Astro Aerospace Ltd. - Quarter Report: 2008 September (Form 10-Q)
U.S. SECURITIES AND EXCHANGE COMMISSION |
Mark One
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2008
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File No. 333-149000
Onyx China, Inc. | |
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Nevada | 98-0557091 |
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Kvartal 60, dom 23 apt. 18 Angarsk, Russia 665830 | |
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7-904-125-4225 | |
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Securities registered pursuant to Section | Name of each exchange on which |
None |
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Securities registered pursuant to Section 12(g) of the Act: | |
Common Stock, $0.001 |
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(Title of Class) |
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Indicate by checkmark whether the issuer: (1) has 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 past 90 days.
Yes [X ] No[ ]
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Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ]
Smaller reporting company [X]
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.
N/A
Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]
Applicable Only to Corporate Registrants
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
Class | Outstanding as of September 30, 2008 |
Common Stock, $0.001 | 5,050,000 |
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ONYX CHINA, INC.
Form 10-Q
Part 1 | FINANCIAL INFORMATION |
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Item 1 | 3 | |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 |
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Item 3. | 17 | |
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Item 4. | 17 | |
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Part II. | OTHER INFORMATION |
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Item 1 | 18 | |
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Item 2. | 18 | |
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Item 3 | 18 | |
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Item 4 | 18 | |
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Item 5 | 18 | |
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Item 6 | 19 | |
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PART I
ITEM 1. FINANCIAL STATEMENTS
ONYX CHINA INC
FINANCIAL STATEMENTS
September 30, 2008
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The accompanying notes are an integral part of these financial statements. | |||||
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ONYX CHINA INC (A Development Stage Company) Statement of Stockholders’ Equity From Inception on March 27, 2007 to September 30, 2008 (Unaudited) | |||||||||
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| Number of Common Shares | Amount | Additional Paid-in- Capital |
| Deficit accumulated During development stage | Total Stockholders’ Equity | ||
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April 20, 2007 |
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Common shares issued for cash at $0.002 |
| 3,000,000 | $ 3,000 | $ 3,000 |
| $ - | $ 6,000 | ||
May 8, 2007 |
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Common shares issued for cash at $0.002 |
| 800,000 | 800 | 800 |
| - | 1,600 | ||
May 16, 2007 |
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Common shares issued for cash at $0.02 |
| 1,250,000 | 1,250 | 23,750 |
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| 25,000 | ||
Net (loss) |
| - | - | - |
| (1,933) | (1,933) | ||
Balance as of December 31, 2007 | 5,050,000 | 5,050 | 27,550 | (1,933) | 30,667 | ||||
Net (Loss) | - | - | - |
| (21,062) | (21,062) | |||
Balance as of September 30, 2008 | 5,050,000 | $ 5,050 | $ 27,550 |
| $ (22,995) | $ 9,605 | |||
The accompanying notes are an integral part of these financial statements.
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The accompanying notes are an integral part of these financial statements.
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ONYX CHINA INC
(A Development Stage Company)
Notes To The Financial Statements
September 30, 2008
(Unaudited)
1. ORGANIZATION AND BUSINESS OPERATIONS
ONYX CHINA INC (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on March 27, 2007. The Company is in the development stage as defined under Statement on Financial Accounting Standards No. 7, Development Stage Enterprises (“SFAS No.7”) and its efforts are primarily devoted marketing and distributing chinaware to North American market. The Company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception, March 27, 2007 through September 30, 2008 the Company has accumulated losses of $22,995.
INTERIM FINANCIAL STATEMENTS
The unaudited financial statements as of September 30, 2008 and for the nine months ended September 30, 2008 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-QSB. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2008 and the results of operations and cash flows for the nine months ended September 30, 2008.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the period March 27, 2007 (inception) December 31, 2007 as included in our registration statement on Form SB-2 filed on February 1, 2008.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a)Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
b) Going Concern
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $22,995 as of September 30, 2008 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock.
c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
d) Use of Estimates and Assumptions
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.
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ONYX CHINA INC
(A Development Stage Company)
Notes To The Financial Statements
September 30, 2008
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e) Foreign Currency Translation
The Company's functional currency and its reporting currency is the United States dollar.
f) Financial Instruments
The carrying value of the Company's financial instruments approximates their fair value because of the short maturity of these instruments.
g) Stock-based Compensation
Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R). To date, the Company has not adopted a stock option plan and has not granted any stock options.
h) 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 carry forwards. 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.
i) Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with SFAS No. 128,"Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement.
Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
j) Fiscal Periods
The Company's fiscal year end is December 31.
k) Recent Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those
years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how
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ONYX CHINA INC
(A Development Stage Company)
Notes To The Financial Statements
September 30, 2008
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for “plain vanilla” share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business Combinations.’This Statement replaces FASB Statement No. 141, Business Combinations, but retains the fundamental requirements in Statement 141. This Statement establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The effective date of this statement is the same as that of the related FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The Company will adopt this statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
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ONYX CHINA INC
(A Development Stage Company)
Notes To The Financial Statements
September 30, 2008
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities—Including an Amendment of FASB Statement No. 115. This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities. Most of the provisions in FAS 159 are elective; however, an amendment to FAS 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available for sale or trading securities. Some requirements apply differently to entities that do not report net income. SFAS No. 159 is effective as of the beginning of an entities first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS No. 159 beginning March 1, 2008 and is currently evaluating the potential impact the adoption of this pronouncement will have on its consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this statement does not require any new fair value measurements. However, for some entities, the application of this statement will change current practice. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company will adopt this statement March 1, 2008, and it is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
3. COMMON STOCK
The authorized capital of the Company is 75,000,000 common shares with a par value of $ 0.001 per share.
In April 2007, the Company issued 3,000,000 shares of common stock at a price of $0.002 per share for total cash proceeds of $6,000.
In May 2007, the Company issued 800,000 shares of common stock at a price of $0.002 per share for total cash proceeds of $1,600.
In May 2007, the Company also issued 1,250,000 shares of common stock at a price of $0.02 per share for total cash proceeds of $25,000.
During the period March 27, 2007 (inception) to December 31, 2007, the Company sold a total of 5,050,000 shares of common stock for total cash proceeds of $32,600.
4. INCOME TAXES
As of September 30, 2008, the Company had net operating loss carry forwards of approximately $22,995 that may be available to reduce future years’ taxable income through 2028. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
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ONYX CHINA INC
(A Development Stage Company)
Notes To The Financial Statements
September 30, 2008
(Unaudited)
5. CONTRACT
On November 15, 2007 the Company made a contract with PC “Dulevo Porcelain” (Contract # 174) to purchase chinaware products directly from manufacturer and market and distribute the products in North America.
6. REGISTRATION STATEMENT
On February 1, 2008, the Company filed a registration statement on Form SB-2 with the Securities and Exchange Commission (the "SEC") . On February 27, 2008, the registration statement was declared effective by the SEC.
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FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
Onyx China, Inc. is a corporation organized under the laws of the State of Nevada. Our registration statement has been filed with the Securities and Exchange Commission and has been declared effective on February 27, 2008. We have filed a 15c2-11 with the Financial Industry Regulatory Authority (“FINRA”) and were approved to commence trading on the Over-the-Counter Bulletin Board on March 31, 2008.
Our shares of common stock trade on the Over-the-Counter Bulletin Board under the symbol “OYXC:OB”.
Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "Onyx China," refers to Onyx China, Inc.
CURRENT BUSINESS OPERATIONS
As of the date of this Quarterly Report, we have not started operations. We intend to market and distribute in the North American market a comprehensive assortment of Russian porcelain produced by Dulevsky Farfor Company. We are in the process of developing a website that will offer the Russian porcelain to distributors who will be responsible for marketing and selling the Russian porcelain to chinaware and giftware stores and retail outlets. Our website will also offer our product directly to retail stores and to the general public. The operations we have engaged in to date are the creation of our website, the development of a business plan and the execution of an agreement with our supplier.
Our sole supplier, PC Dulevo Porcelain (“Dulevo”) is a manufacturer and distributor of certain high-quality porcelain in Russia and other countries. On November 15, 2007 we entered into a distribution agreement with Dulevo (the “Distribution Agreement”). In accordance with the terms and provisions of the Distribution Agreement, Dulevo has agreed to manufacture and supply many
types of porcelain products to us according to its current prices. The Distribution Agreement was authenticated by the East-Siberian Chamber of Commerce and Industry on December 27, 2007.
