticipate their personal preferences in specific airlines, types of restaurants, type of recreational activities etc. That database will enable us to anticipate the needs and desires of our clients.
Competition
The electronic commerce market is intensely competitive. The market for information resources is more mature but also intensely competitive. We expect competition to continue to intensify in the future. Competitors include companies with substantial customer bases in the computer and other technical fields. There can be no assurance that we can maintain a competitive position against current or future competitors, particularly those with greater financial, marketing, service, support, technical and other resources. Our failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our business, financial condition and results of operations.
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Most hotels and resorts have their own websites and upon initiating our website operations, we will be competing with the foregoing. We intend to differentiate ourselves by offering a much more personalized service. We will handle all aspects of the travel arrangements - air travel, hotel accommodations, car rental, limousine pick-up, floral arrangements, dinner, tickets for theater productions or shows, having your suit or dress pressed, down to ensuring that a specific brand of water is available in the room. We intend to act as a personal concierge or executive assistant throughout the duration of the trip.
The travel market is a small niche market and may be difficult to penetrate. Our competitive position within the industry is negligible in light of the fact that we have not started our operations. Older, well-established travel agencies with records of success will attract qualified clients away from us. Since we have not started operations, we cannot compete with them on the basis of reputation. We do expect to compete with them on the basis of the range of services and the quality of services that we intend to provide.
Xuezheng Yuan, our president will be devoting approximately 15 hours a week of his time to our operations. Once we begin operations, and are able to attract more and more clients to use our services, Xuezheng Yuan has agreed to commit more time as required. Because Mr. Yuan will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to our officers and directors. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations.
Marketing
We intend to market our website in China, the United States and in Canada through traditional sources such as trade magazines, conventions and conferences, newspaper advertising, billboards, telephone directories and flyers / mailers. We also intend to attend tradeshows and conferences. We may utilize inbound links that connect directly to our website from other sites. Potential clients can simply click on these links to become connected to our website from search engines and community and affinity sites.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Employees; Identification of Certain Significant Employees.
We are a development stage company and currently have no employees, other than our sole officer and director. We intend to hire additional employees on an as needed basis.
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Offices
Our offices are currently located at Suite 12B2, Guanghua Rd., Chaoyang District, Beijing, China 100004. Our telephone number is (86-10) 6530-6109. This is the office of our President, Xuezheng Yuan. We do not pay any rent to Mr. Yuan and there is no agreement to pay any rent in the future. Upon the completion of our offering, we intend to establish an office elsewhere. As of the date of this prospectus, we have not sought or selected a new office sight.
Government Regulation
We are not currently subject to direct Chinese, federal, state or local regulation other than regulations applicable to businesses generally or directly applicable to electronic commerce. However, the Internet is increasingly popular. As a result, it is possible that a number of laws and regulations may be adopted with respect to the Internet. These laws may cover issues such as user privacy, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights and information security. Furthermore, the growth of electronic commerce may prompt calls for more stringent consumer protection laws. Several states have proposed legislation to limit the uses of personal user information gathered online or require online services to establish privacy policies.
We are not certain how business may be affected by the application of existing laws governing issues such as property ownership, copyrights, encryption and other intellectual property issues, taxation, libel, obscenity and export or import matters. The vast majority of such laws were adopted prior to the advent of the Internet. As a result, they do not contemplate or address the unique issues of the Internet and related technologies. Changes in laws intended to address such issues could create uncertainty in the Internet market place. Such uncertainty could reduce demand for services or increase the cost of doing business as a result of litigation costs or increased service delivery costs. In addition, because our services are available over the Internet in multiple states and foreign countries, other jurisdictions may claim that we are required to qualify to do business in each such state or foreign country. We are qualified to do business only in Nevada. Our failure to qualify in a jurisdiction where i t is required to do so could subject it to taxes and penalties. It could also hamper our ability to enforce contracts in such jurisdictions. The application of laws or regulations from jurisdictions whose laws currently apply to our business could have a material adverse affect on our business, results of operations and financial condition.
