UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10–Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
or
[ ] 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: 333-174155
Clear System Recycling, Inc. | ||
(Exact name of registrant as specified in its charter) | ||
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Nevada |
| 27-4673791 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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9 Scheel Drive, Markham, Ontario, L6E 0M2 | ||
(Address of principal executive offices) | ||
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(416) 800 6679 | ||
(Registrant’s telephone number, including area code) | ||
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4915 Portalis Way, Anacortes, WA 98221 | ||
(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 required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No []
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] 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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer [ ] |
| Accelerated filer [ ] |
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Non-accelerated filer [ ] |
| Smaller reporting company [X] |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]
As of May 7, 2012, there were 2,940,000 shares of the issuer’s common stock, par value $0.001, outstanding.
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
CLEAR SYSTEM RECYCLING, INC.
(A Development Stage Company)
INDEX TO CONDENSED INTERIM UNAUDITED FINANCIAL STATEMENTS
From Inception on January 24, 2011 through March 31, 2012
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Condensed Balance Sheets – March 31, 2012 and December 31, 2011 | 3 |
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Condensed Statements of Operations for the Three Months Ended March 31, 2012, From Inception on January 24, 2011 to March 31, 2011, and Cumulative From Inception on January 24, 2011 through March 31, 2012 | 4 |
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Condensed Statements of Cash Flows for the Three Months Ended March 31, 2012, From Inception on January 24, 2011 to March 31, 2011, and Cumulative From Inception on January 24, 2011 through March 31, 2012 | 5 |
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Notes to the Condensed Interim Financial Statements | 6 |
_______________________________________
CLEAR SYSTEM RECYCLING, INC. (A Development Stage Company) Condensed Balance Sheets |
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| March 31, 2012 |
| December 31, 2011 |
ASSETS |
| (Unaudited) |
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Current Assets |
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Cash and cash equivalents | $ | 55 | $ | 19,642 |
Prepaid fees |
| - |
| 1,500 |
Total Current Assets |
| 55 |
| 21,142 |
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TOTAL ASSETS | $ | 55 | $ | 21,142 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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LIABILITIES |
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Current Liabilities |
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Accounts payable and accrued liabilities | $ | 6,959 | $ | 200 |
Total Current Liabilities |
| 6,959 |
| 200 |
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TOTAL LIABILITIES |
| 6,959 |
| 200 |
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STOCKHOLDERS’ EQUITY (DEFICIT) |
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Preferred stock, par value $0.001, 15,000,000 shares authorized, none issued and outstanding |
| - |
| - |
Common Stock, par value $0.001, 100,000,000 shares authorized, 2,940,000 shares issued and outstanding, respectively |
| 2,940 |
| 2,940 |
Additional paid-in capital |
| 54,060 |
| 54,060 |
Deficit accumulated during the development stage |
| (63,904) |
| (36,058) |
Total Stockholders’ Equity (Deficit) |
| (6,904) |
| 20,942 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 55 | $ | 21,142 |
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The accompanying condensed notes are an integral part of these unaudited financial statements.
CLEAR SYSTEM RECYCLING, INC. (A Development Stage Company) Condensed Statements of Operations (Unaudited) |
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| Three Months Ended March 31, |
| From Inception on January 24, 2011 to March 31, |
| Cumulative From Inception on January 24, 2011 to March 31, |
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| 2012 |
| 2011 |
| 2012 |
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REVENUES: | $ | - | $ | - | $ | - |
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OPERATING EXPENSES: |
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General and administrative |
| 8,497 |
| 730 |
| 13,387 |
Professional fees |
| 19,349 |
| 3,093 |
| 50,517 |
Total Operating Expenses |
| 27,846 |
| 3,823 |
| 63,904 |
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OTHER INCOME AND EXPENSE |
| - |
| - |
| - |
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Net Loss | $ | (27,846) | $ | (3,823) | $ | (63,904) |
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Basic and Diluted Loss per Common Share | $ | (0.01) | $ | (0.00) |
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Basic and Diluted Weighted Average Number of Common Shares Outstanding |
| 2,940,000 |
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2,071,875 |
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The accompanying condensed notes are an integral part of these unaudited financial statements.
