Changsheng International Group Ltd - Quarter Report: 2013 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Global Karaoke Network, Inc.

(Exact name of registrant as specified in its charter)

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 [X] Yes [ ] 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 [X] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X ] Yes [ ] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 469,440,000 as of May 20, 2013.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our financial statements included in this Form 10-Q are as follows:

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2013 are not necessarily indicative of the results that can be expected for the full year.

GLOBAL KARAOKE NETWORK, INC.

(A Development Stage Company)

Balance Sheets

The accompanying notes are an integral part of these financial statements.

GLOBAL KARAOKE NETWORK, INC.

(A Development Stage Company)

Statements of Operations (unaudited)

The accompanying notes are an integral part of these financial statements.

GLOBAL KARAOKE NETWORK, INC.

(A Development Stage Company)

Statements of Cash Flows (unaudited)

The accompanying notes are an integral part of these financial statements.

GLOBAL KARAOKE NETWORK, INC.

(A Development Stage Company)

Notes to the Financial Statements

March 31, 2013

(unaudited)

NOTE 1 – THE COMPANY

Nature of Business

Global Karaoke Network, Inc. (the “Company”) was incorporated as MojoRepublik, Inc. in the state of Delaware on September 10, 2007. On October 1, 2008, the Company changed its name to Republik Media and Entertainment, Ltd. The Company conducted business through its two wholly-owned subsidiaries, MojoRepublik, LLC and LiveBrew.com, LLC. MojoRepublik, LLC, a wholly-owned subsidiary of the Company, was organized on June 14, 2007 in the State of Nevada. MojoRepublik, LLC was in the business of developing and promoting a website, www.mojorepublik.com. LiveBrew.com, LLC, a wholly-owned subsidiary of the Company, was organized on May 23, 2008 in the State of Nevada. LiveBrew.com, LLC was in the business of organizing and promoting live events.

 As reported in the Form 8-K filed on August 4, 2011, effective August 3, 2011, and upon the prior approval of the Company’s board of directors and a majority of its shareholders, the Company’s corporate name was changed to “Global Karaoke Network, Inc.” Contemporaneously with the name change, the Company decided to stop pursuing its former business plans. 

On September 26, 2011, the Company agreed to transfer all membership units owned in its two wholly-owned subsidiaries to a former officer of the Company who is also the Company’s former majority stockholder in exchange for the assumption of all liabilities relating to the subsidiaries and for the cancellation of outstanding promissory notes.

On November 17, 2011, the Company’s majority shareholder sold all of his shares in the Company to an individual who now holds 82.82% of the Company’s total issued and outstanding stock.

On May 21, 2012, the Company entered into a license and revenue sharing agreement for an exclusive worldwide license to access, use, market and promote the Internet website MeAndMic.com as further discussed in Note 8.

NOTE 2 – BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments (which include only normal recurring adjustments) and disclosures necessary to present fairly the Company’s financial position, results of operations, and cash flows at March 31, 2013 and for all periods presented herein.

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. These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2012, filed on December 31, 2012. The results of operations for the period ended March 31, 2013 is not necessarily indicative of the operating results for the full year.

The Company is currently in the development stage and has not realized significant sales through March 31, 2013. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.

NOTE 3 - GOING CONCERN

The Company's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. Additionally, management is unsure at this time if it is going to continue to develop the MeandMic.com website. If management determines that it is not in the Company’s best interest to continue developing the website, the Company’s business plan may change. The Company has incurred operating losses since inception. The Company has realized net losses from inception totaling $517,575 and has a working capital deficiency of $133,080. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – INTANGIBLE ASSET

The Company’s intangible asset is comprised of the following on March 31, 2013 and June 30, 2012:

Amortization expense for the nine months ended March 31, 2013 and 2012 was $340 and $0, respectively.  The Company’s future estimated amortization for the above intangible assets is as follows: 

NOTE 5 – DISCONTINUED OPERATIONS

On September 26, 2011, the Company agreed to transfer all membership units owned in its two wholly-owned subsidiaries, MojoRepublik, LLC and LiveBrew.com, LLC, to a former officer of the Company who is also the Company’s former majority stockholder, in consideration for the cancellation of all outstanding promissory notes held by the former officer and the assumption of other liabilities related to the subsidiaries. The former officer agreed to cancel and/or assume a total of $364,721 which included accounts payable, accrued interest and notes payable. The former officer also received fixed assets which had no carrying value on the date of sale as well as the bank account of one subsidiary with cash of $364. The Company did not recognize a gain on the transaction and recognized the net book deficiency of the subsidiaries sold as an increase in the Company’s additional paid-in-capital of $364,357.

