Marquie Group, Inc. - Quarter Report: 2008 August (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 10-Q
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x
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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 August 31, 2008
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o
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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______.
Zhong
Sen International Tea Company
(Exact
name of registrant as specified in the Charter)
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Florida
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000-1434601
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26-2091212
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File No.)
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(IRS
Employee Identification No.)
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2416
Lincoln Street, Hollywood, FL 33020
(Address
of Principal Executive Offices)
(Address
of Principal Executive Offices)
(206)
888-2585
(Issuer
Telephone number)
(Former Name or Former
Address if Changed Since Last Report)
Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer 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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company filer.
See definition of “accelerated filer” and “large accelerated filer” in
Rule 12b-2 of the Exchange Act (Check one):
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Large
Accelerated Filer o
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Accelerated
Filer o
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Non-Accelerated
Filer o
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Smaller
Reporting Company x
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Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.
Yes o No
x
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of August 31, 2008: 59,900,000 shares of common stock.
ZHONG
SEN INTERNATIONAL TEA COMPANY
FORM
10-Q
August
31, 2008
TABLE
OF CONTENTS
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PART
I— FINANCIAL INFORMATION
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Item
1.
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Financial Statements
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1 |
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Item
2.
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Management’s Discussion and Analysis of Financial
Condition and Results of Operations
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8
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Item
3.
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Quantitative and Qualitative Disclosures About
Market Risk
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10
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Item
4T.
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Controls and Procedures
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10
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PART
II— OTHER INFORMATION
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Item
1.
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Legal Proceedings
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11
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Item
1A.
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Risk Factors
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11
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Item
2.
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Unregistered Sales of Equity Securities and Use of
Proceeds
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11
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Item
3.
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Defaults Upon Senior
Securities
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11
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Item
4.
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Submission of Matters to a Vote of Security
Holders
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11
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Item
5.
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Other Information
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11
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Item
6.
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Exhibits and Reports on Form
8-K
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11
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SIGNATURES
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12
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PART
1 - FINANCIAL INFORMATION
Item
1. Financial Statements
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ZHONG
SEN INTERNATIONAL TEA COMPANY
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(A
DEVELOPMENT STAGE COMPANY)
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BALANCE
SHEET
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AS
OF MAY 31, 2008 AND AUGUST 31, 2008
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August
31, 2008
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May
31,
2008
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(Unaudited)
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ASSETS
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||||||||
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CURRENT
ASSETS
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||||||||
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Cash
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$ | 1,071 | $ | 6,300 | ||||
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Prepaid
expenses
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1,917 | 21,000 | ||||||
| 2,988 | 27,300 | |||||||
| . | ||||||||
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Marketing
agreement
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499,000 | - | ||||||
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TOTAL
ASSETS
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$ | 501,988 | $ | 27,300 | ||||
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LIABILITIES AND
STOCKHOLDERS’ EQUITY
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||||||||
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CURRENT
LIABILITIES
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||||||||
| $ | 730 | $ | - | |||||
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TOTAL
LIABILITIES
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- | - | ||||||
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COMMITMENTS
AND CONTINGENCIES
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- | - | ||||||
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STOCKHOLDERS’
EQUITY
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||||||||
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Common
stock, $0.001 par value, 100,000,000 shares
authorized, 59,900,000 and 5,000,000 shares issued and
outstanding
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59,900 | 5,000 | ||||||
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Additional
paid in capital
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529,470 | 30,870 | ||||||
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Accumulated
deficit during development stage
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(88,112 | ) | (8,570 | ) | ||||
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Total
Stockholders’ Equity
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501,258 | 27,300 | ||||||
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TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY
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$ | 501,988 | $ | 27,300 | ||||
See
Accompanying Notes to the Financial Statements.