CLEAR SYSTEM RECYCLING, INC. (A Development Stage Company) Condensed Statements of Cash Flows (Unaudited) |
| Three Months Ended March 31, |
| From Inception on January 24, 2011 to March 31, |
| Cumulative From Inception on January 24, 2011 to March 31, | |||
| 2012 |
| 2011 |
| 2012 | |||
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss | $ | (27,846) |
| $ | (3,823) |
| $ | (63,904) |
Adjustment to reconcile net loss to net cash used in operating activities: |
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Prepaid expenses |
| 1,500 |
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| (2,233) |
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| - |
Accounts payable and accrued expenses |
| 6,759 |
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| - |
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| 6,959 |
Net cash used in operating activities |
| (19,587) |
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| (6,056) |
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| (56,945) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Net cash provided by (used in) investing activities |
| - |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Issuance of common stock for cash |
| - |
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| 19,000 |
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| 57,000 |
Net cash provided by financing activities |
| - |
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| 19,000 |
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| 57,000 |
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Net increase (decrease) in cash and cash equivalents |
| (19,587) |
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| 12,944 |
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| 55 |
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Cash and cash equivalents - beginning of period |
| 19,642 |
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| - |
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Cash and cash equivalents - end of period | $ | 55 |
| $ | 12,944 |
| $ | 55 |
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Supplemental Cash Flow Disclosure: |
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Cash paid for interest | $ | - |
| $ | - |
| $ | - |
Cash paid for income taxes | $ | - |
| $ | - |
| $ | - |
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The accompanying condensed notes are an integral part of these audited financial statements.
CLEAR SYSTEM RECYCLING, INC.
(A Development Stage Company)
Notes to Condensed Interim Financial Statements
March 31, 2012
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2012, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2011 audited financial statements. The results of operations for the periods ended March 31, 2012 and 2011 are not necessarily indicative of the operating results for the full years.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The Company is considered to be in the development stage as defined in Accounting Standards Codification (ASC) 915 “Development Stage Entities.” The Company is devoting substantially all of its efforts to development of business plans.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $55 and $19,642 in cash and cash equivalents at March 31, 2012 and December 31, 2011, respectively.
Fair value of financial instruments
The carrying amounts reported in the balance sheet for accounts payable approximate fair value because of their immediate or short term maturity.
Start-Up Costs
In accordance with ASC 720, “Start-up Activities”, the Company expenses all costs incurred in connection with the start-up and organization of the Company.
Net Income or (Loss) Per Share of Common Stock
The Company has adopted ASC 260,“Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
The following table sets forth the computation of basic and diluted earnings per share, for the periods specified:
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| Three Months Ended March 31, |
| From Inception on January 24, 2011 to March 31, |
| 2012 |
| 2011 | |
Net loss | $ | (27,846) | $ | (3,823) |
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Weighted average common shares |
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outstanding (Basic) |
| 2,940,000 |
| 2,071,875 |
Weighted average common shares |
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outstanding (Diluted) |
| 2,940,000 |
| 2,071,875 |
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Net loss per share (Basic and Diluted) | $ | (0.01) | $ | (0.00) |
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Revenue Recognition
The Company recognizes revenue from the sale of services in accordance with ASC 605,“Revenue Recognition.” Revenue will consist of consulting and professional fees and will be recognized only when all of the following criteria have been met:
i) Persuasive evidence for an agreement exists;
ii) Service has been provided;
iii) The fee is fixed or determinable; and
iv) Revenue is reasonably assured.
Recent Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future consolidated financial statements.
NOTE 3 - CAPITAL STOCK
Authorized Stock
The Company has authorized 100,000,000 common shares and 15,000,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
Share Issuance
Since inception (January 24, 2011) to March 31, 2012, the Company has issued 2,000,000 common shares at $0.005 per share for $10,000 in cash, and 940,000 common shares at $0.05 per share for $47,000 in cash, for total cash proceeds of $57,000, being $2,940 for par value shares and $54,060 for capital in excess of par value. There were 2,940,000 common shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively. Of these shares, 2,000,000 were issued to a director and officer of the Company.