In accordance with ASC 205, “Presentation of Financial Statements”, all results of operations related to the subsidiaries have been reclassified to loss from discontinued operations. Historical operations of the two subsidiaries have also been retroactively reclassified to loss from discontinued operations to be presented separately from results of operations from continuing operations. The statements of cash flows have been retroactively reclassified to separate cash flow activity into cash flows from continuing operations and cash flows from discontinued operations.

Loss from discontinued operations consisted of the following for the nine months ended March 31, 2013 and 2012 and the period from inception through March 31, 2013:

NOTE 6 – RELATED PARTY TRANSACTIONS

Various expenses of the Company as well as loans for operating purposes have been paid for or made by the Company’s sole officer and director. Loan payable – related party total $73,800 and $25,000 as of March 31, 2013 and June 30, 2012, respectively. The amounts do not bear interest, are due on demand, and are unsecured.

Effective July 12, 2011, office space is provided by the Company’s sole officer and director. No rent is charged for the use of the space.

NOTE 7 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has designated 10,000,000 shares of the Company’s authorized capital stock as preferred stock with the board of directors authorized to fix the number of shares of any series of preferred stock and to determine the designation of any such series, including the authority to determine the designation of any such series, including the authority to determine the rights, preferences, privileges and restrictions on any such series of preferred stock.

Common Stock

On May 21, 2012, the Company entered into a license and revenue sharing agreement whereby it agreed to issue 91,200,000 shares of common stock for (see Note 8). The shares were valued at $2,268 based on the estimated fair market value of the shares on the date of issuance. As of the date of issuance of these financial statements, the shares have not been issued and have been classified as common stock to be issued on the balance sheet.

NOTE 8 – SIGNIFICANT AGREEMENTS

On May 21, 2012, the Company entered into a license and revenue sharing agreement for an exclusive world-wide license to access, use, market and promote the Internet website MeAndMic.com (the “Website”). In consideration for this license the Company will issue 91,200,000 shares of common stock. The license was valued at $2,268 per share based on the estimated fair market value of the shares on the date of issuance.

Pursuant to the terms of the Agreement:

- During the term of the agreement, the Company agrees to use its best efforts to market and promote the Website.

- During the term of the agreement, the parties agree to divide the gross revenues generated by the Website such that sixty-two percent (62%) of all gross revenues generated by the Website shall be paid to the Company.

- At any time during the term of the Agreement and up to thirty (30) days following the expiration of the agreement, the Company shall have the exclusive option to acquire all of the assets related to the Website, including the website domain and intellectual property for a purchase price of five million dollars $5,000,000. Such purchase price may, at the Company’s sole option, be paid by issuance of shares of common stock having a value of $5,000,000. The value per share issued in payment of such purchase price shall be deemed to be twenty-five percent (25%) of the market price of the Company’s common stock at the time of the closing of the purchase transaction.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Company Overview

We were incorporated as MojoRepublik, Inc. in the state of Delaware on September 10, 2007. On October 1, 2008, we changed our name to Republik Media and Entertainment, Ltd. (the “Company” or “Republik Media” or “Republik”). As Republik, we created two wholly-owned subsidiaries, MojoRepublik, LLC and LiveBrew.com, LLC. MojoRepublik, LLC, a wholly-owned subsidiary of the Company, was organized on June 14, 2007 in the State of Nevada. MojoRepublik, LLC was in the business of developing and promoting a website, www.mojorepublik.com. LiveBrew.com, LLC, a wholly-owned subsidiary of the Company, was organized on May 23, 2008 in the State of Nevada. LiveBrew.com, LLC was in the business of organizing and promoting live events.

As reported in the Form 8-K filed on August 4, 2011, effective August 3, 2011, and upon the prior approval of our board of directors and a majority of our shareholders, our corporate name was changed to “Global Karaoke Network, Inc.” Contemporaneously with the name change, we decided to stop pursuing our former business plans.

In furtherance of our decision to stop pursuing our prior business plans, on September 26, 2011, we entered into an Agreement of Conveyance, Transfer and Assignment of Membership Interests, Assumption of Obligations and Cancellation of Promissory Notes with Mr. David Woo. The foregoing agreement transferred all membership units owned in our two wholly-owned subsidiaries, MojoRepublik, LLC and LiveBrew.com, LLC to Mr. Woo in exchange for Mr. Woo assuming all liabilities relating to the subsidiaries and for the cancellation of all outstanding promissory notes.

