Nova Lifestyle, Inc. - Quarter Report: 2010 June (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 June 30, 2010
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Commission
file number: 333-163019
STEVENS RESOURCES, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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75-3250686
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(State
or other jurisdiction of incorporation
or
organization)
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(IRS
Employer Identification
No.)
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No. 6, JieFangNan Lu, HeXi
District
TianJin, China
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300000
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(Address
of principal executive offices)
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(Zip
Code)
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(86) 22-25763415
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(Registrant’s
telephone number, including area
code)
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Indicate
by checkmark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the last 90 days. YES x NO ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer, “accelerated filer,”
“non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller reporting company x
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(do not check if a smaller
reporting company)
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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 x NO ¨
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
As of
August 9, 2010, the registrant had 2,596,000 shares of common stock, $.001 par
value, issued and outstanding.
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
TABLE
OF CONTENTS
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Page
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PART I.
FINANCIAL INFORMATION
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Item 1.
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Financial
Statements
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3
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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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11
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Item 3.
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Quantitative
and Qualitative Disclosures About Market Risk
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12
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Item 4.
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Controls
and Procedures
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13
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PART
II. OTHER INFORMATION
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Item 1.
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Legal
Proceedings
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13
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Item 1A.
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Risk
Factors
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13
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Item 2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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14
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Item 3.
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Defaults
Upon Senior Securities
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14
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Item 5.
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Other
Information
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14
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Item 6.
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Exhibits
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14
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SIGNATURES
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15
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Item
1. Financial Statements
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
BALANCE
SHEETS
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As of June 30, 2010
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As of September 30, 2009
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(Unaudited)
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ASSETS
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CURRENT
ASSETS
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Cash
& cash equivalents
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$ | 1,395 | $ | 4,000 | ||||
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Prepaid
expenses
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- | 2,000 | ||||||
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TOTAL
ASSETS
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$ | 1,395 | $ | 6,000 | ||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
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CURRENT
LIABILITIES
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Accounts
payable & accrued liabilities
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- | $ | 525 | |||||
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Total
current liabilities
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- | 525 | ||||||
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COMMITMENT
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STOCKHOLDERS'
EQUITY
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Common
stock, $0.001 par value; 75,000,000 shares authorized; 2,614,000 and
2,100,000 issued and outstanding at June 30, 2010 and September 30, 2009,
respectively
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2,614 | 2,100 | ||||||
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Additional
paid in capital
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13,666 | 3,900 | ||||||
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Deficit
accumulated during the exploration stage
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(14,885 | ) | (525 | ) | ||||
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Total
stockholders' equity
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1,395 | 5,475 | ||||||
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TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 1,395 | $ | 6,000 | ||||
The
accompanying notes are an integral part of these financial
statements.
3
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
STATEMENTS
OF EXPENSES
(Unaudited)
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From September 9, 2009
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Nine Months Ended
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Three Months Ended
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(inception) through
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June 30, 2010
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June 30, 2010
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June 30, 2010
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Expenses
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G&A
expenses
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$ | 266 | $ | 14 | $ | 266 | ||||||
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Professional
fees
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14,094 | 4,761 | 14,619 | |||||||||
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Total
Expenses
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14,360 | 4,775 | 14,885 | |||||||||
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Net
loss
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$ | 14,360 | $ | 4,775 | $ | 14,885 | ||||||
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Weighted
average number of shares outstanding
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2,425,883 | 2,614,000 | ||||||||||
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Basic
and diluted net loss per share
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
The
accompanying notes are an integral part of these financial
statements.
