UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| [X] | QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES |
| EXCHANGE ACT OF 1934 | |
| FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2008 | |
| OR | |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
| EXCHANGE ACT OF 1934 | |
Commission file number 000-53155
SINO CHARTER INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
Block C Flat 410
Lotus Hill Golf Apartments
Lotus Hill Town, Panyu District
Guangzhou, China 511440
(Address of principal executive offices, including zip code.)
(86) 20-8484-7776
(telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.
YES [X] NO [ ]
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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [ ] | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] | Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 10,977,500 as of April 14, 2008
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| Balance Sheets | F-1 |
| Statements of Expenses | F-2 |
| Statements of Cash Flows | F-3 |
| Notes to Financial Statements | F-4 |
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| SINO CHARTER INC. | ||||||
| (A DEVELOPMENT STAGE ENTERPRISE) | ||||||
| BALANCE SHEETS | ||||||
| February 29, | November 30, | |||||
| 2008 | 2007 | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Cash | $ | 12,742 | $ | 29,405 | ||
| TOTAL CURRENT ASSETS | 12,742 | 29,405 | ||||
| TOTAL ASSETS | $ | 12,742 | $ | 29,405 | ||
| LIABILITIES AND STOCKHOLDER'S DEFICIT | ||||||
| CURRENT LIABILITIES | ||||||
| Accrued interest | $ | 475 | $ | 475 | ||
| Accounts payable and accrued expenses | 4,858 | 8,036 | ||||
| TOTAL CURRENT LIABILITIES | 5,333 | 8,511 | ||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||
| STOCKHOLDER'S DEFICIT | ||||||
| Preferred stock, $0.00001 par value; 100,000,000 shares authorized, | ||||||
| no shares issued and outstanding | - | - | ||||
| Common stock, $0.00001 par value; 100,000,000 shares authorized, | ||||||
| 10,977,500 shares issued and outstanding | 110 | 110 | ||||
| Additional paid-in capital | 97,740 | 97,740 | ||||
| Accumulated deficit | (90,441 | ) | (76,956 | ) | ||
| TOTAL STOCKHOLDER'S EQUITY | 7,409 | 20,894 | ||||
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $ | 12,742 | $ | 29,405 | ||
See accompanying condensed notes to interim financial statements.
F-1
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| SINO CHARTER INC. | |||||||||
| (A DEVELOPMENT STAGE ENTERPRISE) | |||||||||
| STATEMENTS OF OPERATIONS | |||||||||
| Three Months | Three Months | From October 30, | |||||||
| Ended | Ended | 2006 (Inception) | |||||||
| February 29th | Februrary 28th | to Feb 29, | |||||||
| 2008 | 2007 | 2008 | |||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||
| REVENUES | $ | - | $ | - | $ | - | |||
| EXPENSES | |||||||||
| Legal and accounting | 8,505 | 7,087 | 52,603 | ||||||
| Travel | 3,684 | - | 15,355 | ||||||
| License expense | 425 | ||||||||
| Management contracts | 18,500 | ||||||||
| Bank fees | 36 | 22 | 178 | ||||||
| Office expense | 1,260 | 150 | 2,467 | ||||||
| Total Expenses | 13,485 | 7,259 | 89,528 | ||||||
| LOSS FROM OPERATIONS | (13,485 | ) | (7,259 | ) | (89,528 | ) | |||
| OTHER INCOME (EXPENSE) | |||||||||
| Interest expense | - | (84 | ) | (913 | ) | ||||
| Total Other Income (Expense) | - | (84 | ) | (913 | ) | ||||
| LOSS BEFORE TAXES | (13,485 | ) | (7,343 | ) | (90,441 | ) | |||
| INCOME TAX EXPENSE | - | - | |||||||
| NET LOSS | $ | (13,485 | ) | $ | (7,343 | ) | $ | (90,441 | ) |
| BASIC AND DILUTED NET LOSS PER SHARE | $ | nil | $ | nil | $ | nil | |||
| WEIGHTED AVERAGE NUMBER OF | |||||||||
| COMMON SHARES OUTSTANDING, | |||||||||
| BASIC AND DILUTED | 10,977,500 | 10,000,000 | 10,977,500 | ||||||
See accompanying condensed notes to interim financial statements.
