GREENKRAFT, INC. - Quarter Report: 2013 July (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended July 31, 2013
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _________________ to _________________
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Commission File No.: 000-53047
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SUNRISE GLOBAL, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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20-8767728
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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| 2530 S. Birch Street, Santa Ana, CA 92797 |
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(Address of principal executive offices)
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Issuer’s telephone number: (714) 545-7777
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No 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 (§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 o
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company) 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 x No o
As of September 13, 2013, 3,357,830 shares of our common stock were outstanding.
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
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1
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Item 1. Financial Statements
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1
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Balance Sheets as of July 31, 2013 (unaudited) and April 30, 2013 (audited)
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2
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Statements of Expenses for the three months ended July 31, 2013 and 2012, and from inception to July 31, 2013 (unaudited)
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3
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Statements of Cash Flows for the three months ended July 31, 2013 and 2012, and from inception to July 31, 2013 (unaudited)
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4
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Notes to Financial Statements (unaudited)
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5
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Item 2. Management's Discussion and Analysis Or Plan of Operation
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6
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Item 3. Controls and Procedures
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8
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PART II - OTHER INFORMATION
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10
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Item 1. Legal Proceedings
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10
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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10
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Item 3. Defaults Upon Senior Securities.
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10
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Item 4. Submission of Matters to a Vote of Security Holders.
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10
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Item 5. Other Information.
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10
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Item 6. Exhibits
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10
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Signatures
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11
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Item 1. Financial Statements (Unaudited)
The accompanying unaudited financial statements of Sunrise Global Inc. (“Sunrise” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary in order to make the financial statements not misleading and for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, for the fiscal year ended April 30, 2013, previously filed with the Commission, which are included in the Company's annual report filed on Form 10-K.
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SUNRISE GLOBAL INC.
(A Development Stage Company)
BALANCE SHEETS
(unaudited)
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July 31, 2013
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April 30, 2013
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(audited)
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ASSETS:
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Current assets:
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Cash
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$ | - | $ | 450 | ||||
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Prepaid Expenses
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549 | 549 | ||||||
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TOTAL ASSETS
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$ | 549 | $ | 999 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY:
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Current liabilities:
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Account payable
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1,800 | 1,800 | ||||||
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Advance from company officers
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26,029 | 21,929 | ||||||
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TOTAL LIABILITIES
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$ | 27,829 | $ | 23,729 | ||||
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Stockholders' Deficit:
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Preferred Stock, $.001par value; 100,000,000 shares authorized,
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No share issued and outstanding at July 31, 2013 and April 30, 2013
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- | |||||||
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Common Stock, $.001 par value; 100,000,000 shares authorized,
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3,357,830 issued and outstanding at July 31, 2013 and April 30, 2013
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3,358 | 3,358 | ||||||
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Additional paid-in capital
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192,425 | 192,425 | ||||||
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Deficit accumulated during the development stage
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(223,063 | ) | (218,513 | ) | ||||
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Total Stockholders' Deficit
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(27,280 | ) | (22,730 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 549 | $ | 999 | ||||
See notes to unaudited financial statements
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(A Development Stage Company)
STATEMENTS OF EXPENSES
(unaudited)
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Inception
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For the three months ended
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(September 27, 2006)
through
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July 31, 2013
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July 31
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2013
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2012
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2013
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Total Revenue
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$ | - | $ | - | $ | 14,886 | ||||||
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Cost of goods sold
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- | - | 10,560 | |||||||||
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Selling, General and Administrative:
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Website development costs
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$ | - | $ | - | $ | 5,000 | ||||||
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General and administrative expenses
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4,550 | 4,398 | 220,067 | |||||||||
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Loss from operations
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4,550 | 4,398 | 220,741 | |||||||||
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Other Expense:
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Interest income net of interest expense
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- | - | (2,322 | ) | ||||||||
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Net Loss
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$ | (4,550 | ) | $ | (4,398 | ) | $ | (223,063 | ) | |||
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Net Loss per share - basic and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | n/a | |||||
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Weighted average share outstanding - basic and diluted
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3,357,830 | 3,357,830 | n/a | |||||||||
See notes to unaudited financial statements
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SUNRISE GLOBAL INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
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Inception
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For the three months ended
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(September 27, 2006)
through
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July 31
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July 31 | |||||||||||
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2013
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2012
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2013
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Cash Flows from Operating Activities:
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Net Loss
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$ | (4,550 | ) | $ | (4,398 | ) | $ | (223,063 | ) | |||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Stocks issued for services
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- | - | 135,000 | |||||||||
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Stocks issued for interest expenses
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- | - | 9,483 | |||||||||
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Changes in:
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Prepaid expenses
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- | - | (549 | ) | ||||||||
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Accounts payable
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- | 250 | 1,800 | |||||||||
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Net Cash Flows Used in Operating Activities
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(4,550 | ) | (4,148 | ) | (77,329 | ) | ||||||
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Cash Flows from Financing Activities:
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Advance from company officer
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4,100 | 4,000 | 29,795 | |||||||||
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Proceeds from convertible note payable to related party
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- | - | 300,000 | |||||||||
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Payment on related party loan
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- | - | (303,766 | ) | ||||||||
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Proceed from stock for cash
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- | - | 51,300 | |||||||||
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Net Cash Flows Provided in Financing Activities
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4,100 | 4,000 | 77,329 | |||||||||
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Net Increase (Decrease) in Cash
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(450 | ) | (148 | ) | 0 | |||||||
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Cash and cash equivalents - Beginning of period
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450 | 992 | - | |||||||||
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Cash and cash equivalents - End of period
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$ | (0 | ) | $ | 844 | $ | 0 | |||||
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SUPPLEMENTARY INFORMATION
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Interest Paid
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$ | - | $ | - | $ | - | ||||||
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Taxes Paid
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$ | - | $ | - | $ | - | ||||||
See notes to unaudited financial statements
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SUNRISE GLOBAL INC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Sunrise Global, Inc. (Sunrise) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with Sunrise’s audited 2013 annual financial statements and notes thereto contained in Sunrise’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosure required in Sunrise’s fiscal 2013 financial statements have been omitted.
NOTE 2 - GOING CONCERN
These financial statements have been prepared on a going concern basis, which implies Sunrise will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Sunrise be unable to continue as a going concern. Through July 31, 2013, Sunrise has only generated small amount of revenue to date and has accumulated losses since inception. These conditions raise substantial doubt as to Sunrise’s ability to continue as a going concern. The continuation of Sunrise as a going concern is dependent upon the continued financial support from its shareholders, the ability of Sunrise to obtain necessary equity financing to continue operations, and the attainment of profitable operations. The financial statements do not include any adjustments that might be necessary if Sunrise is unable to continue as a going concern.
NOTE 3 – ADVANCES FROM OFFICER
The balance due from advances from officers increased by $4,100 during the period. Advances are unsecured, bear no interest and are due on demand.
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Item 2. Management's Discussion and Analysis of Financial Condition or Results of Operations
This quarterly report contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. There are a number of factors that could cause our actual results to differ materially from those indicated by such forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume 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 report to conform such statements to actual results.
The following discussion should be read along with our financial statements as of July 31, 2013, which are included in another section of this document and with our Form 10-K as of April 30, 2013 that contains a more detailed discussion of our plan. This discussion contains forward-looking statements about our expectations for our business and financial needs. These expectations are subject to a variety of uncertainties and risks that may cause actual results to vary significantly from our expectations. The cautionary statements made in our Report on Form 10-K should be read as applying to all forward-looking statements in any part of this report.
Organization
We were incorporated on September 27, 2006 in Nevada as Sunrise Global, Inc. Our address is 2530 S. Birch Street, Santa Ana, CA and our telephone number is (714) 545-7777. We do not currently maintain a corporate website.