-1-
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ZHONG
SEN INTERNATIONAL TEA COMPANY
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(A
DEVELOPMENT STAGE COMPANY)
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INCOME
STATEMENT
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FOR
THE THREE MONTHS ENDED AUGUST 31, 2008
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AND
THE PERIOD FROM JANUARY 30, 2008 TO AUGUST 31, 2008
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(UNAUDITED)
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For
the three
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For
the Period
from
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|||||||
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months
Ended
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January
30,
2008
to
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August
31,
2008
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August
30,
2008
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OPERATING
EXPENSES
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Officer's
compensation
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$ | 4,500 | $ | 11,800 | ||||
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Professional
fees
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24,938 | 26,138 | ||||||
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Consulting
fees
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50,000 | 50,000 | ||||||
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General
and administrative
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104 | 174 | ||||||
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Total
Operating Expenses
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79,542 | 88,112 | ||||||
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LOSS
FROM OPERATIONS
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(79,542 | ) | (88,112 | ) | ||||
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Provision
for Income Taxes
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- | - | ||||||
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NET
LOSS
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$ | (79,542 | ) | $ | (88,112 | ) | ||
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Net
loss per share - basic and diluted
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$ | (0.01 | ) | |||||
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Weighted
average number of shares outstanding during the period - basic and
diluted
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6,193,478 | |||||||
See
Accompanying Notes to the Financial Statements.
-2-
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(A
DEVELOPMENT STAGE COMPANY)
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STATEMENT
OF STOCKHOLDERS EQUITY
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FOR
THE THREE MONTHS ENDED AUGUST 31, 2008
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AND
THE PERIOD FROM JANUARY 30, 2008 TO AUGUST 31, 2008
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(UNAUDITED)
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Common
Stock
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Additional
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Accumulated
Deficit During
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||||||||||||||||||
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Shares
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Amount
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Paid-In
Capital
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Development
Stage
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Total
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BALANCE, JANUARY
30, 2008 (Inception)
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- | $ | - | $ | - | $ | - | $ | - | |||||||||||
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Issuance
of founders stock
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70,000 | 70 | - | - | 70 | |||||||||||||||
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Sale
of common stock for cash ($.001 per share)
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1,500,000 | 1,500 | - | - | 1,500 | |||||||||||||||
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Sale
of common stock for cash ($.01 per share)
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2,580,000 | 2,580 | 23,220 | - | 25,800 | |||||||||||||||
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Common
stock issued for services ($.01 per share)
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730,000 | 730 | 6,570 | - | 7,300 | |||||||||||||||
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Common
stock issued for professional fees ($.01 per share)
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120,000 | 120 | 1,080 | - | 1,200 | |||||||||||||||
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Net
Loss, for the Period January 30, 2008 (Inception) to
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May
31, 2008
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- | - | - | (8,570 | ) | (8,570 | ) | |||||||||||||
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Balance
May 31, 2008
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5,000,000 | 5,000 | 30,870 | (8,570 | ) | 27,300 | ||||||||||||||
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Common
stock issued for finder's fee
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5,000,000 | 5,000 | 45,000 | - | 50,000 | |||||||||||||||
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Common
stock issued for sales and marketing agreement
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49,900,000 | 49,900 | 449,100 | - | 499,000 | |||||||||||||||
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Imputed
compensation
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- | 4,500 | - | 4,500 | ||||||||||||||||
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Net
Loss for the three months ended August 31, 2008
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- | - | - | (79,542 | ) | (79,542 | ) | |||||||||||||
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Balance
August 31, 2008
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59,900,000 | $ | 59,900 | $ | 529,470 | $ | (88,112 | ) | $ | 501,258 | ||||||||||
See
Accompanying Notes to the Financial Statements.
-3-
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(A
DEVELOPMENT STAGE COMPANY)
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STATEMENT
OF CASH FLOWS
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FOR
THE THREE MONTHS ENDED AUGUST 31, 2008
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AND
THE PERIOD FROM JANUARY 30, 2008 TO AUGUST 31, 2008
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(UNAUDITED)
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||||||||
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For
the three
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For
the Period
from
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|||||||
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months
Ended
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January
30,
2008
to
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August
30,
2008
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August
30,
2008
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$ | (79,542 | ) | $ | (88,112 | ) | ||
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Imputed
compensation
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4,500 | 4,500 | ||||||
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Common
stock issued for services
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50,000 | 58,500 | ||||||
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Changes
in operating assets and liabilities:
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Decrease / (increase) in prepaid expenses
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19,083 | (1,917 | ) | |||||
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Increase in accounts payable
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730 | 730 | ||||||
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Net
Cash Used In Operating Activities
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(5,229 | ) | (26,299 | ) | ||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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- | - | ||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Proceeds
from issuance of common stock
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- | 27,370 | ||||||
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Net
Cash Provided By Financing Activities
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- | 27,370 | ||||||
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NET
INCREASE IN CASH
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(5,229 | ) | 1,071 | |||||
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CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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6,300 | - | ||||||
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CASH
AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 1,071 | $ | 1,071 | ||||
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Cash
paid for interest
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$ | - | $ | - | ||||
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Cash
paid for taxes
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$ | - | $ | - | ||||
See Accompanying Notes to
the Financial Statements.