4
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
STATEMENTS
OF CASH FLOWS
(Unaudited)
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Period from September 9, 2009
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Nine months ended
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(inception) through
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June 30, 2010
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June 30, 2010
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$ | (14,360 | ) | $ | (14,885 | ) | ||
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Adjustments
to reconcile net loss to net cash used in operating
activities
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Common
stock issued for services
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- | 2,000 | ||||||
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Changes
in
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Prepaid
Expenses
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2,000 | - | ||||||
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Accounts
payable and accrued liabilities
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(525 | ) | - | |||||
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Net
cash used in operating activities
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(12,885 | ) | (12,885 | ) | ||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Proceeds
from issuance of common stock
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10,280 | 14,280 | ||||||
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Net
cash provided by financing activities
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10,280 | 14,280 | ||||||
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(DECREASE)
INCREASE IN CASH & CASH EQUIVALENTS
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(2,605 | ) | 1,395 | |||||
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CASH
& CASH EQUIVALENTS, BEGINNING OF PERIOD
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4,000 | - | ||||||
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CASH
& CASH EQUIVALENTS, END OF PERIOD
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$ | 1,395 | $ | 1,395 | ||||
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Supplemental
Cash flow data:
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Income
tax paid
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$ | - | $ | - | ||||
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Interest
paid
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$ | - | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
5
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ DEFICIT
From
September 9, 2009 (Inception) to June 30, 2010
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Common stock
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Additional
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Deficit Accumulated
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Numbers of shares
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Amount
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Paid in capital
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During the development stage
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Total
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Balance,
September 9, 2009 (Inception)
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- | $ | - | $ | - | $ | - | $ | - | |||||||||||
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Common
stock issued for cash, September 28, 2009, $0.002 per
share
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2,000,000 | 2,000 | 2,000 | - | 4,000 | |||||||||||||||
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Common
stock issued for services, September 28, 2009, $0.002 per
share
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100,000 | 100 | 1,900 | - | 2,000 | |||||||||||||||
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Net
loss
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- | - | - | (525 | ) | (525 | ) | |||||||||||||
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Balance
at September 30, 2009
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2,100,000 | 2,100 | 3,900 | (525 | ) | 5,475 | ||||||||||||||
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Common
stock issued for cash at $0.02, January 13, 2010
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514,000 | 514 | 9,766 | - | 10,280 | |||||||||||||||
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Net
loss period ended June 30, 2010
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- | - | - | (14,360 | ) | (14,360 | ) | |||||||||||||
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Balance
at June 30, 2010
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2,614,000 | $ | 2,614 | $ | 13,666 | $ | (14,885 | ) | $ | 1,395 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
6
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
NOTES
TO THE FINANCIAL STATEMENTS
June
30, 2010 (Unaudited)
NOTE 1 -
FINANCIAL STATEMENTS
The
accompanying financial statements were prepared by Stevens Resources, Inc. (the
“Company”) without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows as
of and for the periods ended June 30, 2010, and for all periods presented were
made.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) have been condensed or omitted. It is
suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's September 30,
2009, audited financial statements as reported in the Company’s Form
S-1. The results of operations for the period ended June 30, 2010,
are not necessarily indicative of the operating results for the full year ended
September 30, 2010.
NOTE 2 –
SIGNIFICANT ACCOUNTING POLICIES
Cash
For the
Statements of Cash Flows, all highly liquid investments with maturity of three
months or less are considered cash equivalents.
Use of
Estimates
The
preparation of these financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Income
Taxes
The
Company utilizes Statement of Financial Accounting Standards (“SFAS”) No. 109,
“Accounting for Income Taxes,” codified in Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 740, which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that were included in the financial statements or tax
returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, (codified in FASB ASC Topic 740) on September 9,
2009. As a result of the implementation of FIN 48, the Company made a
comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by FIN 48. As a result of the implementation
of FIN 48, the Company recognized no material adjustments to liabilities or
stockholders’ equity. When tax returns are filed, it is highly certain that some
positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken
or the amount of the position that would be ultimately sustained. The benefit of
a tax position is recognized in the financial statements in the period during
which, based on all available evidence, management believes it is more likely
than not that the position will be sustained upon examination, including
the resolution of appeals or litigation processes, if any. Tax positions taken
are not offset or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest
amount of tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority. The portion of the benefits
associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheets along with any associated interest and penalties
that would be payable to the taxing authorities upon examination. Interest
associated with unrecognized tax benefits are classified as interest expense and
penalties are classified in selling, general and administrative expenses in the
statements of income. At June 30, 2010, the Company did not take any uncertain
positions that would necessitate recording of tax related
liability.
Statement of Cash
Flows
In
accordance with SFAS No. 95, “Statement of Cash Flows,” (codified in FASB ASC
Topic 230), cash flows from the Company's operations are calculated based upon
the local currencies. As a result, amounts related to assets and
liabilities reported on the statement of cash flows may not necessarily agree
with changes in the corresponding balances on the balance
sheet.
