UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2009
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission File Number: 333-153111
Shengrui Resources Co. Ltd.
(Exact name of registrant as specified in its charter)
| Nevada | | None |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
270 – 11331 Coppersmith Way
Richmond, British Columbia, Canada V7A 5J9
(Address of principal executive offices)
(604) 214-7706
(Registrant’s telephone number, including area code)
_____________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of September 14, 2009 the registrant’s outstanding common stock consisted of 5,456,400 shares.
| 3 |
| | |
| 3 |
| 4 |
| 9 |
| 9 |
| 9 |
| | |
| 10 |
| | |
| 10 |
| 10 |
| 10 |
| 10 |
| 10 |
| 10 |
Item 1. Financial Statements
The unaudited interim financial statements of Shengrui Resources Co. Ltd. (formerly known as Double Halo Resources Inc.) follow. All currency references in this report are to US Dollars unless otherwise noted.
Table of Contents
| Balance Sheets | F-2 |
| Statement of Operations and Comprehensive Loss | F-3 |
| Statement of Cash Flows | F-4 |
| Statements of Stockholders' Equity (Deficiency) | F-5 |
| Notes to the Financial Statements | F-6 |
SHENGRUI RESOURCES CO. LTD.
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
BALANCE SHEETS
(Expressed in US Dollars)
As at July 31, 2009
| | | July 31, 2009 | | | October 31, 2008 | |
| | | | | | | |
| ASSETS | | | | | | |
| Current | | | | | | |
| Cash and cash equivalents | | $ | 319 | | | $ | 323 | |
| Exploration advances | | | - | | | | 20,000 | |
| | | | 319 | | | | 20,323 | |
Oil and gas properties (Note 3) | | | - | | | | 19,810 | |
| | | $ | 319 | | | $ | 40,133 | |
| LIABILITIES | | | | | | | | |
| Current | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 30,186 | | | $ | 33,984 | |
Due to related parties (Note 4) | | | 18,288 | | | | 33,562 | |
| | | | 48,474 | | | | 67,546 | |
| SHAREHOLDERS' EQUITY | | | | | | | | |
Capital stock - 100,000,000 shares authorized, $0.0001 par value, 5,456,400 shares issued and outstanding (October 31, 2008 - 5,456,400) (Note 5) | | | 546 | | | | 546 | |
| Additional paid-in capital | | | 622,177 | | | | 573,094 | |
| Deficit | | | (670,878 | ) | | | (601,053 | ) |
| | | | (48,155 | ) | | | (27,413 | ) |
| | | $ | 319 | | | $ | 40,133 | |
Nature and continuance of operations (Note 1)
Subsequent events (Note 9)
UNAUDITED
See accompanying Notes to the Financial Statements
SHENGRUI RESOURCES CO. LTD.
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in US Dollars)
For the nine months ended July 31, 2009
| | | Period from inception at October 31, 2006 to | | | For the three months ended | | | For the three months ended | | | For the nine months ended | | | For the nine months ended | |
| | | July 31, 2009 | | | July 31, 2009 | | | July 31, 2008 | | | July 31, 2009 | | | July 31, 2008 | |
| | | | | | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | | | | |
| General and administrative expenses | | $ | 3,720 | | | $ | - | | | $ | 77 | | | $ | 2,591 | | | $ | 240 | |
| Management fees | | | 13,500 | | | | - | | | | 1,500 | | | | 1,500 | | | | 4,500 | |
| Rent | | | 13,500 | | | | - | | | | 1,500 | | | | 1,500 | | | | 4,500 | |
| Stock-based compensation | | | 449,550 | | | | - | | | | - | | | | - | | | | - | |
| Professional fees | | | 176,659 | | | | 38,474 | | | | 12,443 | | | | 64,505 | | | | 65,881 | |
| Bank charges and interest | | | 647 | | | | - | | | | - | | | | 648 | | | | - | |
| Write-off of exploration advances | | | 20,000 | | | | - | | | | - | | | | 20,000 | | | | - | |
| Write-off of exploration costs | | | 25,000 | | | | - | | | | 25,000 | | | | - | | | | 25,000 | |
| | | | 702,576 | | | | 38,474 | | | | 40,520 | | | | 90,744 | | | | 100,121 | |
| | | | (702,576 | ) | | | (38,474 | ) | | | (40,520 | ) | | | (90,744 | ) | | | (100,121 | ) |
Gain on settlement of debt (Note 8) | | | 36,000 | | | | - | | | | - | | | | 36,001 | | | | - | |
| Foreign currency gain (loss) | | | (4,302 | ) | | | - | | | | (71 | ) | | | (282 | ) | | | 1,029 | |
| Net income (loss) for the period | | | (670,878 | ) | | | (38,474 | ) | | | (40,591 | ) | | | (55,025 | ) | | | (99,092 | ) |