Business Description
We are a recycled industrial waste resale company with operations based in the United States and China. We were formed to sell recycled industrial waste material to customers in China. Our main operations and services include acquisition of recyclable materials such as scrap metals (including battered pipes, fine metal shavings, doorknobs, jumbles of wire, crumpled cars and all other manner of flotsam), scrap tires, plastic, cardboard, and paper sourced from suppliers in North America and the resale of such material to customers in China or in United States. We believe the use of recycled material is both environmentally friendly and is a key part of today's competitive manufacturing process to lower costs. Our major customers are Chinese manufacturers and recycled material traders, which are located in China.
We are a development stage company that has only generated small amount of revenues from operations since our incorporation on September 27, 2006. We have incurred losses since our inception and rely upon the sale of our securities and funds provided by management to cover expenses. In addition, our independent accountant has issued an opinion indicating that there is substantial doubt about our ability to continue as a going concern.
Change of Control
On May 16, 2013, our controlling stockholder, Shaojun Sun, sold 2,300,000 shares of our common stock (the “Control Shares”) held by him to Greenkraft, Inc., a California corporation pursuant to the terms of a stock purchase agreement, as amended by a First Amendment to Stock purchase agreement dated on July 17, 2013 as follows : (i) the aggregate purchase price for the Control Shares (“Shares Purchase Price”) shall be $78,701; (ii) the aggregate purchase price for all of Shaojun Sun’s right, title and interest in loans made by him to the Corporation is $21,929 (the “Loans Purchase Price”) and (iii) the parties acknowledge that Mr. Sun paid $25,000 as a finder’s fee in connection with this transaction. The Shares Purchase Price and the Loan Purchase Price are collectively referred to as the Purchase Price for the Control Shares. As a result of this transaction, Mr. Shaojun Sun transferred control of us to Greenkraft, giving Greenkraft approximately 68% of all votes entitled to be cast in any matter requiring or permitting a vote of stockholders. The change of control described above did not result in an Item 5.06 change in shell company status.
Business Acquisition Opportunities
Business opportunities have been sought by the Company through its officers and directors for a reverse merger with an operating company.
To a large extent, a decision to participate in a specific business opportunity may be made upon management's analysis regarding the quality of the other firm's management and personnel, the asset base of such firm or enterprise, the anticipated acceptability of new products or marketing concepts, the merit of their business plan, and numerous other factors which are difficult to analyze.
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The Company has had no substantial business operations in several years, except limited activities, and has been seeking to acquire an interest in a business with long-term growth potential. The Company currently has no commitment or arrangement to participate in a business and cannot now predict what type of business it may enter into or acquire. It is emphasized that the business objectives discussed herein are extremely general and are not intended to be restrictive on the discretion of the Company's management.
There are no plans or arrangements proposed or under consideration for the issuance or sale of additional securities by the Company prior to the identification of an acquisition candidate. Consequently, management anticipates that it may be able to participate in only one potential business venture, due primarily to the Company's limited capital. This lack of diversification should be considered a substantial risk, because it will not permit the Company to offset potential losses from one venture against gains from another.
Operation of Business After Acquisition
The Company's operations following its acquisition of a business will be dependent on the nature of the business and the interest acquired. The Company is unable to predict whether the Company will be in control of the business or whether present management will be in control of the Company following the acquisition. It may be expected that the business will present various risks, which cannot be predicted at the present time.
RESULTS OF OPERATIONS
The Company currently does not engage in any business activities that provide cash flow, the Company is currently investigating, analyzing and consummating a business strategy that will allow it to grow.
Comparison of the three months ended July 31, 2013 and 2012
For the three month period ended July 31, 2013 compared to the three month period ended July 31, 2012, we had a net loss of $4,550 compared to a net loss of $4,398, respectively. This increase was mainly due to the increase in professional fees.
No revenue was generated during the three month period ended July 31, 2013 and the comparable period in 2012 because there was no order closed during those periods.
General and administrative expenses increased 3.5% to $4,550 during the three month period ended July 31, 2013 as compared to $4,398 for the comparable period in 2012. This increase was mainly due to the increase in professional fees.