Other than the foregoing, no governmental approval is needed for the sale of our products.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of the prospectus includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
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We are a start-up stage corporation and have not started operations or generated or realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we complete the development of our website, source out purveyors of services for products to sell and source out clients to buy our services. We believe the technical aspects of our website will be sufficiently developed to use for our operations 90 days from the completion of our offering. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and begin our operations. Even if we raise the maximum amount of money in this offering, we do not know how long the money will last, however, we do believe it will last twelve months. We will not begin operations until we raise money from this offering.
To meet our need for cash we are attempting to raise money from this offering. We believe that we will be able to raise enough money through this offering to begin operations but we cannot guarantee that once we begin operations we will stay in business after operations have commenced. If we are unable to successfully negotiate strategic alliances with purveyors of services to enable us to offer these services to our clients, or if we are unable to attract enough clients to utilize our services, we may quickly use up the proceeds from the minimum amount of money from this offering and will need to find alternative sources, like a second public offering, a private placement of securities, or loans from our officers or others in order for us to maintain our operations. At the present time, we have not made any arrangements to raise additional cash, other than through this offering.
If we need additional cash and cannot raise it we will either have to suspend operations until we do raise the cash, or cease operations entirely. If we raise the minimum amount of money from this offering, it will last a year but with limited funds available to develop growth strategy. If we raise the maximum amount, we believe the money will last a year and also provide funds for growth strategy. If we raise less than the maximum amount and we need more money we will have to revert to obtaining additional money as described in this paragraph. Other than as described in this paragraph, we have no other financing plans.
Plan of Operation
Assuming we raise the minimum amount in this offering, we believe we can satisfy our cash requirements during the next 12 months. We will not be conducting any product research or development. We do not expect to purchase or sell plant or significant equipment. Further we do not expect significant changes in the number of employees.
Upon completion of our public offering, our specific goal is to profitably sell our services on our Internet website to the budget conscious traveler. We intend to accomplish the foregoing through the following milestones:
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1. | Complete our public offering. We believe that we will raise sufficient capital to begin our operations. We believe this could take up to 270 days from the date the Securities and Exchange Commission declares our offering effective. We will not begin operations until we have closed this offering. We intend to concentrate all of our efforts on raising as much capital as we can during this period. |
| |
2. | After completing the offering, we will immediately begin to establish our office and acquire the equipment we need to begin operations. Establishing our offices will take 7-10 days. We believe that it will cost $5,000 to establish our office. We do not intend to hire employees. Our sole officer and director will handle our administrative duties. A detailed breakdown of the cost of operating our office is set forth in the Use of Proceeds section of this prospectus. |
| |
3. | After our office is established, which we said should be 7-10 days after completing our offering, we intend to contact and negotiate with high-end five-star resorts, hotels, retreats, Spas, limousine services and private charter airlines to offer their products and services on our website. We will also develop strategic relationships with travel agents, convention centers and spas. We plan to attend industry trade shows that are oriented towards creating opportunities for us to develop important relationships with the management of properties in the US and Canada. Once we have signed up a minimum of three exclusive resorts or retreats, we will hire an outside web designer to begin development on our website. We believe we should have the minimum of three strategic alliances negotiated and signed within 30 days of setting up our office. The negotiation of additional alliances with service providers and the development of the website will be ongoing during the life of our operations. As more service prov iders are added and as our customer database expands, we will have to be continually upgrading the website. We believe that it will cost up to $20,000 in order to have our website initially operational and $10,000 to have our database initially ready to receive information. Both the initial operation of the website and the database is anticipated to be ready within 60 days from the start date. The start date will be once a minimum of three resorts or retreats have agreed to let us represent them. As additional alliances are negotiated with service providers, we will up-grade the website. As our customer base increases we will up-grade the database. Both upgrades will be ongoing during the life of our operations. |
| |