-4-
ZHONG
SEN INTERNATIONAL TEA COMPANY
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
As
of August 30, 2008
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
Organization
Zhong Sen
International Tea Company (“The Company”) was incorporated on January 30, 2008,
in the state of Florida. The Company has the principal business objective of
providing sales and marketing services to small to medium sized Chinese tea
producing companies who wish to export and distribute high quality Chinese tea
products worldwide. The company intends to commence business activity
in the state of Florida with the hope of extending its business throughout the
United States. The Company has not had any significant operations or activities
from inception; accordingly, the Company is deemed to be in the development
stage.
Basis of
Presentation
The
accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in The United States of
America and the rules and regulations of the Securities and Exchange Commission
for interim financial information. Accordingly, they do not include all the
information necessary for a comprehensive presentation of financial position and
results of operations.
It is
management's opinion, however that all material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the year.
Use of
Estimates:
The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities, and disclosure of
contingent liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reporting period. Actual results
could differ from those results.
Revenue
Recognition
The
Company recognizes revenue on arrangements in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in
Financial Statements’ and No. 104, “Revenue Recognition”. In all cases, revenue
is recognized only when the price is fixed or determinable, persuasive evidence
of an arrangement exists, the service is performed and collectability of the
resulting receivable is reasonably assured.
Cash and
Cash Equivalents, and Credit Risk:
For
purposes of reporting cash flows, the Company considers all cash accounts with
maturities of 90 days or less and which are not subject to withdrawal
restrictions or penalties, as cash and cash equivalents in the accompanying
balance sheet.
The
Company maintains a portion of its deposits in a financial institution that
insures its deposits with the FDIC insurance up to $100,000 per depositor and
deposits in excess of such insured amounts represent a credit risk to the
Company. At August 30, 2008 the Company had $0 in cash that was
uninsured.
Stock
Compensation
The
Company adopted SFAS No. 123R,Share-Based
Payment(“SFAS 123R”), which requires all stock-based payments to
employees, including grants of employee stock options, to be recognized in the
financial statements based on their fair values. The
Company accounts for stock-based compensation arrangements with nonemployees in
accordance with the Emerging Issues Task Force Abstract No. 96-18, Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling Goods or Services. The
Company records the expense of such services to employees and non employees
based on the estimated fair value of the equity instrument using the
Black-Scholes pricing model.
-5-
Segments
The
Company operates in one segment and therefore segment information is not
presented.
Fair
Value of Financial Instruments
The
carrying amounts of the Company’s financial instruments including accounts
payable and loans and notes payable approximate fair value due to the relatively
short period to maturity for this instrument.
Earnings
Per Share:
Basic
earnings per share ("EPS") is computed by dividing earnings available to common
shareholders by the weighted-average number of common shares outstanding for the
period as required by the Financial Accounting Standards Board (FASB) under
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Shares". Diluted EPS reflects the potential dilution of securities that could
share in the earnings. As of August 30, 2008 there were no common share
equivalents outstanding.
Recent
Accounting Pronouncements
In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No.
51 ”. This statement improves the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements by establishing
accounting and reporting standards that require; the ownership interests in
subsidiaries held by parties other than the parent and the amount of
consolidated net income attributable to the parent and to the noncontrolling
interest be clearly identified and presented on the face of the consolidated
statement of income, changes in a parent’s ownership interest while the parent
retains its controlling financial interest in its subsidiary be accounted for
consistently, when a subsidiary is deconsolidated, any retained noncontrolling
equity investment in the former subsidiary be initially measured at fair value,
entities provide sufficient disclosures that clearly identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners. SFAS No. 160 affects those entities that have an outstanding
noncontrolling interest in one or more subsidiaries or that deconsolidate a
subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Early
adoption is prohibited. The adoption of this statement is not expected to
have a material effect on the Company's financial statements.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133) as well as related hedged items,
bifurcated derivatives, and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008,
with early application permitted. The adoption of this statement is not expected
to have a material effect on the Company's financial statements.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. SFAS 162 is effective 60 days following
the SEC’s approval of PCAOB Auditing Standard No. 6, Evaluating Consistency
of Financial Statements (AS/6). The adoption of FASB 162 is not expected to have
a material impact on the Company’s financial position.