| Deficit, beginning of the period | | | - | | | | (632,404 | ) | | | (72,846 | ) | | | (601,053 | ) | | | (14,345 | ) |
| Deficit, end of the period | | $ | (670,878 | ) | | $ | (670,878 | ) | | $ | (113,437 | ) | | $ | (656,078 | ) | | $ | (113,437 | ) |
| Earnings per share | | | | | | | | | | | | |
| Basic | | $ | (0.01 | ) | | $ | (0.21 | ) | | $ | (0.01 | ) | | $ | (0.03 | ) |
| Weighted average number of shares outstanding | | | 5,456,000 | | | | 194,000 | | | | 5,456,000 | | | | 2,986,000 | |
UNAUDITED
See accompanying Notes to the Financial Statements
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
(Expressed in US Dollars)
For the nine months ended July 31, 2009
| | | Period from inception at October 31, 2006 to | | | For the nine months ended | | | For the nine months ended | |
| | | July 31, 2009 | | | July 31, 2009 | | | July 31, 2008 | |
| | | | | | | | | | |
| Cash flow from operating activities | | | | | | | | | |
| Net income (loss) for the period | | $ | (670,878 | ) | | $ | (69,825 | ) | | $ | (99,092 | ) |
| Add back non-cash operating activities: | | | | | | | | | | | | |
| Gain on settlement of debt | | | (36,000 | ) | | | (36,001 | ) | | | - | |
| Donated rent | | | 13,500 | | | | 1,500 | | | | 4,500 | |
| Donated services | | | 13,500 | | | | 1,500 | | | | 4,500 | |
| Write-off of exploration advances | | | 20,000 | | | | 20,000 | | | | - | |
| Non-cash consulting fees | | | 38,451 | | | | 38,451 | | | | - | |
| Stock-based compensation | | | 449,550 | | | | - | | | | - | |
| Write-off of oil and gas costs | | | 25,000 | | | | - | | | | 25,000 | |
| Changes in non-cash working capital | | | | | | | | | | | | |
| Exploration advances | | | (20,000 | ) | | | - | | | | (20,000 | ) |
| Accounts payable | | | 48,186 | | | | 14,202 | | | | 19,494 | |
| | | | (118,691 | ) | | | (30,172 | ) | | | (65,598 | ) |
| Cash flow from investing activities | | | | | | | | | | | | |
| Acquisition of oil and gas properties | | | (50,930 | ) | | | (6,120 | ) | | | (44,810 | ) |
Net cash used in investing activities | | | (50,930 | ) | | | (6,120 | ) | | | (44,810 | ) |
| | | | | | | | | | | | | |
| Cash flow from financing activities | | | | | | | | | | | | |
| Advances from related parties | | | 51,850 | | | | 18,288 | | | | 849 | |
| Capital stock subscribed | | | 71,660 | | | | - | | | | - | |
| Proceeds from the issuance of capital stock | | | 42,780 | | | | - | | | | 42,000 | |
| Repurchase of capital stock | | | (14,350 | ) | | | - | | | | - | |
| Note payable | | | 18,000 | | | | 18,000 | | | | - | |
| | | | 169,940 | | | | 36,288 | | | | 42,849 | |
| Net change in cash and cash equivalents | | | 319 | | | | (4 | ) | | | (67,559 | ) |
| Cash and cash equivalents, beginning of the period | | | - | | | | 323 | | | | 72,909 | |
| Cash and cash equivalents, end of the period | | $ | 319 | | | $ | 319 | | | $ | 5,350 | |
Supplemental cash flow disclosure (Note 7)
UNAUDITED
See accompanying Notes to the Financial Statements
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(Expressed in US Dollars)
For the nine months ended July 31, 2009
| | | | | | | | | | | | | | | Deficit accumulated | | | Total | |
| | | | | | | | | | | | | | | during the | | | Stockholders' | |
| | | Common stock | | | Additional Paid | | | Common stock | | | Exploration | | | Equity | |
| | | Number of shares | | | Amount | | | in Capital | | | Subscribed | | | stage | | | (Deficiency) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| October 31, 2007 | | | 7,800 | | | $ | 1 | | | $ | 12,779 | | | $ | 71,660 | | | $ | (14,345 | ) | | $ | 70,095 | |
| Issuance of stock for cash | | | 5,592,100 | | | | 559 | | | | 113,101 | | | | (71,660 | ) | | | - | | | | 42,000 | |
| Cancellation of capital stock | | | (143,500 | ) | | | (14 | ) | | | (14,336 | ) | | | - | | | | - | | | | (14,350 | ) |
| Donated services and rent | | | - | | | | - | | | | 12,000 | | | | - | | | | - | | | | 12,000 | |
| Stockbased compensation | | | - | | | | - | | | | 449,550 | | | | - | | | | - | | | | 449,550 | |
| Net loss | | | - | | | | - | | | | - | | | | - | | | | (586,708 | ) | | | (586,708 | ) |
| October 31, 2008 | | | 5,456,400 | | | | 546 | | | | 573,094 | | | | - | | | | (601,053 | ) | | | (27,413 | ) |
| Donated services and rent | | | - | | | | - | | | | 3,000 | | | | - | | | | - | | | | 3,000 | |
