Sino American Oil Co - Quarter Report: 2009 March (Form 10-Q)

ril10q33109.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2009

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number: 000-52304

RAPHAEL INDUSTRIES LTD.

(Exact name of registrant as specified in its charter)

Nevada		02-3717729
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4205-268 Bush Street, San Francisco, CA 94104

(Address of principal executive offices including Zip Code)

Registrant's telephone number, including area code: 1-866-261-8853

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No x

Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court.

Yes  No 

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: Common, $0.0001 par value per share: 9,511,500 outstanding as of May 12, 2009.

Raphael Industries Ltd.

(A Development Stage Company)

March 31, 2009

	Index


Balance Sheets	F-2

Statements of Operations	F-3

Statements of Cash Flows	F-4

Notes to the Financial Statements	F-5

F-1

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Raphael Industries Ltd.

(A Development Stage Company)

Balance Sheets

(Expressed in US dollars)

		March 31,	September 30,
		2009	2008
		$	$
		(unaudited)	(audited)
ASSETS

Current Assets
	Cash	224,889	241,589
	Accounts receivable	5,872	16,920
	Prepaid expenses	300	25

Total Current Assets		231,061	258,534

Property and Equipment (Note 3)		744	1,114

Website Development (Note 4)		3,850	7,480

Total Assets		235,655	267,128


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

	Accounts payable	6,756	2,023
	Accrued liabilities	-	5,003
	Licensee fee payable	43,410	35,767

Total Liabilities		50,166	42,793

Going Concern and Commitments (Notes 1 and 6)

Stockholders' Equity

Common stock: 50,000,000 shares authorized, $0.0001 par value
9,511,500 shares issued and outstanding		951	951

Additional Paid-in Capital		320,199	320,199

Donated Capital (Note 5)		196,800	168,000

Deficit Accumulated During the Development Stage		(332,461)	(264,815)

Total Stockholders' Equity		185,489	224,335

Total Liabilities and Stockholders’ Equity		235,655	267,128

The accompanying notes are an integral part of these financial statements

F-2

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Raphael Industries Ltd.

(A Development Stage Company)

Statements of Operations

(Expressed in US dollars)

						Accumulated from
		Three months	Three months	Six months	Six months	October 31, 2005
		ended	ended	ended	ended	(Date of Inception)
		March 31,	March 31,	March 31,	March 31,	to March 31,
		2009	2008	2009	2008	2009
		$	$	$	$	$


Revenue		(524)	3,320	9,390	7,970	203,079
Cost of sales		(250)	3,996	4,879	11,025	106,709

Gross Profit		(274)	(676)	4,511	(3,055)	96,370

Operating Expenses

	Foreign currency loss	4,174	7,055	27,066	19,065	53,341
	General and administrative	18,358	19,489	45,091	48,849	315,490
	Option expense	-	-	-	-	60,000

Total Operating Expenses		22,532	26,544	72,157	67,914	428,831

Net income (loss) before taxes		(22,806)	(27,220)	(67,646)	(70,969)	(332,461)

Income tax expense (benefit)		-	-	-	-	-

Net income (loss)		(22,806)	(27,220)	(67,646)	(70,969)	(332,461)

Loss per share – Basic and diluted		(0.00)	(0.00)	(0.01)	(0.01)

Weighted Average Shares Outstanding		9,511,500	9,511,500	9,511,500	9,511,500

The accompanying notes are an integral part of these financial statements

F-3

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Raphael Industries Ltd.

(A Development Stage Company)

Statements of Cash Flows

(Expressed in US dollars)

					Accumulated from
			Six months	Six months	October 31, 2005
			ended	ended	(Date of Inception)
			March 31,	March 31,	to March 31,
			2009	2008	2009
			$	$	$

Operating Activities

	Net income (loss)		(67,646)	(70,969)	(332,461)

	Adjustments to reconcile net loss of cash
		Depreciation	4,000	4,000	19,875
		Donated services	28,800	28,800	196,800
		Option lapse	-	-	50,000

	Change in operating assets and liabilities
		Accounts receivable	11,048	15,330	(5,872)
		Prepaid expenses	(275)	(80)	(300)
		Accounts payable and accrued liabilities	(270)	(8,848)	6,756
		License fee payable	7,643	6,793	43,410

Net Cash (Used In) Operating Activities			(16,700)	(24,974)	(21,792)

Investing Activities

	Deposit on database list option		-	-	(50,000)
	Website development		-	-	(22,000)
	Purchase of equipment		-	-	(2,469)

Net Cash Flows (Used in) Investing Activities			-	-	(74,469)

Financing Activities

	Proceeds from issuance of common stock		-	-	321,150

Net Cash Flows Provided by Financing Activities			-	-	321,150

Increase (Decrease) in Cash			(16,700)	(24,974)	224,889

Cash – Beginning of Period			241,589	264,474	-

Cash – End of Period			224,889	239,500	224,889

Supplemental Disclosure
	Interest paid		-	-	40
	Foreign exchange loss		27,066	19,065	53,341

The accompanying notes are an integral part of these financial statements

F-4

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Raphael Industries Ltd.

