Sino American Oil Co - Quarter Report: 2011 March (Form 10-Q)

saoc10q-3312011.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011

OR

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-52304

SINO AMERICAN OIL COMPANY

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

5190 Neil Road, Suite 430

Reno, NV 89502

(Address of principal executive offices, including zip code.)

(866) 261-8853

(telephone number, including area code)

Indicate by check mark 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 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [ ]

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. (Check one):

Large Accelerated Filer	[ ]	Accelerated Filer	[ ]
Non-accelerated Filer	[ ]	Smaller Reporting Company	[X]
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 29,023,000 as of May 16, 2011.

TABLE OF CONTENTS

			Page

PART I.

Item 1.	Financial Statements.		3

	Financial Statements:
		Balance Sheets	F-1
		Statements of Operations	F-2
		Statements of Cash Flows	F-3
		Statements of Stockholders’ Equity	F-4
		Notes to the Financial Statements	F-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		9

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		10

Item 4.	Controls and Procedures.		10

PART II.

Item 1A.	Risk Factors.		10

Item 6.	Exhibits.		10

Signatures			12

Exhibit Index			13

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Balance Sheets

(Expressed in US dollars)

(Unaudited)

		March 31,	September 30,
		2011	2010
		$	$
ASSETS

Current Assets
	Cash	1,163,498	171,145
	Restricted cash	-	856,387
	Prepaid expenses	-	47

Total Current Assets		1,163,498	1,027,579

Property and Equipment (Note 3)		5,047	1,477

Website Development (Note 4)		2,390	-

Total Assets		1,170,935	1,2029,056

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

	Accounts payable and accrued liabilities	14,909	7,787
	Licensee fee payable	43,410	43,410

Total Liabilities		58,319	51,197

Going Concern (Note 1)
Commitments (Note 7)

Stockholders' Equity

Common stock: 100,000,000 shares authorized, $0.0001 par value
43,534,500 (19,023,000 shares in September 30, 2010) issued and
outstanding (Note 5)		4,353	1,902
Additional Paid-in Capital		1,318,248	319,248
Share Subscriptions		-	856,387
Donated Capital (Note 4)		247,200	232,800
Deficit Accumulated During the Development Stage		(457,185)	(432,478)

Total Stockholders' Equity		1,112,616	977,859

Total Liabilities and Stockholders’ Equity		1,170,935	1,029,056

The accompanying notes are an integral part of these financial statements

F-1

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Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Statements of Operations

(Expressed in US dollars)

(Unaudited)

						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,
		2011	2010	2011	2010	2011
		$	$	$	$	$


Revenue		-	-	-	-	205,242
Cost of sales		-	-	-	-	106,710

Gross Profit		-	-	-	-	98,532

Operating Expenses

	Foreign currency (gain) loss	(23,290)	(4,548)	(33,005)	(7,941)	(9,262)
	General and administrative	25,025	33,255	56,261	57,417	501,821
	Option expense	-	-	-	-	60,000

Total Operating Expenses		1,735	28,707	23,256	49,476	552,559

Net income (loss) before taxes		(1,735)	(28,707)	(23,256)	(49,476)	(454,027)

Income tax expense		-	-	-	-	1,707

Net income (loss)		(1,735)	(28,707)	(23,256)	(67,646)	(455,734)

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

Weighted Average Shares Outstanding		33,860,167	19,023,000	31,305,115	19,023,000

The accompanying notes are an integral part of these financial statements

F-2

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Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Statements of Cash Flows

(Expressed in US dollars)

(Unaudited)

					Accumulated from
			Six months	Six months	October 31, 2005
			ended	ended	(Date of Inception)
			March 31,	March 31,	to March 31,
			2011	2010	2011
			$	$	$

Operating Activities
	Net income (loss)		(23,256)	(49,476)	(455,734)

	Adjustments to reconcile net loss of cash
		Depreciation	745	492	25,813
		Donated services	14,400	14400	247,200
		Option lapse	-	-	50,000

	Change in operating assets and liabilities
		Prepaid expenses	47	(41)	-
		Accounts payable and accrued liabilities	7,122	8142)	14,909
		License fee payable	-	-	43,410