F-2
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| SINO CHARTER INC. | |||||||||
| (A DEVELOPMENT STAGE ENTERPRISE) | |||||||||
| STATEMENTS OF CASH FLOWS | |||||||||
| From October 30, | |||||||||
| Three Months Ended | Three Months Ended | 2006 (Inception) | |||||||
| February 29, | February 28, | to Feb 29, | |||||||
| 2008 | 2007 | 2008 | |||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
| Net loss | $ | (13,485 | ) | $ | (7,343 | ) | $ | (90,441 | ) |
| Adjustments to reconcile net loss to net cash | |||||||||
| used by operations: | |||||||||
| Increase in accrued interest, related party | 84 | 475 | |||||||
| Increase (decrease) in accounts payable and accrued expenses | (3,178 | ) | (5,263 | ) | 4,858 | ||||
| Net cash used by operating activities | (16,663 | ) | (12,522 | ) | (85,108 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | - | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
| Proceeds from borrowing, related party | 12,000 | ||||||||
| Proceeds from sale of stock | 97,850 | ||||||||
| Net cash provided by financing activities | - | 12,000 | 97,850 | ||||||
| NET INCREASE FOR PERIOD | (16,663 | ) | (522 | ) | 12,742 | ||||
| CASH at Beginning of period | 29,405 | 975 | |||||||
| CASH - End of period | $ | 12,742 | $ | 453 | $ | 12,742 | |||
| SUPPLEMENTAL CASH FLOW DISCLOSURES: | |||||||||
| Interest paid | $ | - | $ | - | $ | - | |||
| Income taxes paid | $ | - | $ | - | $ | - | |||
See accompanying condensed notes to interim financial statements.
F-3
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SINO CHARTER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 29, 2008
NOTE 1 – BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
Sino Charter Inc. (hereinafter “the Company” or “Sino”) was incorporated on October 30, 2006 in the State of Nevada. The principal business of the Company is internet-based aircraft charter booking for East Asia.
The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended November 30, 2007. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. Operating results for the three month period ended February 29, 2008 are not necessarily indicative of the results that may be expected for the year ending November 30, 2008.
The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company’s financial position and results of operations.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
This summary of significant accounting policies of Sino Charter Inc., is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
Accounting Method
The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
In September, 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter “SFAS No. 157”). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosure about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements. This statement does not require any new fair value measurements, but for some entities, the application of this statement may change current practice. The adoption of this statement had no immediate material effect on the Company’s financial condition or results of operations.
F-4
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SINO CHARTER, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 29, 2008
Going Concern
As shown in the accompanying financial statements, the Company had working capital of $7,409 and an accumulated deficit of ($90,441) incurred through February 29, 2008. Management has established plans to begin generating revenues and decrease debt. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. The Company anticipates that it will need $40,000 to continue in existence for the following twelve months. The Company expects to control its cash outflows based upon funds received.
NOTE 3– RELATED PARTY LOAN PAYABLE
None
NOTE 4 - SUBSEQUENT EVENTS
Sino Charter Inc. began trading on the NASDAQ OTC Bulletin Board on April 2, 2008.
F-5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
This section of the report 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 report. 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.
We are a start-up stage corporation and have not 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 raised enough money to begin minimal operations including the development of our website, however, we cannot guarantee that 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.
Plan of Operation
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.