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. SFAS 163 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. The adoption of FASB 163 is not
expected to have a material impact on the Company’s financial
position.
NOTE
2 - PREPAID EXPENSES
At May
31, 2008 the Company had prepaid accounting and legal fees of $21,000. The
Company will expense the prepaid as the services are rendered. At August 30,
2008 the Company had prepaid accounting and legal fees of $1,917. The Company
will expense the prepaid as the services are rendered.
NOTE
3 - SALES AND MARKETING AGREEMENT
On August
29, 2008 the Company entered into a sales and marketing agreement with
the Yunnan Zhongsen Group, Ltd., or YZG, a Chinese company located in
Kunming, Yunnan Province, People’s Republic of China, which caused us to become
YZG’s exclusive sales and marketing agent worldwide. We receive a
commission of 20% of global sales, payable each month based on our and YZG’s
sales figures. On August 29, 2008, the effective date of the
transaction, we issued 49,900,000 shares of common stock valued
at $499,000 or $.01 per share the most recent cash offering
price in exchange for the sales and marketing
agreement. The Company has capitalized the value of the Sales and
Marketing agreement. As of August 31, 2008 the Company has not recorded any
impairment on the agreement. The Company issued 5.000.000 shares of common stock
valued at $50,000 or $.01 per share the most recent cash offering
price as the finders fee. The Company expensed the value of the
common stock issued at August 31, 2008.
-6-
NOTE
4 - RELATED PARTY TRANSACTIONS
On
January 30, 2008 the Company sold its President and sole Director 70,000 shares
of common stock for $70. ($.001 per share)
During
the period January 30, 2008 (Inception) to May 31, 2008, the Company issued its
President and sole Director 730,000 shares of common stock for services valued
at $7,300. ($.01 per share).
On April
6, 2008 the Company sold 100,000 shares of common stock to its President
and Sole Director’s wife for $1,000 ($.01)
During
the three months ended August 31, 2008 the Company recorded imputed compensation
of $4,500 for the services contributed by issued its President and sole
Director.
On August
29, 2008 the Company’s President and Sole Director resigned.
On August
29, 2008 the Board of Directors made the following appointments: Li Wang,
Chairman; Zhongping Zhou, Independent Director; Jun Zou, Independent Director;
Pin Nie, Director; and Jiansheng Li, Director.
On August
29, 2008 the Board of Directors made the following appointments: Li Wang,
President; Pin Nie, COO; Xiaokun Li, CFO; and Jiansheng Li,
Secretary.
NOTE 5
- SHAREHOLDERS' EQUITY
On
January 30, 2008 the Company sold its President and sole Director 70,000 shares
of common stock for $70. ($.001 per share)
During
the period January 30, 2008 (Inception) to May 31, 2008, the Company issued its
President and sole Director 730,000 shares of common stock for services valued
at $7,300. ($.01 per share).
In
February 2008 the Company sold a total of 1,500,000 shares for net proceeds of
$1,500. ($.001 per share) The Company believes this offering is exempt from
registration with the US Securities and Exchange Commission.
During
the period January 30, 2008 (Inception) to May 31, 2008, the Company undertook a
private placement issuance, Regulation D Rule 506 offering of 2,580,000 shares
of common stock for net proceeds of $25,800 ($.01 per share). The Company
believes this offering is exempt from registration with the US Securities and
Exchange Commission.
During
the period January 30, 2008 (Inception) to May 31, 2008, the Company issued
120,000 shares of common stock for legal and consulting services. The
shares were valued at $1,200 or $.01 per share based on a recent cash
offering price.
During
the three months ended August 31, 2008 the Company recorded imputed compensation
of $4,500 for the services contributed by issued its President and sole
Director.
NOTE
6 - GOING CONCERN
The
Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company is in the
development stage, has an accumulated deficit of $88,112 and used cash in
operations of $26,299 from inception. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management continues
to actively seek additional sources of capital to fund current and future
operations. There is no assurance that the Company will be successful in
continuing to raise additional capital and establish its business model. These
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
NOTE
7 - SUBSEQUENT EVENTS
On
September 1, 2008 the Company entered into an agreement with EverAsia Consultant
Co., Ltd whereby Company will pay to EverAsia Consultant Co., Ltd $5,000 per
month beginning September 1, 2008 and ending December 31, 2009 for consulting
services.