7
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
NOTES
TO THE FINANCIAL STATEMENTS
June
30, 2010 (Unaudited)
Basic and Diluted
Loss per Share
(EPS)
Basic EPS
(Loss) is computed by dividing income (loss) available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
EPS is computed similarly to basic net income (loss) per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted EPS is based on the
assumption that all dilutive convertible shares and stock options
were converted or exercised. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the
average market price during the period.
Fair Value of Financial
Instruments
SFAS No.
107, “Disclosures about Fair Value of Financial Instruments,” codified in FASB
ASC Financial Instruments, Topic 825, requires the Company to disclose estimated
fair values of financial instruments. The carrying amounts reported in the
statements of financial position for current assets and current liabilities
qualifying as financial instruments are a reasonable estimate of fair
value.
Fair Value
Measurements
On
September 9, 2009, the Company adopted SFAS No. 157, “Fair Value Measurements,”
codified in FASB ASC Financial Instruments, Topic 820. SFAS 157 defines fair
value, establishes a three-level valuation hierarchy for disclosures of fair
value measurement and enhances disclosures requirements for fair value
measures. The three levels are defined as follows:
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·
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Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
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·
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Level
2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
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·
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Level
3 inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
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As of
June 30, 2010, the Company did not identify any assets and liabilities that are
required to be presented on the balance sheet at fair value.
Share-Based
Expenses
ASC 718
"Compensation - Stock Compensation," codified in SFAS No. 123, prescribes
accounting and reporting standards for all stock-based payments awarded to
employees, including employee stock options, restricted stock, employee stock
purchase plans and stock appreciation rights, which may be classified as either
equity or liabilities. The Company should determine if a present obligation to
settle the share-based payment transaction in cash or other assets exists. A
present obligation to settle in cash or other assets exists if: (a) the option
to settle by issuing equity instruments lacks commercial substance or (b) the
present obligation is implied because of an entity's past practices or stated
policies. If a present obligation exists, the transaction should be recognized
as a liability; otherwise, the transaction should be recognized as
equity.
The
Company accounts for stock-based compensation issued to non-employees and
consultants in accordance with the provisions of ASC 505-50 "Equity - Based
Payments to Non-Employees," which codified SFAS 123 and the Emerging Issues Task
Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods or Services." Measurement of share-based payment
transactions with non-employees shall be based on the fair value of whichever is
more reliably measurable: (a) the goods or services received; or (b) the equity
instruments issued. The fair value of the share-based payment transaction should
be determined at the earlier of performance commitment date or performance
completion date.
8
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
NOTES
TO THE FINANCIAL STATEMENTS
June
30, 2010 (Unaudited)
Recent Accounting
Pronouncements
We
adopted all recently issued accounting pronouncements. The adoption of the
accounting pronouncements, including those not yet effective, is not anticipated
to have a material effect on our financial position or results of
operations.
On
September 9, 2009, the Company adopted Accounting Standards Update (“ASU”) No.
2009-01, “Topic 105 - Generally Accepted Accounting Principles - amendments
based on Statement of Financial Accounting Standards No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles” (“ASU No. 2009-01”). ASU No. 2009-01
re-defines authoritative GAAP for nongovernmental entities to be only comprised
of the FASB Accounting Standards Codification (“Codification”) and, for SEC
registrants, guidance issued by the SEC. The Codification is a
reorganization and compilation of all then-existing authoritative GAAP for
nongovernmental entities, except for guidance issued by the SEC. The
Codification is amended to effect non-SEC changes to authoritative
GAAP. Adoption of ASU No. 2009-01 only changed the referencing
convention of GAAP in Notes to the Financial Statements.
On
February 25, 2010, the FASB issued ASU No. 2010-09 Subsequent Events Topic 855
“Amendments to Certain Recognition and Disclosure Requirements,” effective
immediately. The amendments in the ASU remove the requirement for an SEC filer
to disclose a date through which subsequent events have been evaluated in both
issued and revised financial statements. Revised financial statements include
financial statements revised as a result of either correction of an error or
retrospective application of US GAAP. The FASB believes these amendments remove
potential conflicts with the SEC’s literature. The adoption of this ASU did not
have a material impact on the Company’s financial statements.