| Extinguishment of related party debt | | | - | | | | - | | | | 46,083 | | | | - | | | | - | | | | 46,083 | |
| Net income | | | - | | | | - | | | | - | | | | - | | | | (69,825 | ) | | | (69,825 | ) |
| July 31, 2009 | | | 5,456,400 | | | $ | 546 | | | $ | 622,177 | | | $ | - | | | $ | (670,878 | ) | | $ | (48,155 | ) |
UNAUDITED
See accompanying Notes to the Financial Statements
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
July 31, 2009
1. NATURE AND CONTINUANCE OF OPERATIONS
Shengrui Resources Co. Ltd. (formerly Double Halo Resources Inc.) (the “Company”) was incorporated in the State of Nevada on October 30, 2006. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7, “Accounting and Reporting for Development Stage Enterprises”. The Company’s principal business was the acquisition and exploration of oil and gas resources, but it has recently changed its principal business to the acquisition and exploration of mineral resources.
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at July 31, 2009 the Company has accumulated losses of $670,878 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company filed an S-1 Registration Statement with the United States Securities and Exchange Commission to register 192,400 shares of common stock for sale by the existing shareholders of the Company at $0.30 per share until the Company’s common stock is quoted on the OTC Bulletin Board and thereafter at prevailing market prices. The Company will not receive any proceeds from the resale of shares of common stock by the selling stockholders.
The Company’s common stock is quoted on the OTC Bulletin Board under the trading symbol “SRUI”.
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
July 31, 2009
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America applicable to interim financial information and with the rules and regulations of the United States Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed, or omitted, pursuant to such rules and regulations. In the opinion of management, the unaudited interim financial statements include all adjustments necessary for the fair presentation of the results of the interim periods presented. All adjustments are of a normal recurring nature, except as otherwise noted below. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended October 31, 2008. The results of operations for the interim periods are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.
Recent accounting pronouncements
A variety of proposal or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, the Comoany has not determined whether implementation of such proposed standards would be material to the Company’s financial statements.
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
July 31, 2009
3. OIL AND GAS PROPERTIES
a) On October 30, 2007, the Company entered into an agreement to acquire up to 50% of the vendor’s 50% interest in an oil and gas property (the “Worsley Property”) located in Alberta, Canada in consideration for a cash payment of $12,500 (paid), and payment of up to 50% of the vendor’s interest in a seismic and test well program.
b) On June 5, 2008, the Company entered into a purchase agreement to acquire 20% of an Alberta Crown PNG Lease in Alberta, Canada and 100% of the vendor’s 50% interest in the Worsley Property in consideration for a cash payment of $32,310 (CAD$32,000).
c) The Partnership was dissolved on June 15, 2008, at which time the Company’s 75% interest in the assets of the Partnership, which consist of interest in certain oil and gas properties, was transferred to its wholly owned subsidiary, Patch Oilsands Ltd.
d) On June 30, 2008, the Company abandoned the interest in the Worsley Property when the company allowed a cash call for approximately $212,000 from the operator of the property, Bounty Developments Ltd., to expire.
e) As at October 31, 2008, all the oil and gas properties are unproved and excluded from depletion calculations.
f) On April 16, 2009, the Company transferred 100% of the shares of its wholly-owned subsidiary, Patch Oilsands Ltd., to a Company with a director in common. This was in consideration of consulting services provided. (Please refer to Note 4b.)