Our specific goal is to profitably sell our services on our Internet website to the business oriented traveler. We intend to accomplish the foregoing through the following milestones:
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| 1. | We have contacted and we intend to continue to contact high-end resorts, hotels, retreats, limousine services and private charter airlines either directly or through broker services to offer their products and services on our website. We also intend to attend industry trade shows that are oriented towards creating opportunities for us to develop important relationships with the management of properties in China, the US, and Canada. Even though we have no service providers under contract at this time we believe we need to move forward with the website as we had a significant amount of feedback that potential service providers would like to see our website before further discussions can take place. As soon as the website is complete, we will begin operations. Contacting and 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 provid ers 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 $10,000 in order to have our website initially operational and $5,000 to have our database initially ready to receive information. Both the initial operation of the website and the database is anticipated to be ready by March 31, 2008. 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. |
| 2. | As soon as our website is operational, which as we have said will be approximately March 31, 2008, 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, Bradley W. Miller. 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 $5,000 for our marketing campaign. We also belie ve that we should begin to see results from our marketing campaign within 30 days from its initiation. |
| 3. | 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 ma terial to identify suitable candidates to develop and maintain the database is estimated to be $5,000 to $15,000. |
| 4. | Within 90-120 days from the initial launch of our website, we believe that we will begin booking travel arrangements for our clients. |
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In summary, we should be in full operation and receiving orders within 90 days of completing our website which is when we will begin operations. We estimate that we will generate revenue 90 to 120 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 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 October 30, 2006 to February 29, 2008
Since inception, we incorporated the company, hired the auditor, and hired the attorney for the preparation of our registration statement. We have prepared an internal business plan. We have reserved the domain name “www.sinocharter.com”. Our loss since inception is $90,441, most of which is for the general and administrative expenses. We have not started our proposed business operations and will not do so until we have completed our website.
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Since inception, we sold 10,000,000 shares of common stock to our sole officer and director in consideration of $100 and an additional 977,500 shares of common stock through our offering in consideration of $97,750.
We established our office in November 2007.
Liquidity and capital resources
As of the date of this report, we have yet to generate any revenues from our business operations.
In November 2006, we issued 10,000,000 shares of common stock pursuant to the exemption from registration contained in section 4(2) of the Securities Act of 1933. This was accounted for as a sale of common stock.
In October 2007, we issued 977,500 shares of common stock which had been registered via an SB-2. This was accounted for as a sale of common stock.
As of February 29, 2008, our total assets were $12,742 and our total liabilities were $5,333. As of February 29, 2008, we had cash of $12,742.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures - Our Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, have concluded that, based on the evaluation of these controls and procedures, that our disclosure controls and procedures were effective.
Internal Controls Over Financial Reporting - We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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PART II. OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On March 30, 2007 at 4:00 p.m, the Securities and Exchange Commission declared our Form SB-2 Registration Statement effective (File number 333-140587) permitting us to offer up to 1,500,000 shares of common stock at $0.10 per share. There is no underwriter involved in our public offering. In October 2007 we completed our SEC registered offering and issued 977,500 shares for $97,750 in cash. Since public offering we have used the proceeds as follows:
| Legal and Accounting | $ | 52,603 |
| Travel | 15,355 | |
| State Filing Fees | 425 | |
| Management Contracts | 18,500 | |
| Bank Fees | 177 | |
| Office Expenses | 2,467 | |
| Total Expenses | $ | 89,527 |
ITEM 6. EXHIBITS.
The following documents are included herein:
| Exhibit No. | Document Description |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to |
| Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of | |
| 1934, as amended. | |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of |
| the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 17th day of April, 2008.
| SINO CHARTER INC. | ||
| (Registrant) | ||
| BY: | BRADLEY W. MILLER | |
| Bradley W. Miller | ||
| President, Principal Executive Officer, | ||
| Secretary/Treasurer, Principal Financial Officer, | ||
| Principal Accounting Officer and a member of the | ||
| Board of Directors. | ||
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EXHIBIT INDEX
| Exhibit No. | Document Description |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to |
| Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of | |
| 1934, as amended. | |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of |
| the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). | |
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