CHUN CAN CAPITAL GROUP - Quarter Report: 2011 September (Form 10-Q)

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2011

o TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 333-100046

CINTEL CORP.

(Name of registrant in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

52-2360156

(I.R.S. Employer Identification No.)

1101 Marycrest Road, Suite #B, Henderson, NV 89074

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (702)-403-9477

Indicate by check mark whether the registrant (1) has filed all reports required 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 o

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 during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files. Yes x No o

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o

Non-accelerated filer o Smaller reporting company x

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

The number of shares of registrant’s common stock outstanding, as of November 18, 2011 was 100,863,169.

CINTEL CORP.

INDEX

PART I: FINANCIAL INFORMATION
ITEM 1:	FINANCIAL STATEMENTS (Unaudited)	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3 :	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
ITEM 4:	CONTROLS AND PROCEDURES	18
PART II: OTHER INFORMATION
Item 1	LEGAL PROCEEDINGS	19
ITEM 1A :	RISK FACTORS	19
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	19
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	19
ITEM 5	OTHER INFORMATION	19
ITEM 6:	EXHIBITS	19
SIGNATURES		20

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CINTEL CORP. AND SUBSIDIARY

___________________________________________________________

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(UNAUDITED)

CINTEL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

ASSETS	September 30, 2011 (Unaudited)			December 31, 2010 (1)
Current assets:
Cash and cash equivalents	$	4		$	4
Loans receivable		66			53
Total current assets		70			57
Property, plant and equipment, net		-			2
Long-term investments		6,471			6,477
Equity method investments		5,892			7,300
Deposits and other assets		1			2
Total assets	$	12,434		$	13,838

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	11,796		$	12,419
Accrued liabilities		448			295
Other current liabilities		93			94
Total current liabilities		12,337			12,808
Accrued severance benefits		4			4
Convertible debts		23,751			24,198
Total liabilities		36,092			37,010

Stockholders’ deficit:
Common stocks: par value $0.001 per share, 300,000,000 shares authorized, 100,863,169 and 95,300,196 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively.		103			98
Additional paid-in capital		20,332			20,293
Accumulated other comprehensive loss		(3,921	)		(4,896	)
Accumulated deficit		(40,172	)		(38,667	)
Total stockholders’ deficit		(23,658	)		(23,172	)
Total liabilities and stockholders' deficit	$	12,434		$	13,838

(1)	Derived from audited financial statements included in the Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission.

See accompanying notes to unaudited condensed consolidated financial statements.

CINTEL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

	Three Months Ended September 30, 2011			Three Months Ended September 30, 2010			Nine Months Ended September 30, 2011			Nine Months Ended September 30, 2010

Net revenues	$	-		$	-		$	-		$	-
Operating expenses:
General and administrative expenses		-			93			29			497
Depreciation and amortization		-			1			2			3
		-			94			31			500
Loss from operations		-			(94	)		(31	)		(500	)

Other income (expenses):
Interest expenses		(53	)		(51	)		(156	)		(149	)
Impairment loss on investment		(67	)		(183	)		(198	)		(558	)
Share of loss from equity method investment		(188	)		(35	)		(925	)		(415	)
Foreign currency transaction, net		(363	)		807			(195	)		212
		(671	)		538			(1,474	)		(910	)
Income (loss) before income taxes		(671	)		444			(1,505	)		(1,410	)
Income tax provision		-			-			-			-
Net income (loss)	$	(671	)	$	444		$	(1,505	)	$	(1,410	)

Loss per share – basic and diluted:
Net income (loss)	$	(0.01	)	$	-		$	(0.02	)	$	(0.01	)

Weighted average shares outstanding - basic and diluted		99,432			95,300			99,432			95,300

See accompanying notes to unaudited condensed consolidated financial statements.