There are no preferred shares outstanding. The Company has issued no authorized preferred shares. The Company has no stock option plan, warrants or other dilutive securities.
NOTE 4 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As at March 31, 2012, the Company has a loss from operations of $27,846 an accumulated deficit of $63,904 and has earned no revenues since inception. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2012.
The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In
response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 5 - SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and determined that there are no material subsequent events to report.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business – Risk Factors” section in our Prospectus on Form 424B2, as filed on July 13, 2011. You should carefully review the risks described in our Prospectus and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Clear System,” “we,” “us,” or “our” are to Clear System Recycling, Inc.
Results of Operations
We have not commenced operations and have generated no revenues to date.
We incurred operating expenses of $27,846 for the three months ended March 31, 2012. These expenses consisted of general operating expenses for preparation of our website.
Our net loss from inception (January 24, 2011) through March 31, 2012 was $63,904.
Cash provided by financing activities for the period from inception (January 24, 2011) through March 31, 2012, was $57,000
Since inception (January 24, 2011) to March 31, 2012, the Company has issued 2,000,000 common shares at $0.005 per share for $10,000 in cash, and 940,000 common shares at $0.05 per share for $47,000 in cash, for total cash proceeds of $57,000, being $2,940 for par value shares and $54,060 for capital in excess of par value. There were 2,940,000 common shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively. Of these shares, 2,000,000 were issued to a director and officer of the Company.
Liquidity and Capital Resources
The report of our auditors on our audited financialstatements for the period ended March 31, 2011, contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have not achieved operating revenues since our inception. We have depended on sales of equity securities to conduct operations.
Our cash balance at March 31, 2012, was $55. In order to achieve our business plan goals, we raised $33,000 from the sale of 660,000 registered shares pursuant to our S-1 Registration Statement filed with the SEC under file number 333-174155 which became effective on July 12, 2011.
We do not have sufficient funds to implement our business plan and will seek alternative sources of funds and business opportunities.
Plan of Operation
CSR is a development stage company that has limited operations, no revenue and limited assets. Our plan was to develop a hospital-based business offering waste divergence programs and strategies to help hospitals better recycle. The Company intended to play an educational role bringing hospital administrators, staff, and recycling professionals together to formulate workable conservation solutions. Professional fees and retainers were to be charged for our services, and incentives attached to performance. A specific referral program is planned, whereby whenever a partner hospital successfully refers our services to another, financial as well as value-added incentives were to be returned to the partner hospital.
We do not have sufficient funds to proceed with the implementation of our business plan, and have been unable to raise additional funds.
We intend to pursue other business opportunities and alternative sources of funding.
As described in our report on Form 8-K filed with the SEC on March 26, 2012 (File No. 333-174155), Item 5.01 “Changes in Control of Registrant”, our current officers and directors, Mr. Brian Pollard and Ms. Cheryl Nesler resigned and Ms. Min Zou was elected to serve as the sole officer and director. At the same time, Min Zou acquired 2,000,000 shares of our common stock (64% of the outstanding) from Brian Pollard and Cheryl Nesler. Min Zou has more than ten years experience in corporate finance, securities and consulting public listing services.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Our Disclosure Controls
Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, Min Zou, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2012, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We did not issue unregistered equity securities during the quarter ended March 31, 2012.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are included as part of this report:
Exhibit No. Description
31.1 / 31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial Officer
32.1 / 32.2 Rule 1350 Certification of Principal Executive and Financial Officer
101.INS* XBRL Instance
101.SCH* XBRL Taxonomy Extension Schema
101.CAL* XBRL Taxonomy Extension Calculations
101.DEF* XBRL Taxonomy Extension Definitions
101.LAB* XBRL Taxonomy Extension Labels
102.PRE* XBRL Taxonomy Extension Presentation
* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CLEAR SYSTEM RECYCLING, INC.
Dated: May 8, 2012 By:/s/ Min Zou
Min Zou
President, Principal Executive and Financial Officer