On March
5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815
“Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the
guidance within the derivative literature that exempts certain credit related
features from analysis as potential embedded derivatives requiring separate
accounting. The ASU specifies that an embedded credit derivative feature related
to the transfer of credit risk that is only in the form of subordination of one
financial instrument to another is not subject to bifurcation from a host
contract under ASC 815-15-25, Derivatives and Hedging — Embedded Derivatives —
Recognition. All other embedded credit derivative features should be analyzed to
determine whether their economic characteristics and risks are “clearly and
closely related” to the economic characteristics and risks of the host contract
and whether bifurcation is required. The ASU will be effective for the Company
in the fourth quarter of 2010. Early adoption is permitted. The adoption of this
ASU will not have a material impact on the Company’s financial
statements.
In April
2010, the FASB codified the consensus reached in Emerging Issues Task Force
Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-17
provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for research
and development transactions. FASB ASU No. 2010-17 is effective for fiscal years
beginning on or after June 15, 2010, and is effective on a prospective
basis for milestones achieved after the adoption date. The Company does not
expect this ASU will have a material impact on its financial position or results
of operations when it adopts this update on October 1, 2010.
Going
Concern
The
Company's financial statements are prepared using US GAAP applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes
profitable. If the Company is unable to obtain adequate capital, it
could be forced to cease operations.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plans to obtain such
resources for the Company include (1) obtaining capital from management and
significant stockholders sufficient to meet its minimal operating expenses, and
(2) as a last resort, seeking out and completing a merger with an existing
operating company. However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
9
STEVENS
RESOURCES, INC.
(An
Exploration Stage Company)
NOTES
TO THE FINANCIAL STATEMENTS
June
30, 2010 (Unaudited)
NOTE 3 –
COMMON STOCK
On
January 13, 2010, the Company filed a Prospectus pursuant to Rule 424(b)(3)
promulgated under the Securities Act of 1933, as amended, as part of the
Company’s Registration Statement on Form S-1 deemed effective by the Securities
and Exchange Commission on January 12, 2010. Pursuant to the
prospectus, the Company sold 514,000 shares at $0.02 per share for $10,280
cash.
NOTE 4 –
SUBSEQUENT EVENT
Effective
July 13, 2010, Mr. Justin Miller, the Company’s President, Chief Executive
Officer, Chief Financial Officer, Treasurer and director, entered into an
agreement for the sale and purchase of securities of the Company (the
“Agreement”) with Mr. Alex Li. In accordance with the terms and provisions of
the Agreement, Mr. Miller sold an aggregate of 2,000,000 shares of common
stock of the Company, par value $.001 per share (the “Common Stock”), held of
record, representing approximately 77.04% of the issued and outstanding Common
Stock of the Company, to Mr. Li in a private transaction intended to be exempt
from registration under the Securities Act of 1933, as amended, for an aggregate
consideration of $40,000. The shares of Common Stock are restricted securities.
The source of funds used by Mr. Li was personal funds. After giving effect to
the Agreement, there has been a change in control of the
Company.
10
CAUTIONARY
STATEMENT FOR FORWARD-LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us 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. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “would,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the
negative of such terms or other similar expressions. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those listed
under the heading “Risk Factors” and those listed in our other SEC filings. The
following discussion should be read in conjunction with our Financial Statements
and related Notes thereto included elsewhere in this report. Throughout this
Quarterly Report, we will refer to Stevens Resources, Inc. as “Stevens
Resources,” the “Company,” “we,” “us,” and “our.”
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Company
History
Stevens
Resources, Inc. was incorporated in the State of Nevada on September 9,
2009. We intend to commence operations as an exploration stage
company. We will explore for mineral properties to exploit any mineral deposits
we discover. We own an option to acquire an undivided 100% beneficial
interest in a mineral claim in Stevens County, Washington State, known as the
Young American Claim Group (“YACG”). The claims are about 80 acres of
lode claims. YACG is 4 en bloc unpatented claims originally located in 1886 and
is within the Bossburg Mining District. YACG is a lead (Pb)-zinc (Zn) prospect
with minor silver and gold potential. We do not have any current plans to
acquire interests in additional mineral properties, though we may consider such
acquisitions in the future.