CINTEL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Nine Months Ended
	September 30, 2011			September 30, 2010

Cash flows from operating activities:
Net loss	$	(1,505	)	$	(1,410	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation		2			3
Impairment loss on investment		198			559
Share of loss from equity investment		925			415
Foreign currency transaction, net		195			(212	)
(Increase) decrease in assets:
Prepaid expenses and other assets		1			45
Security deposits		-			30
Increase (decrease) in liabilities:
Accounts payable		-			132
Accrued liabilities		156			184
Cash used in operating activities		(28	)		(254	)

Cash flows from investing activities:
Acquisition of property and equipment		-			(42	)
Payments on loan receivable		(56	)		(106	)
Proceeds from loan receivable		39			204
Cash provided by (used in) investing activities		(17	)		56

Cash flows from financing activities:
Proceeds from issuance of common stocks		45			-
Cash provided by financing activities		45			-

Net decrease in cash and cash equivalent		-			(198	)
Effect of foreign currency translation		-			3
Cash and cash equivalent - beginning of period		4			320

Cash and cash equivalent - end of period	$	4		$	125

Supplemental disclosure of cash flows information:
None

See accompanying notes to unaudited condensed consolidated financial statements.

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CinTel Corp. (“Cintel” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments), necessary to state fairly the financial information included herein.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ materially from these estimates. In addition, any changes in these estimates or their related assumptions could have a materially adverse effect on the Company's operating results.

Where the functional currency of the Company's foreign subsidiaries is the local currency, all assets and liabilities are translated into U.S. dollars, using the exchange rate on the consolidated balance sheet date, and revenues and expenses are translated at average rates prevailing during the period. Accounts and transactions denominated in foreign currencies have been re-measured into functional currencies before translated into U.S. dollars. Foreign currency transaction gains and losses are included as a component of other income and expense. Gains and losses from foreign currency translation are included as a separate component of comprehensive income.

These unaudited condensed consolidated financial statements include the accounts of Cintel Corp. and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. While the Company believes that the disclosures are adequate to make the information not misleading, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Going Concern

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced recurring losses over the past years which have resulted in an accumulated deficit of approximately $40.2 million and a working capital deficit of approximately $12.3 million at September 30, 2011.

The Company’s ability to continue as a going concern is contingent upon its ability to secure additional financing, increase sales of its product and attain profitable operations. It is the intent of management to continue to raise additional funds to sustain operations and to pursue acquisitions of operating companies in order to generate future profits for the Company. Although the Company plans to pursue additional equity financing, there can be no assurance that the Company will be able to secure financing when needed or obtain such on terms satisfactory to the Company, if at all.

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

Reclassifications

Certain reclassifications have been made to the prior year consolidated financial statement presentation to correspond to the current period’s format. Total equity (deficit) and net income (loss) are unchanged due to these reclassifications.

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting pronouncements

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations – a consensus of the FASB Emerging Issues Task Force”. This ASU clarifies existing disclosure requirements for public entities with business combinations that occur in the current reporting period. The ASU stipulates that if an entity is presenting comparative financial statements, revenue and earnings of the combined entity should be disclosed as though the business combinations that occurred during the current year had occurred as of the beginning of the comparative prior annual reporting period. The ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations with acquisition dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. Adoption of the standard is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.

Note 2 - Loans Receivable

Loans receivable consist of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011		December 31, 2010
	(in thousands)
Due from officers	$	66	$	-
Other loan receivable		-		53
	$	66	$	53

In the opinion of management, such transactions were on similar terms, including interest rates and collateral, as those prevailing at the time of comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Company.

Note 3 – Investments Securities

The carrying amount, gross unrealized holding gains, gross unrealized holding losses, and fair value of investment securities by major security type and class of security at September 30, 2011 and December 31, 2010 were as follows:

	Aggregate cost basis		Gross unrealized holding gains		Gross unrealized holding (losses)			Estimated fair values
	(In thousands)
September 30, 2011
Available-for-sale:
Equity securities - nonmarketable	$	7,203	$	-	$	(732	)	$	6,471

December 31, 2010
Available-for-sale:
Equity securities - nonmarketable	$	7,203	$	-	$	(726	)	$	6,477

Above equity securities are classified as long-term investments.