4. | As soon as our website is operational, which as we have said will be approximately 60 days from setting up our office, we will begin to market our website in China, the United States and in Canada through traditional sources such as trade magazines, conventions and conferences, newspaper advertising, billboards, telephone directories and flyers / mailers. We also intend to attend tradeshows and conferences. We intend to target business executives, corporations and high-income individuals to become potential users of our services. Initially we will aggressively court the key database of corporate contacts provided by our president, Xuezheng Yuan. We may utilize inbound links that connect directly to our website from other sites. Potential clients can simply click on these links to become connected to our website from search engines and community and affinity sites. We believe that it will cost a minimum of $12,500 for our marketing campaign. If we raise the maximum amount of proceeds from the offering, we will devote an additional $20,000 to our marketing program. Marketing is an ongoing matter that will continue during the life of our operations. We also believe that we should begin to see results from our marketing campaign within 30 days from its initiation, or 90 days from setting up our office. |
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5. | Our marketing program will combine sourcing out service providers as well as clients to utilize those services. The process of sourcing out service providers includes identifying owners and management of resorts, hotels, retreats, spas, private charter companies, etc. via the Internet and research in trade magazines and directories. This process will start as soon as our office is operational and will be ongoing during the life of our operations. Sourcing potential clients may consist of telephone surveys and may contain questions that would "qualify" the potential clients. It will also involve research into existing databases available via the Internet to target and extract the applicable names and contacts to create our own customized database. We intend to look into the databases of travel journals, business magazines, newspapers, trade magazines as well as telephone directories. The cost to source and analyze all of the material to identify suitable candidates to develop and maintain the database is estimated to be $10,000 to $20,000. |
| |
6. | Within 90 days from the initial launch of our website, we believe that we will begin booking travel arrangements for our clients. Once the website is fully operational and we have begun to book travel arrangements for our customers, we intend to hire 1 or 2 part-time salesperson(s) to call on additional hotels, resorts and service providers to introduce them to our website. |
In summary, we should be in full operation and receiving orders within 100 days of completing our offering. We estimate that we will generate revenue 120 to 180 days after beginning operations.
Until our website is fully operational, we do not believe that clients will use our services to book their travel arrangements. We believe, however, that once our website is operational and we are able to provide a wide selection of services that we can offer to potential clients, they will utilize our services as their "personal concierge" for their travel needs.
If we are unable to negotiate suitable terms with service providers to enable us to represent their companies, or if we are unable to attract clients to use our services, we may have to suspend or cease operations.
If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations. If we cease operations, we do not know what we will do and we do not have any plans to do anything else.
Limited operating history; need for additional capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are in start-up stage operations and have not generated any revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
To become profitable and competitive, we have to locate and negotiate agreements with service providers to allow us to represent them for a percentage-based commission. We then have to locate clients to book those services through us. We are seeking equity financing to provide for the capital required to implement our operations.
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We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Results of operations
From Inception on March 14, 2006 to June 30, 2006
During the period we incorporated the company, hired the attorney, and hired the auditor for the preparation of this Registration Statement. We have prepared an internal business plan. We have reserved the domain namewww.chinabizhotel.com. Our loss since inception is $4,041 of which, $2,000 is for audit fees, $1,500 is for other accounting fees, and $541 is for the other general and administrative expenses. Deferred offering costs of $10,000 consist of legal fees incurred in connection with the offering of securities under this registration statement. We have not started our proposed business operations and will not do so until we have completed this offering. We expect to begin operations 100 days after we complete this offering.
Since inception, we sold 3,350,000 shares of common stock to our sole officer and director and 725,000 shares of common stock to two other individuals.
Liquidity and capital resources
As of the date of this prospectus, we have yet to generate any revenues from our business operations.
In March 2006, we issued 3,350,000 shares of common stock pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933 This was accounted for as a sale of common stock.
As of June 30, 2006, our total assets were $25,982 and our total liabilities were $29,982. As of June 30, 2006, we had cash of $15,982.
MANAGEMENT
Officers and Directors
Our sole director will serve until his successor is elected and qualified. Our sole officer is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of directors has no nominating, auditing or compensation committees.
The name, address, age and position of our present officer and director is set forth below:
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Name and Address
| Age
| Position(s)
|
| | |
Xuezheng Yuan | 38 | president, chief executive officer, secretary/treasurer, chief financial officer, and the sole member of the board of directors |
Suite 12B2, Hanwei Plaza |
7 Guanghua Road |
Chaoyang District, Beijing |
China 100004 |
The person named above has held his offices/positions since inception of our company and are expected to hold his offices/positions until the next annual meeting of our stockholders.