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US dollars)

(Unaudited)

NOTE 1 - NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS

Raphael Industries Ltd. (“the Company”) was incorporated on October 31, 2005 under the laws of the State of Nevada. Its principal business is to market database for commercial use in newsletters, direct mail, and internet marketing promotions. The Company has obtained the rights to two subscriber databases.

The financial statements are prepared in accordance with generally accepted accounting principles in the United States on a going concern basis which contemplates the realization of assets and discharge of liabilities and commitments in the normal course of business. To date the Company has funded operations through the issuance of capital stock and the limited generation of revenues. The Company has limited operating history, has generated limited revenues from operations, is dependent on a limited number of databases, is dependent on the owners of the license agreements for the renewal of the license agreements, and may require additional capital requirements. The Company currently has one license to two databases resulting in a limited ability to market databases. The Company does not have sufficient marketing capability to consistently undertake rentals independent of third party marketing and management agents. As at March 31, 2009, the Company has an accumulated deficit of $332,461. As a result, the Company is dependent on third party agents to successfully market and rent the databases. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management’s plan is to continue raising additional funds through future equity or debt financings, as needed, until it can generate sufficient revenues to maintain sustainable profitable operations. On October 25, 2006, the Company filed an amended SB-2 Registration Statement with the United States Securities and Exchange Commission that was declared effective on November 9, 2006, to offer up to a minimum of 2,500,000 shares of common stock at $0.10 per share for cash proceeds of $250,000 and a maximum of 5,000,000 shares of common stock at $0.10 per share for cash proceeds of $500,000. The Company raised $251,150 pursuant to the SB-2 and has sufficient capital to maintain operations for the next 12 months.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Fiscal Year

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is September 30.

(b) Interim Financial Statements

The interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods shown. The results of operations for such periods are not necessary indicative of the results expected for a full year or for any future period.

NOTE 3 – PROPERTY AND EQUIPMENT

			March 31,	September 30,
			2009	2008
		Accumulated	Net Carrying	Net Carrying
	Cost	amortization	Value	Value
	$	$	$	$

Computer hardware	2,469	1,725	744	1,114

NOTE 4 – WEBSITE DEVELOPMENT

			March 31,	September 30,
			2009	2008
		Accumulated	Net Carrying	Net Carrying
	Cost	amortization	Value	Value
	$	$	$	$

Website development	22,000	18,150	3,850	7,480

In September 2006, the Company entered into an agreement with a marketing company to develop a website and corporate identity for the Company for $30,000, of which $22,000 was capitalized in accordance with EITF No. 00-2, ”Accounting for Web Site Development Costs.” In 2009, the amortization will be completed with a charge of $7,480.

F-5

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Raphael Industries Ltd.

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US dollars)

(Unaudited)

NOTE 5 – RELATED PARTY TRANSACTIONS

Consulting fees of $28,800 were recorded as donated services by the President of the Company for consulting services provided to the Company during the six month period ended March 31, 2009. These fees are included in general and administrative, and recorded as donated capital.

NOTE 6 - COMMITMENTS

The Company entered into a license agreement dated December 1, 2007 for the exclusive use of a database for a period of 24 months. The Company has the exclusive right to market the database. The agreement calls for the payment of 30% of the generated revenues to the Company.

NOTE 7 – RECLASSIFICATION

Certain 2008 amounts have been reclassified in order to conform with the 2009 financial statement presentation.

F-6

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

Forward-Looking Statements

This Form 10-Q includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this Form 10-Q, other than statements of historical facts, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including operating costs, future capital expenditures (including the amount and nature thereof), and other such matters are forward-looking statements. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Because our stock is a penny stock, each time we refer to the Litigation Reform Act, the safe harbor does not apply.

Factors that could cause actual results to differ materially from those in forward-looking statements include: the change of business focus; continued availability of capital and financing; general economic, market or business conditions; acquisition opportunities or lack of opportunities; changes in laws or regulations; risk factors listed from time to time in our reports filed with the Securities and Exchange Commission; and other factors.

Raphael Industries Ltd is a Nevada company incorporated on October 31, 2005. We are a startup company providing list management and marketing services in the direct mail marketing industry. To date we have had limited revenues and have been issued a going concern opinion from our auditors. Our registered office and agent for service is located at 5190 Neil Road Suite 430 Reno NV 89502 and we maintain an executive operations office at 268 Bush Street, Suite 4205, San Francisco, CA 94104. Our telephone and fax numbers are 1-866-261-8853 and 1-414-434-3656, respectively and our corporate website is www.raphaelindustries.net.

Employees and Consultants

The Registrant has no employees. The company's President, Arne Raabe, is retained as a consultant.

(b) Results of Operations

During the six months ending March 31, 2009, we realized revenues of $9,390 compared to $7,970 for the same period of 2008 and we incurred an operating loss before taxes of $67,646 compared to an operating loss of $70,969 for 2008. Total operating expenses for the six months ended March 31, 2009 were $72,157 (2008 - $67,914). The major components to expenses faced by the company during the six months were general and administrative of $45,091 (2008 - $48,849), foreign currency loss of $27,066 (2008 - $19,065), and cost of sales of $4,879 (2008 - $ 11,025).