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The investments in equity securities with unrealized gain or loss are consisted of marketable and non-marketable equity securities. The Company evaluated the near-term prospects of the issuers to assess whether the investments have been impaired that is other than temporary. Based on that evaluation and the Company’s ability and intent to hold those investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the Company does not consider the investments to be other-than-temporarily impaired at September 30, 2011.

Note 4 – Equity Method Investments

The Company accounts investment under equity method when the it has the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the investing company has an ownership interest in the voting stock of an investee of between 20% and 50%.

Investments accounted for under the equity method consist of as follows at September 30, 2011 and December 31, 2010:

September 30, 2011	Ownership			Carrying Value
				(in thousands)

Phoenix Asset Investment		27.4	%	$	5,892

December 31, 2010	Ownership			Carrying Value
				(in thousands)

Phoenix Asset Investment		27.4	%	$	7,300

The Company’s share of losses from the equity method investment for the nine months ended September 30, 2011 and 2010 were approximately $925,000 and $415,000, respectively.

Note 5 – Fair Value Measurements

Effective January 1, 2008, the Company adopted ASC 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets.

Level 2 - Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets, or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset.

Level 3 - Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The fair values of securities available for sale are generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs).

The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at September 30, 2011 and December 31, 2010:

			Fair value measurements at reporting date using
	September 30, 2011		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In thousands)
Available-for-sale securities
Nonmarketable equity securities	$	6,471	$	-	$	6,361	$	110

			Fair value measurements at reporting date using
	December 31, 2010		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In thousands)
Available-for-sale securities
Nonmarketable equity securities	$	6,477	$	-	$	6,361	$	116

The fair values of the financial instruments shown in the above table as of September 30, 2011 and December 31, 2010 represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

Note 6 – Employee Severance Benefits

Employees and directors with one year or more of service are entitled to receive a lump-sum payment upon termination of their employment based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent the amount which would be payable assuming all eligible employees and directors are to terminate their employment as of the balance sheet date. The accrued severance benefits payable at September 30, 2011 and December 31, 2010, were about $4,000.

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 – Convertible Debts

The Company accounts for the convertible debentures as liability instrument at carrying value which approximates the fair value. The carrying value of convertible debts outstanding at September 30, 2011 and December 31, 2010, are summarized as follows:

	Maturity	Interest Rate			Conversion Price		September 30, 2011		December 31, 2010
							(in thousands)

Convertible debenture - A	2011		8.00	%	$	0.50	$	15,284	$	15,284
Convertible debenture - C	2012		2.30	%	$	0.70		8,467		8,914
Total							$	23,751	$	24,198

The convertible debentures have not been included in the calculation of the diluted (loss) per share as their inclusion would be anti-dilutive.

Note 8 – Income Taxes

Corporate income tax rates applicable to the Korean subsidiaries in 2011 and 2010 were 16.5% of the first 100 million Korean Won of taxable income and 29.7% on the excess. For the United States operations, the corporate tax rates range from 10% to 35%. The Company provided a valuation allowance equal to the deferred tax amounts resulting from the tax losses in the United States, as it is not likely that they will be realized. Tax losses from the Korean subsidiaries can be carried forward for five years to offset future taxable income. The U.S. tax losses can be carried forward for 15 to 20 years to offset future taxable income. The Company has accumulated about $23 taxable loss in US and $17 million of taxable loss in Korea operations. The utilization of the Korean losses expires in years 2010 to 2014 and the US losses in years 2020 to 2029.