Background of officers and directors
Xuezheng Yuan
Since March 14, 2006, Mr. Yuan has been our president, chief executive officer, secretary/treasurer, chief financial officer, principal accounting officer and the sole member of the board of directors. Since April 1997, Mr. Yuan has been the president of Hubei Dilong Industry Group located in Wuhan, China. Hubei Dilong Industry Group is engaged in the business of tourist and travel theme park. From April 1992 to April 1997, Mr. Yuan was a founder and president of Hubei Province Real Estate Development Ltd. located in Wuhan, China. Hebei Province Real Estate Development Ltd. is engage in the business of real estate development. From July 1990 to April 1992, Mr. Yuan was employed by a trading company located in Shenzhen, China. He was mainly engaged in the business of acting as an import and export agent of textiles. In 1990, Mr. Yuan was awarded a degree in sociology from China's Wuhan Irrigation Water and Electric Power University. Mr. Yuan will devote 15 hours a week to our operations.
Audit Committee Financial Expert
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.
Conflicts of Interest
There are no conflicts of interest. Further, we have not established any policies to deal with possible future conflicts of interest.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us from inception on March 14, 2006 through June 30, 2006, for our sole officer and director. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any.
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Summary Compensation Table
| | | | | | Long-Term Compensation
|
| | Annual Compensation
| Awards
| Payouts
|
| | | | | | Securities | | |
| | | | Other | Under | Restricted | | Other |
| | | | Annual | Options/ | Shares or | | Annual |
Name | | | | Compen- | SARs | Restricted | LTIP | Compen- |
Executive Officer and | Year | Salary | Bonus | sation | Granted | Share/Units | Payouts | sation |
Principal Position
| Ended
| (US$)
| (US$)
| (US$)
| (#)
| (US$)
| (US$)
| (US$)
|
| | | | | | | | |
Xuezheng Yuan | 2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
President, Secretary, | 2005 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Treasurer and Director | 2004 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
We have no employment agreements with our officer. We do not contemplate entering into any employment agreements until such time as we begin profitable operations.
The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer.
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole officer and director other than as described herein.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
Compensation of Directors
Our sole director does not receive any compensation for serving as a member of the board of directors.
Indemnification
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
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Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this prospectus, the total number of shares owned beneficially by our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The table also reflects what their ownership will be assuming completion of the sale of all shares in this offering . The stockholders listed below have direct ownership of their shares and possesses sole voting and dispositive power with respect to the shares.
| | | Number of Shares | Percentage of |
| | Percentage of | After Offering | Ownership After |
| Number of | Ownership | Assuming all of | the Offering |
Name and Address | Shares Before | Before the | the Shares are | Assuming all of the |
Beneficial Owner
| the Offering
| Offering
| Sold
| Shares are Sold
|
| | | | |
Xuezheng Yuan [1] | 3,350,000 | 82.21% | 3,350,000 | 55.14% |
Suite 12B2, Guanghua Rd. | | | | |
Chaoyang District, Beijing | | | | |
China 100004 | | | | |
| | | | |
All Officers and Directors as a Group (1 person) | 3,350,000 | 82.21% | 3,350,000 | 55.14% |
| | | | |
Bingjun Guo | 500,000 | 12.27% | 500,000 | 8.23% |
| | | | |
Hua Du | 225,000 | 5.52% | 225,000 | 3.70% |
[1] The person named above may be deemed to be a "parent" and "promoter" of our company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his/its direct and indirect stock holdings. Mr. Yuan is the only "promoter" of our company.
Future sales by existing stockholders
A total of 3,350,000 shares of common stock were issued to our sole officer and director and 725,000 shares of common stock were issued to two other individuals. All of the shares are restricted securities, as defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act. Under Rule 144, the shares can be publicly sold, subject to volume restrictions and restrictions on the manner of sale, commencing one year after their acquisition.
Shares purchased in this offering, which will be immediately resalable, and sales of all of our other shares after applicable restrictions expire, could have a depressive effect on the market price, if any, of our common stock and the shares we are offering.
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There is no public trading market for our common stock. There are no outstanding options or warrants to purchase, or securities convertible into, our common stock. There are three holders of record for our common stock.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.00001 per share. The holders of our common stock:
* | have equal ratable rights to dividends from funds legally available if and when declared by our board of directors; |
* | are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; |
* | do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and |
* | are entitled to one non-cumulative vote per share on all matters on which stockholders may vote. |
All shares of common stock now outstanding are fully paid for and non-assessable and all shares of common stock that are the subject of this offering, when issued, will be fully paid for and non-assessable. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of our securities.