Net Cash (Used In) Operating Activities			(942)	(16,700)	(74,402)

Investing Activities
	Deposit on database list option		-	-	(50,000)
	Website development		(2,390)	-	(24,390)
	Purchase of equipment		(4,315)	(2,075)	(8,860)

Net Cash Flows (Used in) Investing Activities			(6,705)	(2,075)	(83,250)

Financing Activities
	Share subscriptions received		(856,387)	-	-
	Proceeds from issuance of common stock		1,000,000	-	1,321,150

Net Cash Flows Provided by Financing Activities			143,613	-	1,321,150

Increase (Decrease) in Cash			135,966	(28,558)	1,163,498

Restricted cash released			856,387	-	-

Cash – Beginning of Period			171,145	239,248	-

Cash – End of Period			1,163,498	210,690	1,163,498

Supplemental Disclosure
	Interest paid		-	-	56
	Foreign exchange (gain) loss		(33,005)	(7,941)	(9,262)

The accompanying notes are an integral part of these financial statements

F-3

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Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Statements of Stockholders’ Equity

For the Period from October 31, 2005 (Date of Inception) to March 31, 2011

(Expressed in US dollars)

(Unaudited)

				Additional	Share			Total
		Common Stock		Paid-in	Subs			Stockholder’s
		Shares	Amount	Capital	Received	Capital	Deficit	Equity
		#	$	$	$	$	$	$

Balance on October 31, 2005 (Date of Inception)		-	-	-		-	-	-

October 31, 2005 - issue of common stock for
	cash at $1.00 per share	1	1	-		-	-	1
November 28, 2005 - cancellation of common
	Stock	(1)	(1)	-		-	-	(1)
November 28, 2005 - issue of common stock
	for cash at $0.01 per share	1,000,000	100	4,900		-	-	5,000
April 30, 2006 - issue of common stock
	for cash at $0.01 per share	13,000,000	1,300	63,700		-	-	65,000
Donated services		-	-	-		52,800	-	52,800
Net loss and comprehensive loss		-	-			-	(22,650)	(22,650)

Balance - September 30, 2006		14,000,000	1,400	68,600		52,800	(22,650)	100,150

April 30, 2007 - issue of common stock
	for cash at $0.10 per share	5,023,000	502	250,648		-	-	251,150
Donated services		-	-	-		57,600	-	57,600
Net loss and comprehensive loss		-	-			-	(148,789)	(148,789)

Balance - September 30, 2007		19,023,000	1,902	319,248		110,400	(171,439)	260,111

Donated Services		-	-	-		57,600	-	57,600
Net loss and comprehensive loss		-	-			-	(93,376)	(93,376)

Balance – September 30, 2008		19,023,000	1,902	319,248		168,000	(264,815)	224,335

Donated Services		-	-	-		36,000	-	36,000
Net loss and comprehensive loss		-	-			-	(69,354)	(69,354)

Balance – September 30, 2009		19,023,000	1,902	319,248		204,000	(334,169)	190,981

Donated Services		-	-	-		28,800	-	28,800
Net loss and comprehensive loss		-	-	-		-	(49,476)	(49,476)

Balance – September 30, 2010		19,023,000	1,902	319,248	856,387	232,800	(432,478)	977,859

October 1, 2010 – issue of common stock
for cash at $0.10 per share		10,000,000	1,000	999,000	(856,387)	-	-	143,613
Donated Services		-	-	-	-	14,400	-	14,400
Stock Dividend – March 1, 2011		14,511,500	1,451	-	-	-	(1,451)	-
Net loss and comprehensive loss		-	-	-	-	-	(23,256)	(23,256)


Balance – March 31, 2011		43,534,500	4,353	1318,248	-	247,200	(457,185)	1,112,616

The accompanying notes are an integral part of these financial statements

F-4

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Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Notes to the Financial Statements

For the Period from October 31, 2005 (Date of Inception) to March 31, 2011

(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 was to market database for commercial use in newsletters, direct mail, and internet marketing promotions. On November 11, 2010 the company changed its name to Sino American Oil Company in anticipation of the company’s new business direction which is exploration for oil and gas.