The provision for income taxes for the periods ended September 30, 2011 and 2010 are summarized as follows:

	Six Months Ended
	September 30, 2011		September 30, 2010
	(in thousands)

Income tax expense	$	-	$	-

The Company has deferred tax assets (liabilities) at September 30, 2011 and December 31, 2010 as follows:

	September 30, 2011			December 31, 2010
	(in thousands)
Net operating loss carryforwards	$	6,659		$	6,119
Valuation allowance		(6,659	)		(6,119	)
	$	-		$	-

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9 – Comprehensive Income (Loss)

Comprehensive income or loss is defined as a change in equity of a company during a period from transactions and other events and circumstances, excluding transactions resulting from investments by owners and distributions to owners. Comprehensive loss, net of taxes, for the periods ended September 30, 2011 and 2010 is as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
	(in thousands)

Net income (loss)	$	(671	)	$	444		$	(1,505	)	$	(1,410	)

Comprehensive income (loss), net of tax:
Foreign currency translation adjustments		1,875			(1,101	)		975			(297	)
Total comprehensive income (loss)	$	1,204		$	(657	)	$	(530	)	$	(1,707	)

Note 10 – Loss per Share

The following reconciles the numerators and denominators of the basic and diluted per share computation for the periods ended September 30, 2011 and 2010:

	Three Months Ended					Nine Months Ended
	September 30, 2011			September 30, 2010		September 30, 2011			September 30, 2010
	(in thousand except for loss per share)
Numerator for basic and diluted earnings per share:
Net income (loss)	$	(671	)	$	444	$	(1,505	)	$	(1,410	)

Denominator:
Basic and diluted weighted average shares outstanding		99,432			95,300		99,432			95,300

Basic and diluted loss per share	$	(0.01	)	$	-	$	(0.02	)	$	(0.01	)

Note 11 – Capital

The Company’s capital transactions for the nine months ended September 30, 2011 are as follows:

In March 2011, the Company issued 5,562,973 shares of common stock to an officer of the Company at a price of $0.008 per share.

Stock Warrants and Options

The Company has accounted for its stock options and warrants in accordance with ASC 718 "Stock Based Compensation". Value of options granted has been estimated by the Black Scholes option pricing model. The assumptions are evaluated annually and revised as necessary to reflect market conditions and additional experience. The following assumptions were used:

	September 30, 2011			December 31, 2010
Interest rate		6.5	%		6.5	%
Expected volatility		70	%		70	%

Expected life in years		2			3
Expected dividends		-			-

In 1999, the Board of Directors of Cintel Korea adopted a stock option plan to allow employees to purchase ordinary shares of the Cintel Korea.

CINTEL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The stock option plan granted 96,000 options for the common stock of Cintel Korea having a $0.425 nominal par value each and an exercise price of $0.425. In 2002, 53,000 stock options were cancelled. In 2003, an additional 30,000 stock options were cancelled.

In March 2000, 225,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.68. From this grant, 135,000 options were cancelled in 2002, and an additional 47,000 options were cancelled in 2003.

In February 2001, 30,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.72. In 2003, all of these stock options were cancelled.

In March 2003, 65,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.71. In the same year, 15,000 of these stock options were cancelled.

The options vest gradually over a period of 3 years from the date of grant. The term of each option shall not be more than 8 years from the date of grant. No options have vested during the periods ended September 30, 2011 and 2010 and no option is outstanding at September 30, 2011.

The stock options have not been included in the calculation of the diluted earnings per share as their inclusion would be anti-dilutive.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note on Forward-Looking Statements.

Certain statements in “Management’s Discussion and Analysis or Plan of Operation” below, and elsewhere in this report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this quarterly report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth below and elsewhere in this quarterly report, and in other reports filed by us with the SEC.

You should read the following description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included in this report.

Overview

In the last three years we have shifted our focus from Internet Traffic Management to becoming a semiconductor and LCD assembly holding company. The company’s focus has included investments in several high growth subsidiaries and divesting some non-performing subsidiaries. The Company currently owns a 19% interest in Phoenix Semiconductor Telecommunication Co., Ltd. ("PSTS") and a 2.2% interest in Phoenix Digital Tech Co. Ltd. (“PDT”). PSTS in the business of semiconductor packaging and manufacturing. PDT is in the business of designing, manufacturing and installing automated assembly line for Flat Panel Displays, and manufacturing and testing of PCB related equipment based on customers’ specification. The Company has one wholly owned subsidiary, Cintel Co. Ltd.