On
September 1, 2008 the Company entered into an agreement with EverAsia Financial
Group, Inc. whereby Company will pay to EverAsia Financial Group, Inc. $5,000
per month beginning September 1, 2008 and ending December 31, 2009 for
management services.
On
October 1, 2008, the Company borrowed $100,000 from an officer and
director. Interest accrues at 2% per year, and expires on December
31, 2008.
-7-
Item
2. Management’s Discussion and Analysis
of Financial Condition and Results of Operation
The
following discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to future events or our future performance. Actual
results may materially differ from those projected in the forward-looking
statements as a result of certain risks and uncertainties set forth in this
prospectus. Although management believes that the assumptions made and
expectations reflected in the forward-looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual results will not be different from expectations expressed
in this report.
Results of
Operation
On August
29, 2008, we entered into an Agreement with the Yunnan Zhongsen Group, Ltd.
(“YZG”) a company located in Kunming, Yunnan Province, People’s Republic of
China. Pursuant to the agreement, we acquired a Sales and Marketing
Agreement from YZG for 49,900,000 shares of Holdings common stock which provided
for Holdings to become the exclusive sales and marketing agent for
YZG. The acquisition was approved by the unanimous consent of our
Board of Directors on August 29, 2008. Pursuant to the Agreement, we
filed an amendment in the State of Florida changing the name of the company to
Zhong Sen International Tea Company. Pursuant to the Sales and
Marketing Agreement, we will receive a commission of 20% of YZG’s worldwide
revenues from all sources.
Plan of
Operations
Our plan
of operations for the next twelve months is focused on the following primary
objectives.
|
1.
|
Find
customers to purchase tea products from our contracted supplier, Yunnan
Zhongsen Group, Ltd.
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||
|
2.
|
Raising
capital through private debt or equity offerings;
|
Subject
to the requisite financing, we believe that we can complete the following
objectives within the time period specified:
New Supply
Agreements
In August
2008, we entered into an agreement with Yunnan Zhongsen Group, Ltd., or YZG, a
Chinese company located in Kunming, Yunnan Province, People’s Republic of China,
which caused us to become YZG’s exclusive sales and marketing agent
worldwide. We receive a commission of 20% of global sales, payable
each month based on our and YZG’s sales figures. On August 29, 2008,
the effective date of the transaction, we issued 49,900,000 shares to
approximately 4200 shareholders in exchange for the sales and marketing
agreement. Additionally, our sole director and officer named a new
board of directors, and hired new executive officers, and resigned his positions
at the company.
-8-
Sales
Marketing
All sales
will initially be generated through sales by external sales and marketing
representatives, including those at our main supplier, YZG.
Administrative
Costs
We do
expect to hire several employees for sales, marketing, administrative and
finance support staff as necessary. Completion of our plan of operations
is subject to attaining adequate revenue. We cannot assure investors that
adequate revenues will be generated. In the absence of our projected revenues,
we may be unable to proceed with our plan of operations. Even without
significant revenues within the next twelve months, we still anticipate being
able to continue with our present activities, but we may require financing to
potentially achieve our goal of profit, revenue and growth.
The
foregoing represents our best estimate of our cash needs based on current
planning and business conditions. The exact allocation, purposes and timing of
any monies raised in subsequent private financings may vary significantly
depending upon the exact amount of funds raised and status of our business plan.
In the event we are not successful in reaching our initial revenue targets,
additional funds will be required and we may then not be able to proceed
with our business plan for the development and marketing of our core products
and services. Should this occur, we would likely seek additional financing to
support the continued operation of our business. We intend to raise the funds
through equity sales and debt, though no definitive agreements have been signed
yet.
Going Concern
Consideration
As
reflected in the accompanying financial statements, we have limited operations,
a stockholders' equity of $501,258 and a working capital of $2,258 and
used cash in operations of $5,229. This raises substantial doubt about our
ability to continue as a going concern. Our ability to continue as a going
concern is dependent on our ability to raise additional capital and implement
our business plan. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
We
believe that actions presently being taken to obtain additional funding and
implement our strategic plans provide the opportunity for us to continue as a
going concern.
Liquidity and Capital
Resources
As
of August 31, 2008, we have assets of $501,988 consisting of cash of
$ 1,071, prepaid expenses of $ 1,917 and intangible assets of
$ 499,000 and total liabilities of $730.
Cash and
cash equivalents from inception to date have been sufficient to cover expenses
involved in starting our business. Current cash on hand is insufficient to
support our operations for the next twelve months. Therefore, we will require
additional funds to continue to implement and expand our business plan during
the next twelve months.