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Liquidity and Capital Resources
Since we are a development stage company, Sunrise has been dependent on its majority owner to provide and seek cash resources to fund its operations. As of July 31, 2013, Sunrise’s deficit accumulated during the development stage was $223,063.
At July 31, 2013, we had current assets of $549, working capital deficit of $27,280, and had $4,550 of net cash used by operations during the three months ended July 31, 2013.
We have provided for our cash requirements to date through financing provided by our former president, who had contributed $37 in capital as of April 30, 2009. We also raised $51,300 from a private placement of our securities as of April 30, 2007, and additional $300,000 from another private placement of convertible debt on September 12, 2007. We paid back the principal amount of the convertible debt on February 6, 2008. The President of the Company plans to loan his own money as working capital for the Company. During the fiscal year ended April 2011, the former chief executive officer of Sunrise advanced $3,500 to pay retainer of auditing fee for the annual financial statements ended April 2010, and loaned $10,000 to the company. During the three months ended July 31, 2012, the former chief executive officer of Sunrise advanced $4,000 to pay retainer of auditing fee for the annual financial statements ended April 2012. During the three months ended July 31, 2013, the new chief executive officer of Sunrise had advanced $4,100 to pay for professional fees such as retainer of auditing fee for the annual financial statements ended April 2013 and monthly service fee charged by the stock transfer agent.
Until financing described below has been received, all our costs, which we will incur irrespective of our business development activities, including bank service fees and those costs associated with SEC requirements associated with going and staying public, estimated to be less than $50,000 annually, will be funded from cash at hand, to the extent that funds are available to do so. Management is not obligated to provide these or any other funds. If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities on the over the counter bulletin board, or if we have secured a qualification, may lose the qualification and our securities would no longer trade on the over the counter bulletin board. Further, if we fail to meet these obligations and as a consequence we fail to satisfy our SEC reporting obligations, investors will now own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC, and investors may have increased difficulty in selling their stock as we will be non-reporting.
We will need to secure a minimum of additional $200,000 in funds to finance our business in the next 12 months, in addition to the funds which will be used to stay public, which funds will be used for business development and sales and marketing. However, in order to become profitable we may still need to secure additional debt or equity funding. We hope to be able to raise additional funds from an offering of our stock in the future. However, this offering may not occur, or if it occurs, may not raise the required funding. We do not have any plans or specific agreements for new sources of funding, except for the anticipated loans from management as described below, or any planned material acquisitions.
Limited commitments to provide additional funds have been made by management and other shareholders. We cannot provide any assurance that any additional funds will be made available on acceptable terms or at all.
Our registered independent public accounting firms have indicated in their audit report for the year ended April 30, 2013 that there is substantial doubt about our ability to continue as a going concern over the next twelve months.
Item 3. Controls and Procedures
Evaluation of disclosure controls and procedures. As of July 31, 2013, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.
Changes in Internal Controls over Financial Reporting
Changes in internal controls. During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness relates to the lack of segregation of duties in financial reporting, as our President/Treasurer performs all accounting functions with no oversight, as our company does not have an audit committee. This weakness is due to the company's lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to the attestation by the Company' s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.
The Company's management carried out an assessment of the effectiveness of the Company's internal control over financial reporting as of July 31, 2013. The Company's management based its evaluation on criteria set forth in the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management has concluded that the Company's internal control over financial reporting was not effective as of July 31, 2013.
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ITEM 1 – LEGAL PROCEEDINGS
None.
ITEM 1A – RISK FACTORS
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 – DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
None.
ITEM 6 – EXHIBITS
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Item No.
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Description
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Method of Filing
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31.1
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Certification of George Gemayel pursuant to Rule 13a-14(a)
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Filed herewith.
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32.1
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Chief Executive Officer and Chief Financial Officer Certification pursuant o 18 U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
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Filed herewith.
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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.
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SUNRISE GLOBAL, INC.
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September 13, 2013
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/s/ George Gemayel
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George Gemayel
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President, Chief Executive Officer,
Chief Financial Officer, Secretary, and Director
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(Principal Executive Officer and
Principal Accounting Officer)
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