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
July 31, 2009
4. RELATED PARTY TRANSACTIONS
a) At January 31, 2009, the Company was indebted to a director of the Company for $46,083 (October 31, 2008 - $33,562), representing expenditures paid on behalf of the Company. This amount is unsecured, non-interest bearing, due on demand and has no specific terms of repayment. As at April 30, 2009 the debt was forgiven and recorded to additional paid-in capital.
b) On April 16, 2009, the Company transferred 100% of the shares of its wholly-owned subsidiary, Patch Oilsands Ltd., to a Company with a director in common in consideration of consulting services provided. The oil and gas properties had a book value of $25,930.
c) As at July 31, 2009, the Company is indebted to a company with a director in common for $18,288, representing expenditures paid on behalf of the Company. This amount in unsecured, non-interest bearing, due on demand and has no specific terms of repayment.
5. COMMON STOCK
a) During the year ended October 31, 2007, the Company issued 7,800 shares of common stock for $780.
b) During the year ended October 31, 2007, the Company received subscriptions of $71,660 for 716,000 shares of common stock issued pursuant to a private placement at $0.10 per share.
c) During the year ended October 31, 2007, the Company received subscriptions of $450 from the President of the Company for 4,500,000 shares of common stocks pursuant to a private placement at $0.0001 per share. On March 19, 2008, the shares were issued. At October 31, 2007, $450 was included in common stock subscribed. Stock-based compensation was recorded during the year ended October 31, 2008, representing the difference between the fair value of the common shares and the consideration received.
d) On January 15, 2008, the Company issued 1,072,100 shares of common stock pursuant to a private placement at $0.10 per share for proceeds of $107,210. At October 31, 2007, the Company had included proceeds from this private placement of $71,210 in common stock subscribed.
e) On June 12, 2008, the Company received subscriptions of $6,000 for 20,000 shares of common stock pursuant to a private placement at $0.30 per share. On June 22, 2008, the shares were issued.
f) On October 23, 2008, the Company repurchased 143,500 common shares for cash consideration of $14,350, which were surrendered for cancellation pursuant to rescission agreements dated October 23, 2008.
SHENGRUI RESOURCES CO. LTD
(Formerly Double Halo Resources Inc.)
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
July 31, 2009
6. NOTE PAYABLE
On January 20, 2009, the Company signed a demand promissory note to borrow a principal amount of CND $22,500 at 5% interest per annum, compounded annually, from Fifth Avenue Diversified Inc. This note was forgiven during the quarter ended April 30, 2009 and is included in the gain on settlement of debt.
7. SUPPLEMENTAL CASH FLOW DISCLOSURE
The following non-cash transactions occurred during the nine months ended July 31, 2009:
a) The company settled payables with a former related party in the amount of $46,083. This amount was recorded as additional paid in capital.
b) The company transferred its oil and gas interests to a company with a director in common in exchange for consulting fees incurred in the total amount of $25,930. The oil and gas property had an original acquisition price of $50,030 which was subsequently written down by $25,000 for a net book value of $25,930.
8. GAIN ON SETTLEMENT OF DEBT
On the change of the control group, the Company has negotiated a settlement with some of the vendors of professional services. The amounts in the gain of $36,000 include $18,000 of professional fees and the forgiveness of the note payable of $18,000 (Note 6).
9. SUBSEQUENT EVENTS
On August 10, 2009, the Company agreed to enter into an agreement with the intent to purchase 100% of the issued and outstanding shares of Helongjiang Jiu Xin Mining Investment Co. Ltd., a private China company located in Harbin, Heilongjiang Province, China.
The agreement is subject to financing and related due diligence of a number of conditions relating to the proposed acquisition.
Forward Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.
Business Overview
Shengrui Resources Co. Ltd. (formerly known as Double Halo Resources Inc.) (“Shengrui”, “we”, “our” or “us”) was incorporated as a Nevada company on October 30, 2006. Until recently, we had been engaged in the acquisition and exploration of oil and gas properties since our inception. Currently, we are engaged in the acquisition and exploration of mining resources.
We had one wholly owned subsidiary, Patch Oilsands Ltd., a British Columbia corporation through which we acquired properties in Leismer, Alberta. This company was inactive. On April 16, 2009 we transferred 100% of the shares of Patch Oilsands Ltd. to Pacific Bridge Capital Ltd., a company with a director in common, pursuant to a consulting agreement in exchange for services rendered. Our common stock is quoted on the OTC Bulletin Board under the symbol “SRUI”.