On May 21, 2012, we entered into a license and revenue sharing agreement with GT Entertainment, Ltd., a British Columbia company (“GT”), Martin Fletcher, Mark Watkins and Far East Global Trading Ltd. (“Far East”) (the “Agreement”) for an exclusive world-wide license to access, use, market and promote the Internet website MeAndMic.com (“MeAndMic”, the “website”). In consideration for this license we will issue to GT 91,200,000 shares of our common stock.

The website MeAndMic.com has been partially constructed. It was anticipated that when it was complete that it would provide immediate access to online karaoke with access to a wide range of songs for all generations and also serve as a representative for the Karaoke World Champions (KWC). At this point in time, management is unsure if it is going to continue to develop the website beyond the preliminary steps it has taken to date. If management determines it is not in our best interest to continue developing the website, then our business plan will likely change.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the Three and Nine Months Ended March 31, 2013 and 2012 and the Period from Inception (September 10, 2007) until March 31, 2013

As a result of the sale of MojoRepublik, LLC and LiveBrew.com, LLC, the entities under which we pursued our former business plans, our operations in the financial statements are now characterized between continuing operations and discontinued operations. The continuing operations reflect our current operations. The discontinued operations reflect the historical operations that we pursued under MojoRepublik, LLC and LiveBrew.com, LLC and our prior business plans. Except as where otherwise provided, the results from our continuing operations are detailed below.

We reported no revenue for the three and nine months ended March 31, 2013 and March 31, 2012 and from our inception on September 10, 2007 through March 31, 2013.

Our operating expenses from our continuing operations for the three months ended March 31, 2013 and March 31, 2012 were $11,061 and $13,943, respectively. The expenses for the three months ended March 31, 2013 consisted of professional fees of $10,813 and general and administrative expenses of $248. The expenses for the three months ended March 31, 2012 consisted of professional fees of $13,783 and general and administrative expenses of $160. We suffered a net loss of $11,061 and $13,943 from our continuing operations for the three months ended March 31, 2013 and March 31, 2012, respectively.

Our operating expenses from our continuing operations for the nine months ended March 31, 2013 and March 31, 2012 were $49,664 and $68,719, respectively. The expenses for the nine months ended March 31, 2013 consisted of professional fees of $45,010 and general and administrative expenses of $4,654. The expenses for the nine months ended March 31, 2012 consisted of professional fees of $64,225 and general and administrative expenses of $4,494. We suffered a net loss of $49,664 and $68,719 from our continuing operations for the nine months ended March 31, 2013 and March 31, 2012, respectively.

Our operating expenses from our inception on September 10, 2007 through March 31, 2013, were $343,917. The expenses since our inception on September 10, 2007 through March 31, 2013 have consisted of professional fees of $334,443 and general and administrative expenses of $9,474. We have suffered a net loss of $343,917 from our continuing operations from our inception on September 10, 2007 through March 31, 2013.

As of March 31, 2013, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan during the next 12 months and beyond is contingent upon us obtaining additional financing in order to construct, market and promote the website. We hope to obtain business capital through the use of private equity fundraising or shareholders loans. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

The results of our discontinued operations are contained in the financial statements. Additionally, the footnotes to the financial statements include a description of the facts and circumstances leading to the disposal, the manner and timing of that disposal and the carrying amounts of the major classes of assets and liabilities included as part of a disposal group.

Liquidity and Capital Resources

As of March 31, 2013, we had total current assets of $176. Our total current liabilities as of March 31, 2013 were $133,256. We had a working capital deficit of $133,080 as of March 31, 2013.

Financing Activities consisted of proceeds from related party loans of $48,800 for the nine months ended March 31, 2013.

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through revenues generated by operation of the website and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Off Balance Sheet Arrangements

As of March 31, 2013, there were no off balance sheet arrangements.

Going Concern

We have negative working capital, have incurred losses since inception, and have not yet received revenues from sales of products or services. These factors create substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

Our ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful in these efforts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4. Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2013. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer (who also serves as our Principal Financial and Accounting Officer).

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer/Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, including our Chief Executive Officer/Principal Financial and Accounting Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this quarterly report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2013 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of March 31, 2013, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending June 30, 2013: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

**Provided herewith

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.