Non-cumulative voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. After this offering is completed assuming the sale of all of the shares of common stock, present stockholders will own approximately 67.08% of our outstanding shares.
Cash dividends
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Preferred Stock
We are authorized to issue 100,000,000 shares of preferred stock with a par value of $0.00001 per share. The terms of the preferred shares is at the discretion of the board of directors. Currently no preferred shares are issued and outstanding.
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Anti-takeover provisions
There are no Nevada anti-takeover provisions that may have the affect of delaying or preventing a change in control.
Reports
After we complete this offering, we will not be required to furnish you with an annual report. Further, we will not voluntarily send you an annual report. We will be required to file reports with the SEC under section 15(d) of the Securities Act. The reports will be filed electronically. The reports we will be required to file are Forms 10-KSB, 10-QSB, and 8-K. You may read copies of any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that will contain copies of the reports we file electronically. The address for the Internet site ishttp://www.sec.gov/.
Stock transfer agent
Our stock transfer agent for our securities is Pacific Stock Transfer Company, 500 E. Warms Springs Road, Suite 240, Las Vegas, Nevada 89119. Its telephone number is (702) 361-3033.
CERTAIN TRANSACTIONS
In March 2006, we issued a total of 3,350,000 shares of restricted common stock to Xuezheng Yuan, our sole officer and director in consideration of $33.50 cash.
LITIGATION
We are not a party to any pending litigation and none is contemplated or threatened.
EXPERTS
Our financial statements for the period from inception to June 30, 2006, included in this prospectus have been audited by Paula S. Morelli, CPA, P.C., 21 Martha Street, Freeport, New York 11520, as set forth in her report included in this prospectus. Her report is given upon her authority as an expert in accounting and auditing.
LEGAL MATTERS
Conrad C. Lysiak, Attorney at Law, 601 West First Avenue, Suite 503, Spokane, Washington 99201, telephone (509) 624-1475 has acted as our legal counsel.
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FINANCIAL STATEMENTS
Our fiscal year end is June 30. We will provide audited financial statements to our stockholders on an annual basis.
Our financial statements from inception to June 30, 2006 (audited), immediately follow:
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PAULA S. MORELLI, CPA P.C.
21 MARTHA STREET
FREEPORT, NY 11520
(516) 378-4258
REPORT OF INDEPENDENT AUDITOR
To the Board of Directors and Stockholders of
China Unitech Group, Inc.
I have audited the accompanying balance sheet of China Unitech Group, Inc.(the Company") as of June 30, 2006 and the related statements of operations, stockholders' equity, and cash flows for the period March 14 (inception date) to June 30, 2006. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these consolidated financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of China Unitech Group, Inc. as of June 30, 2006 and the results of their operations and cash flows for the period March 14, 2006 (inception date) to June 30, 2006 in conformity with accounting principles generally accepted in the United States.
The financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company's present financial situation raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| /s/ Paula S. Morelli CPA P.C. |
|
Freeport, New York | |
August 30, 2006 | |
F-1
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Index
CHINA UNITECH GROUP, INC. |
(A Development Stage Company) |
Balance Sheet |
June 30, 2006 |
| | |
Assets | | |
| | |
Current assets: | | |
| Cash and cash equivalents | $ | 15,982
|
| | |
| Total current assets | | 15,982
|
| | |
Other assets: | | |
| Deferred offering costs | | 10,000
|
| | |
| Total other assets | | 10,000
|
| | |
Total assets | $ | 25,982
|
| | |
Liabilities and Stockholder's Equity (Deficiency) | | |
| | |
Current liabilities: | | |
| Loans payable to sole officer and director | $ | 29,982
|
| | |
| Total current liabilities | | 29,982
|
| | |
Stockholder's equity: | | |
| Preferred stock, $.00001 par value; authorized | | |
| 100,000,000 shares, issued and outstanding | | |
| 0 shares | | - |
| Common stock, $.00001 par value; authorized | | |
| 100,000,000 shares, issued and outstanding | | |
| 4,075,000 shares | | 41 |
| Deficit accumulated during | | |
| development stage | | (4,041)
|
| | |
| Total stockholder's equity (deficiency) | | (4,000)
|
| | |
Total liabilities and stockholder's equity (deficiency) | $ | 25,982
|
See Notes to Financial Statements.