We intend to build our business by developing business interests within the People's Republic of China. We are exploring business opportunities in the mineral and natural resource sector as well as other sectors.
Our registration statement on a Form S-1 registering an aggregate of 192,400 shares of our common stock became effective on August 29, 2008. The 192,000 shares registered for resale by the 39 selling security holders include 20,000 shares owned by 1389999 Alberta Ltd., a company controlled by Susan Shacker, our former President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and sole Director, and 20,000 shares owned by David Stadnyk, the spouse of Ms. Shacker. We will not receive any proceeds from the resale of these shares by the selling security holders. We incurred all costs associated with the registration statement.
Uncertainties
We are a development stage company that has only recently begun operations. We have not generated any revenues from our business activities, and we do not expect to generate revenues for the foreseeable future. Since our inception, we have incurred operational losses, and we have been issued a going concern opinion by our auditors. To finance our operations, we have completed several rounds of financing and raised $100,090 through private placements of our common stock.
We do not currently have sufficient financing to fully execute our business plan and there is no assurance that we will be able to obtain the necessary financing to do so. Accordingly, there is uncertainty about our ability to continue to operate.
Results of Operations
Our results of operations are presented below:
| | | Period from inception at October 31, 2006 to | | | For the three months ended | | | For the three months ended | | | For the nine months ended | | | For the nine months ended | |
| | | July 31, 2009 | | | July 31, 2009 | | | July 31, 2008 | | | July 31, 2009 | | | July 31, 2008 | |
| | | | | | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | | | | |
| General and administrative expenses | | $ | 3,720 | | | $ | - | | | $ | 77 | | | $ | 2,591 | | | $ | 240 | |
| Management fees | | | 13,500 | | | | - | | | | 1,500 | | | | 1,500 | | | | 4,500 | |
| Rent | | | 13,500 | | | | - | | | | 1,500 | | | | 1,500 | | | | 4,500 | |
| Stock-based compensation | | | 449,550 | | | | - | | | | - | | | | - | | | | - | |
| Professional fees | | | 176,659 | | | | 38,474 | | | | 12,443 | | | | 64,505 | | | | 65,881 | |
| Bank charges and interest | | | 647 | | | | - | | | | - | | | | 648 | | | | - | |
| Write-off of exploration advances | | | 20,000 | | | | - | | | | - | | | | 20,000 | | | | - | |
| Write-off of exploration costs | | | 25,000 | | | | - | | | | 25,000 | | | | - | | | | 25,000 | |
| | | | 702,576 | | | | 38,474 | | | | 40,520 | | | | 90,744 | | | | 100,121 | |
| Net income (loss) from operating activities | | | (702,576 | ) | | | (38,474 | ) | | | (40,520 | ) | | | (90,744 | ) | | | (100,121 | ) |
| Gain on settlement of debt | | | 36,000 | | | | - | | | | - | | | | 36,001 | | | | - | |
| Foreign currency gain (loss) | | | (4,302 | ) | | | - | | | | (71 | ) | | | (282 | ) | | | 1,029 | |
| Net income (loss) for the period | | $ | (670,878 | ) | | $ | (38,474 | ) | | $ | (40,591 | ) | | $ | (55,025 | ) | | $ | (99,092 | ) |
Results of Operations for the Three Months Ended July 31, 2009
For the three month period ended July 31, 2009 we incurred a net loss of $38,474, compared to a net loss of $40,591 for the same period in fiscal 2008. We did not experience any net loss per share for the three month period ended July 31, 2009, but our net loss per share was $0.21 for the same period in fiscal 2008.
Our total operating expenses for the three month period ended July 31, 2009 were $38,474, compared to total operating expenses of $40,520 for the same period in fiscal 2008, for a net decrease of 5%. Our general and administrative expenses consist primarily of transfer agent fees, investor relations expenses and general office expenses. Our professional fees include legal, accounting and auditing fees.
Results of Operations for the Period from October 30, 2006 (Date of Inception) to July 31, 2009
From our inception on October 30, 2006 to July 31, 2009 we did not generate any revenues and we incurred an accumulated deficit of $670,878. We may not generate revenues even if our exploration activities indicate that quantities of minerals exist on the properties in which we have an interest. We anticipate that we will incur substantial losses for the foreseeable future.