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RESULTS OF OPERATION
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Nine Month Period Ended September 30, 2008 Compared to the period from Inception (March 27, 2007) to September 30, 2008
Our net loss for the nine-month period ended September 30, 2008 was approximately ($21,062) compared to a net loss of ($22,995) during the period from inception (March 27, 2007) to September 30, 2008. During the nine-month period ended September 30, 2008, we did not generate any revenue.
During the nine-month period ended September 30, 2008, we incurred general and administrative expenses of approximately $21,062 compared to $22,995 incurred during the period from inception (March 27, 2007) to September 30, 2008. General and administrative expenses incurred during the nine-month period ended September 30, 2008 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses.
Our net loss during the nine-month period ended September 30, 2008 was ($21,062) or ($0.00) per share compared to a net loss of ($22,995) or ($0.00) per share during the period from inception (March 27, 2007) to September 30, 2008. The weighted average number of shares outstanding was 5,050,000 for the nine-month period ended September 30, 2008.
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LIQUIDITY AND CAPITAL RESOURCES
Nine-Month Period Ended September 30, 2008
As at the nine-month period ended September 30, 2008, our current assets were $9,605 and our current liabilities were $-0-, which resulted in a working capital surplus of $9,605. As at the nine-month period ended September 30, 2008, current assets were comprised of $9,605 in cash compared to $30,667 in current assets at fiscal year ended December 31, 2007.
Stockholders’ equity decreased from $30,667 for fiscal year ended December 31, 2007 to $9,605 for the nine-month period ended September 30, 2008.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the nine-month period ended September 30, 2008, net cash flows used in operating activities was ($21,062) consisting
primarily of a net loss of ($21,062). Net cash flows used in operating activities was ($22,995) for the period from inception (March 27, 2007) to September 30, 2008.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the nine-month period ended September 30, 2008, we did not generate net cash from financing activities. For the period from inception (March 27, 2007) to September 30, 2008, net cash provided by financing activities was $32,600 received from sale of common stock.
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
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PLAN OF OPERATION AND FUNDING
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
On February 1, 2008, we filed a registration statement on Form SB-2 with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “1933 Securities Act”), relating to the public offering of 2,050,000 shares of our common stock by certain selling shareholders (the “Selling Shareholders”) named in the Registration Statement. The Selling Shareholders will sell our shares of common stock at $0.02 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will not receive any proceeds from the sale of these shares of common stock.
MATERIAL COMMITMENTS
As of the date of this Quarterly Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our December 31, 2007 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.
Exchange Rate
Our reporting currency is United States Dollars (“USD”). The Russian Ruble has been informally pegged to the USD. However, Russia is under international pressure to adopt a more flexible exchange rate system. If the Russian Ruble was no longer pegged to the USD, rate fluctuations may have a material impact on our financial reporting and make realistic revenue projections difficult. Recently the Russian Ruble has risen 12%. This may or may not have any appreciable effect on our future operations
The fluctuation of exchange rates of the Ruble may have positive or negative impacts on our results of operations. However, since all sales revenue and expenses of our company will primarily denominated in U.S. Dollar, the net income effect of appreciation and devaluation of the currency against the US Dollar will be limited to our costs of acquisition of inventory.
Interest Rate
Interest rates in Russia are not generally controlled. Any future loans will relate mainly to trade payables and will be mainly short-term. However our debt may be likely to rise in connection with expansion and if interest rates were to rise at the same time, this could become a significant impact on our operating and financing activities. We have not entered into derivative contracts either to hedge existing risks of for speculative purposes.
ITEM IV. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2008. Based on that evaluation, our management concluded that our disclosure
controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the nine-month period ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
Effective August 14, 2008, Ms. Eleonora Magerramova replaces Mr. Dmitry Lyakutin as corporate secretary, who has resigned in that capacity but remains a director of the Company.
Eleonora Magerramova graduated with a Bachelor Degree in Japanese language from Irkutsk State Foreign Language University in June 2006. Since that time, Ms. Magerramova has been self-employed as sole proprietor and involved in wholesale trade.
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ITEM 6. EXHIBITS
Exhibits:
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-
14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-
14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d- 14(b) and
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ONYX CHINA, INC.
Dated: November 11, 2008
By: /s/ Dmitry Lyakutin
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Dmitry Lyakutin, President and
Chief Executive Officer
Dated: November 11, 2008
By: /s/ Dmitry Lyakutin
-----------------------------------------------
Dmitry Lyakutin, Chief Financial
Officer
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