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, and may require additional capital requirements. As at March 31, 2011, the Company has an accumulated deficit of $455,734. 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 June 3, 2010 the Company filed an S-1 registration statement to register 10,000,000 shares for sale at $0.10 per share. The registration statement was declared effective by the Securities and Exchange Commission on June 11, 2010 and raised $1,000,000. It 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.

The Company adopts new accounting pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective adoption date. Management does not believe that any recently issued but not yet effective standards, if currently adopted, would have a material effect on these financial statements.

F-5

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Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Notes to the Financial Statements

For the Period from October 31, 2005 (Date of Inception) to March 31, 2011

(Expressed in US dollars)

(Unaudited)

NOTE 3 – PROPERTY AND EQUIPMENT

			March 31,	September 30,
			2011	2010
		Accumulated	Net Carrying	Net Carrying
	Cost	amortization	Value	Value
	$	$	$	$

Computer hardware	8,860	3,813	5,047	1,477

NOTE 4 – WEBSITE DEVELOPMENT

			March 31,	September 30,
			2011	2010
		Accumulated	Net Carrying	Net Carrying
	Cost	amortization	Value	Value
	$	$	$	$

Website Development	24,390	22,000	2,390	-

NOTE 5 - COMMON STOCK

On November 28, 2005, the Company issued 1,000,000 shares of common stock to the President of the Company at $0.01 per share for cash proceeds of $5,000.

On October 31, 2005, the Company issued 1 share of common stock to the President of the Company at $1.00 per share for cash proceeds of $1. The share of common stock was cancelled on November 28, 2005.

On April 30, 2006, the Company issued 13,000,000 shares of common stock to the President of the Company at $0.01 per share for cash proceeds of $65,000.

On April 30, 2007, the Company issued 5,023,000 shares of common stock pursuant to the Company’s SB-2 registration statement at $0.10 per share for cash proceeds of $251,150.

On March 8, 2010, the Company completed a 2-1 stock split. These financial statements give retroactive application to this event.

On October 1, 2010 the company completed a fully registered offering for 10,000,000 shares at $0.10 per share for cash proceeds of $1,000,000.

On March 1, 2011, the Company issued a stock dividend to shareholders of record February 10, 2011 on a 1.5:1 basis. The increase in shares did not affect the stock price and as a result, only the par value of the shares issued was recorded as an increase to common stock and an increase to deficit accumulated during the development stage.

As at March 31, 2011, there were no shares subject to options, warrants or other agreements.

F-6

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Sino American Oil Company (formerly Raphael Industries Ltd.)

(A Development Stage Company)

Notes to the Financial Statements

For the Period from October 31, 2005 (Date of Inception) to March 31, 2011

(Expressed in US dollars)

(Unaudited)

NOTE 6 – RELATED PARTY TRANSACTIONS

Consulting fees of $14,400 ($14,400 in 2010) 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, 2011. These fees are included in general and administrative, and recorded as donated capital.

NOTE 7 – COMMITMENTS

On March 14, 2011, the Company completed an Option Agreement with Sentry Petroleum (Australia) Pty. Ltd. The option is an exclusive right to earn an undivided 70% interest in Sentry Petroleum (Australia) Pt. Ltd. ATP 865 & ATP 866 in Queensland. To earn its interest, Sino American must pay 100% of the cost to drill and complete one well and provide funding up to USD$1,000,000 for additional geological, geophysical, and engineering work. The agreement requires an initial payment of $25,000, which has yet to be made.

F-7

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This section of the quarterly report on Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this quarterly report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

(a) Results of Operations

During the fiscal quarter ending March 31, 2011, we realized no revenue compared to $0 for the quarter ending March 31, 2010. Gross profit for the quarter was $0 as compared to a profit of $0 in 2010. We incurred an operating loss of $1,735 compared to a loss of $28,707 to the quarter ending March 31, 2010. The major components to expenses faced by the company during the last quarter were general and administrative of $25,025 (2010 - $33,255), cost of sales of $0 (2010 - $0), and foreign exchange gain of $23,290 (2010 – gain of $4,548). The foreign exchange gain was caused by the weakening of the dollar vs. the Canadian dollar. The Company has been maintaining a portion of its cash in Canadian dollars.