We wrote off $25,000 in oil and gas exploration costs because we allowed our interest in a property located in Worsley, Alberta to expire. We wrote off an additional $20,000 in exploration advances as we determined that it was not feasible to continue exploring and developing the oil and gas properties in which we held an interest.
Liquidity and Capital Resources
As of July 31, 2009 we had $319 in cash and cash equivalents.
Our working capital deficit is $48,155. Our accumulated deficit from our inception on October 30, 2006 to July 31, 2009 was $670,878 and was funded primarily through equity financing.
We are dependent on the funds raised through equity financing. Our net loss of $670,878 from our inception on October 30, 2006 to July 31, 2009 was funded primarily through equity financing.
We estimate our planned expenses for the next 12 months to be approximately $369,000, as summarized in the table below.
| Description | Estimated Completion Date | Estimated Costs |
| | | |
| Develop a website | December 31, 2009 | $ 5,000 |
| Develop business interests in China | December 31, 2009 | 220,000 |
| Professional fees | 12 months | 100,000 |
| Marketing expenses | 12 months | 30,000 |
| General and administrative expenses | 12 months | 14,000 |
| Total | | $ 369,000 |
Our general and administrative expenses for the year will consist primarily of transfer agent fees, investor relations expenses and general office expenses. The professional fees are related to our regulatory filings throughout the year.
Based on our planned expenditures, we will require additional funds of approximately $368,681 (a total of $369,000 less our $319 in cash as of July 31, 2009) to proceed with our business plan over the next 12 months. If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.
We anticipate that we will incur substantial losses for the foreseeable future. On August 10, 2009, we initiated a proposal to acquire 100% of the issued and outstanding shares of Helongjiang Jiu Xin Mining Investment Co. Ltd., a private mining company located in Harbin, Heilongjiang Province.
Our activities in China will be directed by Jianshu Tang, our President, and Haifeng Wong, our Secretary, both of whom are residents of the People’s Republic of China.
Our activities in North America will be directed by Arthur Skagen, our Chief Executive Officer, and Donald Fairholm, our Chief Financial Officer. Mr. Skagen and Mr. Fairholm will also manage our operations and supervise our other planned acquisition and exploration activities.
Future Financings
Our financial statements for the period ended July 31, 2009 have been prepared on a going concern basis and contain an additional explanatory paragraph in Note 1 which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of securities to fund our operations. We may not generate any revenues even if we complete the acquisition of 100% of the issued and outstanding shares of Helongjiang Jiu Xin Mining Investment Co. Ltd. Accordingly, we are dependent on future additional financing in order to maintain our operations and continue our proposed activities.
Of the $369,000 we require for the next 12 months, we had approximately $319 in cash as of July 31, 2009. We intend to raise the balance of our cash requirements for the next 12 months (approximately $368,681) from private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough funds through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing, and there is no guarantee that any financing will be available to us or if available, on terms that will be acceptable to us.
If we are unable to obtain the necessary additional financing, then we plan to reduce the amounts that we spend on acquisition and exploration activities as well as our administrative expenses so as not to exceed the amount of capital resources that are available to us.
Product Research and Development
We do not anticipate spending any material amounts in connection with research and development activities during the next 12 months.
Acquisition of Plant and Equipment and Other Assets
We do not anticipate selling or acquiring any material plants or equipment during the next 12 months. However, any acquisitions we may be able to make are subject to us obtaining additional financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Audit Committee
The functions of the audit committee are currently carried out by our Board of Directors, who has determined that we do not have an audit committee financial expert on our Board of Directors to carry out the duties of the audit committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert on the audit committee.
Not applicable.
Disclosure Controls
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) designed to provide reasonable assurance the information required to be reported in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to Securities and Exchange Commission rules and forms, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Principal Executive Officer and our Principal Financial Officer concluded that our disclosure controls and procedures were (1) designed to ensure that material information relating to our Company is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, in a timely manner, particularly during the period in which this report was being prepared, and (2) effective, in that they provide reasonable assurance that information we are required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Changes in Internal Control
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the quarterly period ended July 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Not applicable.
Item 1. Legal Proceedings
We are not aware of any legal proceedings to which we are a party. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
| Exhibit Number | Exhibit Description |
| 31.1 | |
| 31.2 | |
| 32.1 | |
| 32.2 | |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | Shengrui Resources Co. Ltd. |
| | (Registrant) |
| | |
| Date: September 14, 2009 | /s/ Arthur Skagen |
| | Arthur Skagen |
| | Chief Executive Officer, Director |
11