F-2
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Index
CHINA UNITECH GROUP, INC. |
(A Development Stage Company) |
Statement of Operations |
For the Period March 14, 2006 (Inception) |
to June 30, 2006 |
| | |
| | |
Revenues | $ | -
|
| | |
Expenses: | | |
| General and administrative | | 4,041
|
| | |
| Total expenses | | 4,041
|
| | |
Net income (loss) | $ | (4,041)
|
| | |
Net income (loss) per share, | | |
| basic and diluted | $ | (.00)
|
| | |
Number of common shares outstanding, | | |
| basic and diluted | | 4,075,000
|
See Notes to Financial Statements.
F-3
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Index
CHINA UNITECH GROUP, INC. |
(A Development Stage Company) |
Statement of Changes in Stockholder's Equity (Deficiency) |
For the Period March 14, 2006 (Inception) |
to June 30, 2006 |
|
Common Stock, $.00001 par value
| | Deficit Accumulated During Development | |
Total Stockholder's Equity |
| Shares
| | Amount
| | Stage
| | (Deficiency)
|
| | | | | | | |
Shares sold to officer and director | | | | | | | |
at $.00001 per share in | | | | | | | |
March 2006 | 3,350,000 | $ | 34 | $ | - | $ | 34 |
| | | | | | | |
Shares sold at $.00001 per share | | | | | | | |
in June 2006 | 725,000 | | 7 | | - | | 7 |
| | | | | | | |
| | | | | | | |
Net loss for period March 14, 2006 | | | | | | | |
(inception) to June 30, 2006 | -
| | -
| | (4,041)
| | (4,041)
|
| | | | | | | |
Balances, June 30, 2006 | 4,075,000
| $ | 41
| $ | (4,041)
| $ | (4,000)
|
See Notes to Financial Statements.
F-4
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Index
CHINA UNITECH GROUP, INC. |
(A Development Stage Company) |
Statement of Cash Flows |
For the Period March 14, 2006 (Inception) |
to June 30, 2006 |
| | |
| | |
| | |
Cash flows from operating activities: | | |
| Net income (loss) | $ | (4,041)
|
| | |
| Net cash provided by (used for) operating activities | | (4,041)
|
| | |
Cash flows from investing activities | | -
|
| | |
Cash flows from financing activities: | | |
| Proceeds from sales of common stock | | 41 |
| Proceeds from loans payable to sole | | |
| officer and director | | 29,982 |
| Deferred offering costs incurred | | (10,000)
|
| | |
| Net cash provided by (used for) financing activities | | 20,023
|
| | |
Net increase (decrease) in cash and cash equivalents | | 15,982 |
| | |
Cash and cash equivalents, beginning of period | | -
|
| | |
Cash and cash equivalents, end of period | $ | 15,982
|
| | |
Supplemental disclosures of cash flow information: | | |
| Interest paid | $ | -
|
| | | |
| Income taxes paid | $ | -
|
See Notes to Financial Statements.
F-5
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Index
CHINA UNITECH GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period March 14, 2006 (Inception)
to June 30, 2006
NOTE 1 - ORGANIZATION
China Unitech Group, Inc. (the "Company") was incorporated in the State of Nevada on March 14, 2006. From its office in China, the Company plans to operate in the online travel business using the websitewww.chinabizhotel.com. The website is planned to offer viewers the ability to book hotel rooms in China and earn the Company booking fees from the respective hotels.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation - The Company has been presented as a "development stage enterprise" in accordance with Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises". Since inception, the Company's activities have been limited to organizational efforts, obtaining initial financing, and preparing a registration statement for its planned public offering (see note 5). The Company had no revenues in the period from inception to June 30, 2006.