Business
Development
To date,
our business activities have been limited to completing the registration of our
common stock on Form S-1, maintaining our reporting requirements, and securing
our option to acquire the YACG described above. We have qualified for
the quotation of our common stock on the OTCBB under the ticker symbol “STVS,”
but no market currently exists. Investors should be fully aware that
there can be no guarantee or assurance that a market will ever develop for our
common stock in the future.
Liquidity
and Capital Resources
On
January 12, 2010, the Securities and Exchange Commission (“SEC”) deemed our Form
S-1 Registration Statement (Commission File Number 333-163019)
effective. The Company offered 5,000,000 shares of common stock at
$0.02 per share. As of the date of this report, we have sold 514,000
shares of common stock through our registered offering. If the
Company is unable to secure adequate financing, its business will fail and any
investment made into the Company will be completely lost.
As of
June 30, 2010, we had total cash of $1,395. We have a cumulative net
loss of $14,885 since inception. We have not generated any revenues
and cannot provide any assurance we will ever generate revenues. We
are currently dependent upon raising proceeds in order to continue as a going
concern. There can be no guarantee or assurance that the Company will
be able to secure adequate financing within the next three to six months and
failure to do so would result in a complete loss of any investment in the
Company.
Product
Research and Development
The
Company has not incurred any expense for product research and development since
inception and does not anticipate any costs or expenses to be incurred for
product research and development within the next twelve months.
The
Company does not plan any purchase of significant equipment in the next twelve
months.
Recently
Issued Accounting Pronouncements
On
September 9, 2009, the Company adopted Accounting Standards Update (“ASU”) No.
2009-01, “Topic 105 - Generally Accepted Accounting Principles - amendments
based on Statement of Financial Accounting Standards No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles” (“ASU No. 2009-01”). ASU No. 2009-01
re-defines authoritative GAAP for nongovernmental entities to be only comprised
of the FASB Accounting Standards Codification (“Codification”) and, for SEC
registrants, guidance issued by the SEC. The Codification is a
reorganization and compilation of all then-existing authoritative GAAP for
nongovernmental entities, except for guidance issued by the SEC. The
Codification is amended to effect non-SEC changes to authoritative
GAAP. Adoption of ASU No. 2009-01 only changed the referencing
convention of GAAP in Notes to the Financial Statements.
11
On
February 25, 2010, the FASB issued ASU No. 2010-09 Subsequent Events Topic 855
“Amendments to Certain Recognition and Disclosure Requirements,” effective
immediately. The amendments in the ASU remove the requirement for an SEC filer
to disclose a date through which subsequent events have been evaluated in both
issued and revised financial statements. Revised financial statements include
financial statements revised as a result of either correction of an error or
retrospective application of US GAAP. The FASB believes these amendments remove
potential conflicts with the SEC’s literature. The adoption of this ASU did not
have a material impact on the Company’s financial statements.
On March
5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815
“Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the
guidance within the derivative literature that exempts certain credit related
features from analysis as potential embedded derivatives requiring separate
accounting. The ASU specifies that an embedded credit derivative feature related
to the transfer of credit risk that is only in the form of subordination of one
financial instrument to another is not subject to bifurcation from a host
contract under ASC 815-15-25, Derivatives and Hedging — Embedded Derivatives —
Recognition. All other embedded credit derivative features should be analyzed to
determine whether their economic characteristics and risks are “clearly and
closely related” to the economic characteristics and risks of the host contract
and whether bifurcation is required. The ASU will be effective for the Company
in the fourth quarter of 2010. Early adoption is permitted. The adoption of this
ASU will not have a material impact on the Company’s financial
statements.
In April
2010, the FASB codified the consensus reached in Emerging Issues Task Force
Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-17
provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for research
and development transactions. FASB ASU No. 2010-17 is effective for fiscal years
beginning on or after June 15, 2010, and is effective on a prospective basis for
milestones achieved after the adoption date. The Company does not expect this
ASU will have a material impact on its financial position or results of
operations when it adopts this update on October 1, 2010.
Critical
Accounting Policies
Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“US GAAP”). US GAAP requires the use of estimates; assumptions,
judgments and subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenue 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 of
estimates and underlying accounting assumptions adhere to US 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 2 of our financial
statements. While all these significant accounting policies impact
our 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
consolidated results of operations, financial position or liquidity for the
periods presented in this report.