As of March 31, 2009, the Company had $224,889 in cash (September 30, 2008 - $241,589), $5,872 in accounts receivable (September 30, 2008 - $16,920), $300 in prepaid expenses (September 30, 2008 - $25), $3,850 in website development (September 30, 2008 - $7,480), and $744 in property and equipment (September 30, 2008 - $1,114).

The Company further had $6,756 in accounts payable and accrued liabilities (September 30, 2008 - $7,026), and $43,410 in licensee fee payable (September 30, 2008 - $35,767). There is no long-term debt. The Company may, in the future, invest in short-term investments from time to time but there can be no assurance that these investments will result in profit or loss.

We have sufficient cash to implement our plan of operations for the next 12 months.

Our future growth and success will be dependent on our ability to market the lists we currently maintain for our clients and to secure additional lists. If we cannot succeed in marketing our licensed lists and to secure contracts to market additional lists then our prospects for growth are substantially undermined.

As of March 31, 2009, our sole source of revenue has been list rentals. Accordingly, no table showing percentage breakdown of revenue by business segment or product line is included.

On April 30, 2007 we closed a financing by issuing 2,511,500 shares for $251,150 pursuant to an SB-2 registration statement declared effective by the Securities and Exchange Commission on November 9, 2006.

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No engineering, management or similar report has been prepared or provided for external use in connection with the offer of our securities to the public.

Off balance-sheet arrangements

We do not have any off balance-sheet arrangements that have or are reasonably likely to have a current or future effect on the small business issuer's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Recent accounting pronouncements

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 141(R), "Business Combinations". SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, an any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 141(R) on its consolidated financial statements but does not expect it to have a material effect.

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51". SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended September 31, 2010. The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements but does not expect it to have a material effect.

In March 2008, the FASB issued SFAS No. 161 “Disclosure About Derivative Instruments and Hedging Activities-an amendment to FASB Statement 133” (SFAS 161). SFAS 161 requires enhanced disclosures about derivatives and hedging activities and the reasons for using them. SFAS 161 is effective for fiscal years beginning after November 15, 2008. The Company is currently reviewing the provisions of SFAS 161 on its financial statements but does not expect it to have a material effect.

In May 2008, the FASB issued SFAS 162, “The hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the frame work for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles. This statement shall be effective 60 days after the SEC’s approval of the Public Company Accounting Oversight Board amendment to AU Section 411, “the Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The Company is currently reviewing the provisions of SFAS 162 on its financial statements but does not expect it to have a material effect.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – and interpretation of FASB Statement No. 60” (“SFAS 163”. SFAS 163 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that statement. SFAS 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. The Company is currently reviewing the provisions of SFAS 163 on its financial statements but does not expect it to have a material effect.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

N/A

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures:

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

(b) Changes in Internal Control over Financial Reporting:

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.

PART II -OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

The Company’s SB-2 registration statement, file number 333-135331 was declared effective by the Securities and Exchange Commission on November 9, 2006. The offering has commenced and was closed on April 30, 2007 and 2,511,500 shares were issued at an offering price of $0.10 per share for total proceeds of $251,150. The following table details the use of proceeds through March 31, 2009.

List and services marketing	$
Web site and material design
Rent, Audit, General Legal and Office Expenses		42,813
List updating and enhancement		1,000

TOTAL	$	43,813

Item 3. Defaults Upon Senior Securities

None

Item 4. Submissions of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

-10-

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit Number	Description
3.1	Articles of Incorporation (1)
3.3	By-Laws (1)
4.1	Specimen Stock Certificate (1)
5.1	Opinion on legality (1)
10.1	License agreement with Free Enterprise Press (1)
10.2	License agreement with Global Commodity Press (1)
10.3	Agreement with Kroll Direct Marketing (1)
10.4	Agreement with Infomat Inc. (1)
10.5	Agreement with Marketing Software Company (1)
10.6	Agreement with List Fusion (1)
10.7	Agreement with Global Commodity Press (3)
14.1	Code of ethics (2)
23.1	Consent from Conrad Lysiak (1)
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Audit committee charter (2)

(1) Incorporated herein by reference from our Form SB-2 registration statement and all amendments thereto filed with the Securities and Exchange Commission, and amendments thereto, SEC file No. 333-135331.

(2) Incorporated herein by reference from our Form 10KSB for the year ended September 30, 2006 filed with the Securities and Exchange Commission on February 14, 2007.

(3) Incorporated herein by reference from our Form 10KSB for the year ended September 30, 2007 filed with the Securities and Exchange Commission on January 15, 2008.

(b) Reports on Form 8-K filed during the quarter.

On February 27, 2009 the Company filed an 8-K under Item 5.02 announcing the appointment of Heather Grant as Corporate Secretary.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	RAPHAEL INDUSTRIES LTD.
	(Registrant)

Dated: May 12, 2009	BY:	ARNE RAABE
		President, Chief Executive Officer, and
		Chief Financial Officer and Director

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