The financial statements have been compiled on a "going concern" basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as of June 30, 2006, the Company had negative working capital of $14,000 and a stockholders' deficiency of $4,000. Further, since inception, the Company has had no revenues and has incurred a net loss of $4,007. These factors create uncertainty as to the Company's ability to continue as a going concern. The Company plans to improve its financial condition by obtaining new financing (see note 5) and commencing planned operations. However, there is no assurance that the Company will be successful in accomplishing these objectives. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Cash and cash equivalents - The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the 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.
Fair value of financial instruments - The Company's financial instruments consist of cash and cash equivalents and loans payable to sole officer and director, which approximate fair value because of their short maturity.
F-6
-35-
CHINA UNITECH GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period March 14, 2006 (Inception)
to June 30, 2006
Deferred offering costs - Deferred offering costs consist of legal fees incurred in connection with the Company's planned public offering (see note 5). These costs will be charged to additional paid-in capital upon the completion of the public offering or expensed in the event that the offering is not successful.
Income taxes - Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Net loss per share - Basic and diluted net loss per common share has been calculated based upon the number of common shares outstanding. The Company did not have any common stock equivalents outstanding at June 30, 2006, such as stock options or convertible securities.
NOTE 3 - LOANS PAYABLE TO SOLE OFFICER AND DIRECTOR
The loans payable are non-interest bearing and are due on demand.
NOTE 4 - STOCKHOLDERS' EQUITY
On March 20, 2006, the Company sold 3,350,000 shares of its common stock to its sole officer and director at a price of $.00001 per share, or $34 total.
On June 28, 2006, the Company sold an additional 725,000 shares of its common stock to 2 other investors in private transactions at a price of $.00001 per share, or $7 total.
NOTE 5 - PLANNED PUBLIC OFFERING
The Company plans on filing a Form SB-2 registration statement with the Securities and Exchange Commission in connection with a public offering of up to 2,000,000 shares of common stock at $.10 per share, or $200,000 total. The offering is planned to be sold directly on a "best efforts, all or non basis" as to the first 1,000,000 shares and on a "best efforts basis" as to the remaining 1,000,000 shares. The shares are to be sold in a self-underwritten offering for a period of up to 270 days. The offering is planned to provide that the subscription proceeds will be maintained in a separate bank account until the Company receives a minimum of $100,000; in the event that 1,000,000 shares are not sold within the 270 days, all money received is to be promptly returned to the subscribers.
F-7
-36-
CHINA UNITECH GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period March 14, 2006 (Inception)
to June 30, 2006
NOTE 6 - INCOME TAXES
No provision for income taxes has been recorded since the Company incurred a net loss for the period March 14, 2006 (inception) to June 30, 2006.
Based on management's present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $1,374 attributable to the future utilization of the net operating loss carryforward of $4,041 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforward expires in year 2026.
Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Consulting agreement - On February 21, 2006, the sole officer and director of the Company executed a Consulting Agreement with three individuals (the "Consultants"). Among other things, the agreement provides that the Consultants will assist in the formation of the Company, the preparation of the registration statement in connection with the Company's planned public offering (including the introduction of accountants and an attorney), and the preparation of the application for trading on the OTC Bulletin Board. As compensation for their services, the Consultants are entitled to subscribe to shares of Company common stock in the Company's planned public offering.
Agreement for legal services - In March 2006, the Company engaged an attorney to prepare and file the Form SB-2 registration statement. The letter agreement provides for a total fee of $20,000, $10,000 of which was paid in March 2006.
Agreement for accounting services - In March 2006, the Company engaged an accountant to prepare certain financial statements. The agreement provides for a total estimated fee of $4,000, $1,500 of which was paid at June 30, 2006.
Agreement for audit services - In March 2006, the Company engaged an auditor to audit certain financial statements. The agreement provides for a total estimated fee of $5,000, $2,000 of which was paid at June 30, 2006.
Rental agreement - The Company has been using office space provided by its sole officer and director at no cost to the Company.
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CHINA UNITECH GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period March 14, 2006 (Inception)
to June 30, 2006
Conflicts of interest - The sole officer and director of the Company is involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, he may face a conflict in selecting between the Company and his other business interests. The Company has not formulated a policy for the resolution of such conflicts.
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Table of Contents
Until December 17, 2006, ninety (90) days after the date of this prospectus, all dealers effecting transactions in our registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
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