As of March 31, 2011 the Company had $1,163,498 (December 31, 2010 - $1,163,760) in unrestricted cash. $0 (December 31, 2010 - $0) in prepaid expenses, $5,047 (December 31, 2010 - $5,526) in property and equipment, $14,909 (December 31, 2010 - $18,725) in accounts payable and $43,410 (December 31, 2010 - $43,410) in licensee fee payable. 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.

Our future growth and success will be dependent on our ability to explore for and discover hydrocarbons in commercial quantities. We do not have sufficient capital to satisfy the potential future exploration expenditures and we will rely principally on the issuance of Common Stock to raise funds to finance the expenditures that we expect to incur. Failure to raise additional funds will result in the failure to meet our obligations and the relinquishment of our interest in our acquired permits. We have relied principally on the issuance of Common Stock in public placements to raise funds to support our business but there can be no assurance that we will be successful in raising additional funds through the issuance of additional equity.

As of the date of this report our sole source of revenue is the discovery and sale of commercial quantities of hydrocarbons. Accordingly, no table showing percentage breakdown of revenue by business segment or product line is included.

Liquidity and Capital Resources

Cash on hand is currently our only source of liquidity. We do not have any lending arrangements in place with banking or financial institutions and we do not anticipate that we will be able to secure these funding arrangements in the near future.

We have sufficient cash to carry out nominal operations during our current fiscal year. However we will require additional cash to complete on our farm-in obligations. To the extent that we may require additional funds to support our operations or the expansion of our business, we may sell additional equity or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. There can be no assurance that additional financing, if required, will be available to our company or on acceptable terms.

We do not expect any significant purchases of plant and equipment or any increase in the number of employees in the near future.

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(b) Off-balance sheet arrangements

We do not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.

CONTROLS AND PROCEDURES.

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were effective as of the end of the period covered by this report.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2011 that have affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II. – OTHER INFORMATION

ITEM 1A.

RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 6.

EXHIBITS.

Exhibit		Incorporated by reference			Filed
Number	Description	Form	Date	Number	Herewith
3.1	Articles of Incorporation.	SB-2	6/26/06	3.1

3.2	By-Laws.	SB-2	6/26/06	3.2

4.1	Specimen Stock Certificate.	SB-2	6/26/06	4.1

10.1	License agreement with Free Enterprise Press.	SB-2	6/26/06	10.1

10.2	License agreement with Global Commodity Press.	SB-2	6/26/06	10.2

10.3	Agreement with Kroll Direct Marketing.	SB-2	6/26/06	10.3

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10.4	Agreement with Infomat Inc.	SB-2	6/26/06	10.4

10.5	Agreement with Marketing Software Company.	SB-2	6/26/06	10.5

10.6	Agreement with List Fusion.	SB-2	6/26/06	10.6

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

99.1	Subscription Agreement.	POS AM	6/03/10	99.1

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 16th day of May, 2011.

	SINO AMERICAN OIL COMPANY
	(the "Registrant")

	BY:	RONALD HUGHES
		Ronald Hughes
		President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary, Treasurer and sole member of the Board of Directors

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EXHIBIT INDEX

Exhibit		Incorporated by reference			Filed
Number	Description	Form	Date	Number	Herewith
3.1	Articles of Incorporation.	SB-2	6/26/06	3.1

3.2	By-Laws.	SB-2	6/26/06	3.2

4.1	Specimen Stock Certificate.	SB-2	6/26/06	4.1

10.1	License agreement with Free Enterprise Press.	SB-2	6/26/06	10.1

10.2	License agreement with Global Commodity Press.	SB-2	6/26/06	10.2

10.3	Agreement with Kroll Direct Marketing.	SB-2	6/26/06	10.3

10.4	Agreement with Infomat Inc.	SB-2	6/26/06	10.4

10.5	Agreement with Marketing Software Company.	SB-2	6/26/06	10.5

10.6	Agreement with List Fusion.	SB-2	6/26/06	10.6

31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

99.1	Subscription Agreement.	POS AM	6/03/10	99.1

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