The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business. Management is in negotiations with its major stockholders and debtors to further reduce the Company’s debt and clean up the Company’s balance sheet to position the Company to pursue its acquisition strategy. The Company intends to focus on businesses in the areas of Green Energy, Hybrid Electric Cars, Recycling Material, and other environmentally friendly businesses.

The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:

(a) Potential for growth, indicated by new technology, anticipated market expansion or new products;

(b) Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;

(d) Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;

(e) The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;

(f) The extent to which the business opportunity can be advanced;

(g) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and

(h) Other relevant factors.

In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, the Company may not discover or adequately evaluate potential acquisition targets.

Background

CinTel Corp. (formerly Link2 Technologies) was incorporated in the State of Nevada on August 16, 1996. The initial business focus was to develop a 3D animation and digital effects studio that would provide high-end 3D animation and digital effects to the music video industry.

On September 30, 2003, Link2 Technologies entered into a definitive Share Exchange Agreement with CinTel Korea and the shareholders of CinTel Korea. Pursuant to the Share Exchange Agreement, we acquired 100% of the issued and outstanding capital stock of CinTel Korea in exchange for 16,683,300 shares of our common stock. CinTel Korea was founded in 1997 and has provided various Internet Traffic Management solutions to businesses and consumers. All of the business operations were comprised of developing, manufacturing and distributing Internet Traffic Management solutions to businesses and consumers in order to manage and control large traffic.

CinTel Korea introduced Korea's first dynamic server load balancer, and marketed Internet Traffic Management products since its inception, such as the PacketCruz (TM) family of products, iCache, i2one, and Proximator. The Internet Traffic Management solutions were marketed to customers around the world, helping them improve Internet traffic management, service levels (QOS: Quality of Service), and the user experience (QOC: Quality of Content).

In the last three years, we shifted our focus from Internet Traffic Management to becoming a semiconductor and LCD assembly holding company. The company’s focus has included investments in several high growth subsidiaries and divesting some non-performing subsidiaries. Until December 31, 2009, the Company had significant holdings in companies that directly manufactured semiconductor packaging, NAND flash memory packaging, LCD assembly, and testing specialists, as well as provided a solution for memory applications for home appliances, semiconductor, TFT-LCD application products and Factory Automation Design. The Company’s operations were conducted through its subsidiaries, Phoenix Digital Tech, Phoenix Semiconductor Telecommunication Suzhou, and Bluecomm and its indirect subsidiary BKLCD. Upon transfer of the shares of its operating subsidiaries pursuant to the Agreement with its largest creditor, Woori, in December 2009, the company has no current operations, except for its ownership interests in two other companies. The Company maintains a 19% interest in PSTS and 2.1% interest in PDT.

Results of Operations

Three and nine months period ended September 30, 2011 compared to the three and nine months ended September 30, 2010.

(in thousands, USD)

	Three Months Ended September 30, 2011			Three Months Ended September 30, 2010			Nine Months Ended September 30, 2011			Nine Months Ended September 30, 2010

Revenue	$	-		$	-		$	-		$	-
Cost of sales
Gross profit		-			-			-			-
Operating expenses		-			94			31			500
Loss from operations		-			(94	)		(31	)		(500	)
Net income (loss)		(671	)		444			(1,505	)		(1,410	)

The Company has not engaged in active business later 2009. Accordingly, the Company generated no revenue for the three and nine months ended September 30, 2011 and for the corresponding period in 2010.

Total operating expenses for the three months ended September 30, 2011 and 2010 totaled approximately $nil and $94,000, respectively, resulting in a decrease of $94,000 or 100%. Total operating expenses for the nine months ended September 30, 2011 and 2010 totaled approximately $31,000 and $500,000, respectively, resulting in a decrease of $469,000 or 93.8%, mainly due to the fact that the Company significantly reduced its non-core administrative activities and expenses.