Critical Accounting
Pronouncements
Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenues and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use if estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our
significant accounting policies are summarized in Note 1 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our results of operations,
financial position or liquidity for the periods presented in this
report.
-9-
Recent Accounting
Pronouncements
In
December, 2007, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 141 (revised 2007), “Business
Combinations” (hereinafter “SFAS No. 141 (revised 2007)”). This statement
establishes principles and requirements for how an acquirer a) recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed and any noncontrolling interest in the acquiree, b)
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase and c) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. The scope of SFAS No. 141 (revised 2007) is
broader than the scope of SFAS No. 141, which it replaces. The effective date of
SFAS No. 141 (revised 2007) is for all acquisitions in which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. The adoption of this statement has no immediate
material effect on the Company’s consolidated financial condition or results of
operations.
In
December, 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (hereinafter
“SFAS No. 160”). This statement establishes accounting and reporting standards
that require a) the ownership interests in subsidiaries held by parties other
than the parent be clearly identified, labeled and presented in the consolidated
statement of financial position with equity, but separate from the parent’s
equity, b) the amount of consolidated net income attributable to the parent and
to the noncontrolling interest be clearly identified and presented on the face
of the consolidated statement of income, c) changes in a parent’s ownership
interest while the parent retains its controlling financial interest in its
subsidiary be accounted for consistently, d) when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the
former subsidiary be initially measured at fair value and e) entities provide
sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the noncontrolling owners. The
effective date of this standard is for fiscal years and interim periods
beginning on or after December 15, 2008. The adoption of this statement had no
immediate material effect on the Company’s consolidated financial condition or
results of operations.
In March
2008, the FASB issued SFAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities,” an amendment of FASB
Statement No. 133, (SFAS 161). This statement requires that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. The Company is required to adopt SFAS 161 on January 1, 2009. The
Company is currently evaluating the potential impact of SFAS No. 161 on the
Company’s consolidated financial statements.
In April
2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of
Intangible Assets,”, which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
intangible assets under FASB 142 “Goodwill and Other Intangible
Assets”. The intent of this FSP is to improve the consistency between the
useful life of a recognized intangible asset under SFAS 142 and the period of
the expected cash flows used to measure the fair value of the asset under FASB
141 (revised 2007) “Business Combinations” and other U.S. generally accepted
accounting principles. The Company is currently evaluating the
potential impact of FSP FAS 142-3 on its financial
statements.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. SFAS 162 is effective 60 days following
the SEC’s approval of PCAOB Auditing Standard No. 6, Evaluating Consistency
of Financial Statements (AS/6). The adoption of FASB 162 is not expected to have
a material impact on the Company’s financial position.
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. SFAS 163 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. The adoption of FASB 163 is not
expected to have a material impact on the Company’s financial
position.
-10-
Off-Balance Sheet
Arrangements
We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).
Item
3. Quantitative and Qualitative Disclosures about Market
Risks
We
conduct our business in United States dollars. Our market risk is limited to the
United States domestic, economic and regulatory factors.
Item
4T. Controls and Procedures
Evaluation of Disclosure
Controls and Procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”),of the effectiveness of the Company’s disclosure
controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act)
as of the end of the period covered by this report. Based upon that evaluation,
the Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.
Changes in Internal
Controls
There
have been no changes in the Company's internal control over financial reporting
during the latest fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
-11-
PART
II - OTHER INFORMATION
Item
1. Legal
Proceedings.
Currently
we are not aware of any litigation pending or threatened by or against the
Company.
Item
1A. Risk Factors
None.
Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults Upon
Senior Securities.
None.
Item
4. Submission of
Matters to a Vote of Security Holders.
None.
Item
5. Other
Information.
None.
Item
6. Exhibits and
Reports of Form 8-K.
(a) Exhibits
31.1
Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1
Certification pursuant to Section 906 of Sarbanes Oxley Act of
2002
(b) Reports
of Form 8-K
None.
-12-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
ZHONG
SEN INTERNATIONAL TEA COMPANY
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|||
|
Date:
October 14, 2008
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By:
|
/s/ Wang Li | |
|
Wang
Li
|
|||
| Chief Executive Officer, | |||
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By:
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/s/ Xiaokun Li | |
|
Xiaokun
Li
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|||
|
Chief
Financial Officer
|
|||
-13-