Off-Balance
Sheet Arrangements
As of the
date of this Quarterly Report, the Company does not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on the Company's financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with the Company is a party, under
which the Company has (i) any obligation arising under a guarantee contract,
derivative instrument or variable interest; or (ii) a retained or contingent
interest in assets transferred to such entity or similar arrangement that serves
as credit, liquidity or market risk support for such assets.
Item 3. Quantitative and Qualitative
Disclosures about Market Risk
Not
required.
12
Item
4. Controls and Procedures
Disclosure
Controls and Procedures
As of
June 30, 2010, the management of the Company assessed the effectiveness of the
Company’s internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”) and SEC guidance on conducting such
assessments. Management concluded, during the quarter ended June 30,
2010, internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules. Management realized there are
deficiencies in the design or operation of the Company’s internal control that
adversely affected the Company’s internal controls which management considers
being material weaknesses.
In the
light of management’s review of internal control procedures as they relate to
COSO and the SEC the following material weaknesses were identified:
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·
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The
Company’s Audit Committee does not function as an Audit Committee should,
since there is a lack of independent directors on the Committee and the
Board of Directors has not identified an “expert,” one who is
knowledgeable about reporting and financial statements requirements, to
serve on the Audit Committee.
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·
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The
Company has limited segregation of duties which is not consistent with
good internal control procedures.
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·
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The
Company does not have a written internal control procedures manual that
outlines the duties and reporting requirements of the Directors and any
staff to be hired in the future. This lack of a written internal
control procedures manual does not meet the requirements of the SEC or
good internal control.
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·
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There
are no effective controls instituted over financial disclosure and the
reporting processes.
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Management
feels the material weaknesses identified above, being the latter three, have not
had any effect on the financial results of the Company. Management will have to
address the lack of independent members on the Audit Committee and identify an
“expert” for the Committee to advise other members as to correct accounting and
reporting procedures.
The
Company and its management will endeavor to correct the above noted weaknesses
in internal control once it has adequate funds to do so. By appointing
independent members to the Audit Committee and using the services of an expert
on the Committee will greatly improve the overall performance of the Audit
Committee. With the addition of other Board Members and staff the
segregation of duties issue will be addressed and will no longer be
a concern to management. Having a written policy manual outlining the
duties of each of the officers and staff of the Company will facilitate better
internal control procedures.
Management
will continue to monitor and evaluate the effectiveness of the Company’s
internal controls and procedures and its internal controls over financial
reporting on an ongoing basis and is committed to taking further action and
implementing additional enhancements or improvements, as necessary and as funds
allow.
Changes
in Internal Control over Financial Reporting
There
were no changes in the Company’s internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
during its most recently completed fiscal quarter that have materially affected,
or are reasonably likely to materially affect, its internal control over
financial reporting.
PART II. OTHER INFORMATION
From time
to time, the Company may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may have an adverse effect on the
Company’s business, financial condition or operating results. There are
currently no known pending legal or administrative proceedings or claims that
will have, individually or in the aggregate, a material adverse effect on the
Company’s business, financial condition or operating results.
Item
1A. Risk Factors
Not
required.
13
Use
of Proceeds
On
January 12, 2010, our Registration Statement on Form S-1 (File No. 333-163019)
was declared effective by the Securities and Exchange Commission, pursuant to
which we registered the offering and sale by us of 5,000,000 shares of our
common stock at a price of $.02 per share, for an aggregate price of the
offering amount registered of $100,000. There was no underwriter involved in our
registered offering. We sold 514,000 shares of our common stock in the
registered offering, raising $10,280 in aggregate offering proceeds. We have
used the offering proceeds for general working capital. As of June 30, 2010,
$1,395 remains of the offering proceeds.
Item
3. Defaults Upon Senior Securities
None.
All
information required to be reported in a Current Report on Form 8-K during the
period covered by this Form 10-Q has been reported.
Item 6. Exhibits
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Exhibit No.
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Document Description
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31.1
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Certification
of Principal Executive Officer and Principal Financial Officer
pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
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32.1
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Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, as signed by the Chief Executive Officer
and Chief Financial Officer
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14
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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STEVENS
RESOURCES, INC.
(Registrant)
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Date:
August 12, 2010
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By:
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/s/ Alex Li
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Alex
Li
President,
Chief Executive Officer, Chief Financial Officer,
Treasurer and
Secretary
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15