For the three months ended September 30, 2011, the Company had net loss of approximately $671,000 and net income of approximately $444,000 for the corresponding period ended in 2010. For the nine months ended September 30, 2011, the Company had net loss of approximately $1.5 million and net loss of approximately $1.4 million for the corresponding period ended in 2010. The net loss recognized was mainly from interest expense accrued on debt, impairment loss on investment securities, share of loss from equity method investment and offset by gain or loss adjustment from foreign currency transactions.

Liquidity and Capital Resources

As of September 30, 2011 our cash balance without restriction was approximately $4,000 which has not changed from $4,000, the balance at December 31, 2010. Total current assets at September 30, 2011 was $70,000 compared to $57,000 at December 31, 2010. The increase in the current assets mainly resulted from an increase in short-term advance to officers. Cash has been depleted on operating activities. We currently plan to use the cash balance for ordinary business operations.

For the nine months ended September 30, 2011, net cash used in operating activities was $28,000, compared to $254,000 for the corresponding period ended in 2010. The decrease in the net cash used in operating activities was mainly attributed to the significant reduction in general and administrative activities and decrease in the related expenses.

For the nine months ended September 30, 2011, net cash used in investing activities was $17,000, compared to cash provided by $56,000 for the corresponding period ended in 2010. The decrease in cash provided by investing activities can be largely attributed to lack of investments held which can be converted into liquidity.

For the nine months ended September 30, 2011, net cash provided by financing activities was $45,000 and no cash transactions occurred in financing activities for the corresponding period ended in 2010. The increase in cash provided by financing activities was attributed to the issuance and sale of additional shares during the first quarter of 2011.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Significant Accounting Policies

Cash and Cash Equivalents

Cash includes currency, checks issued by others, other currency equivalents, current deposits and passbook deposits held by financial institutions. For financial statement purposes, we consider all highly liquid debt instruments with insignificant interest rate risk and maturity of three months or less when purchased to be cash equivalent. Cash equivalents consist primarily of cash deposits in money market funds that are available for withdrawal without restriction. The investments that mature within three months from the investment date are also included as cash equivalents.

Cash deposits that are restricted as to usage, withdrawal or pledged as security are disclosed separately and not included in the cash total for the purpose of the statements of cash flow. At June 30, 2011 and December 31, 2010, the Company has no cash under such restriction in use$1,242,582.

Fair Value of Financial Instruments

The Company determines the estimated fair value of financial instruments using available market information and valuation methodologies considered to be appropriate. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The fair value of investments, derivative instruments and convertible debt are based on market data. Carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short maturity of these financial instruments.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist of cash equivalents and loan receivables. Cash equivalents are maintained with high quality institutions, the composition and maturities of which are regularly monitored by management. The Company diversifies its investments to reduce the exposure to loss from any single issuer, sector or bank.

Comprehensive Income

Comprehensive income or loss is defined as a change in equity of a company during a period from transactions and other events and circumstances, excluding transactions resulting from investments by owners and distributions to owners. The components of total comprehensive income or loss for the periods were consist of unrealized gain or loss on available-for-sale marketable securities and foreign currency translation adjustments.

Recent Accounting pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

n/a

ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure; and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

There was no change to our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in the Registrant’s Form 10-K filed on April 15, 2011.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. (REMOVED AND RESERVED)

None

ITEM 6. EXHIBITS

Exhibit Number		Description

31.1*		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

31.2*		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

32.1*		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

32.2*		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

EX-101.INS		XBRL INSTANCE DOCUMENT

EX-101.SCH		XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

EX-101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

EX-101.LAB		XBRL TAXONOMY EXTENSION LABELS LINKBASE

EX-101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

* Filed herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CinTel Corp.

Date: November 21, 2011	By:	/s/ Dave Kyung Han
		Dave Kyung Han
		President, Chief Executive Officer
		and Director (Principal Executive Officer)


Date: November 21, 2011	By:	/s/ Joo Chan Lee
		Joo Chan Lee
		Chief Financial Officer
		(Principal Financial and Accounting Officer)