Value Exchange International, Inc. - Quarter Report: 2009 November (Form 10-Q)

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended: November 30, 2009

Commission File Number: 000-53537

___________________________________

SINO PAYMENTS, INC.

(Name of Small Business Issuer in Its Charter)


Nevada		26-3767331
(State or Other Jurisdiction		IRS Employer
of Incorporation or Organization)		Identification Number

Unit T25, GF Bangkok Bank Building

18 Bonham Strand West

Sheung Wan, Hong Kong

(Address of principal executive offices)

(852) 8121 4220

(Registrant’s Telephone Number)

with a copy to:

Carrillo Huettel, LLP

3033 Fifth Avenue, Suite 201

San Diego, CA 9210 3

Telephone (619) 399-3090

Telecopier (619) 330-1888

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 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes . 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	.	Accelerated Filer	.

Non-Accelerated Filer	.	Smaller Reporting Company	X .

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

Issuer’s revenues for its most recent fiscal year: Nil

As of January 18, 2009, there were 51,710,821 shares of the registrant’s Common Stock outstanding.

SINO PAYMENTS, INC.

Report on Form 10-Q


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statement	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	16
Item 4.	Controls and Procedures	16

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Default Upon Senior Securities	19
Item 4.	Submission of matters to a Vote of Security Holders	19
Item 5.	Other Information	19
Item 6.	Exhibits	19

PART I - FINANCIAL INFORMATION

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Financial Statements

(unaudited)

November 30, 2009


	Index

Balance Sheets	4

Statements of Operations	5

Statements of Cash Flows	6

Notes to the Financial Statements	7

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Balance Sheets

(unaudited)


	November 30, 2009 $	August 31, 2009 $

ASSETS

Current Assets

Cash	142	7

Total Current Assets	142	7

Other assets	770	770

Total Assets	912	777

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable	17,198	13,657
Accrued liabilities	86,205	54,696
Due to related party	18,446	20,710
Convertible notes payable	10,500	4,050
Promissory note payable	12,203	–

Total Liabilities	144,552	93,113

Stockholders’ Deficit

Preferred stock, 100,000,000 shares authorized, $0.00001 par value; no shares issued and outstanding	–	–

Common stock, 100,000,000 shares authorized, $0.00001 par value; 47,624,646 and 48,494,646 shares issued and outstanding, respectively	476	485

Additional paid-in capital	543,462	530,515

Deficit accumulated during the development stage	(687,578)	(623,336)

Total Stockholders’ Deficit	(143,640)	(92,336)

Total Liabilities and Stockholders’ Deficit	912	777

(The accompanying notes are an integral part of these financial statements)

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Statements of Expenses

(unaudited)


	For the Three Months Ended	For the Three Months Ended	Accumulated from June 26, 2007 (Date of Inception)
	November 30,	November 30,	to November 30,
	2009	2008	2009
	$	$	$
Operating Expenses

General and administrative	61,556	4,865	683,480

Total Operating Expenses	61,556	4,865	683,480

Other Expense

Interest expense	186	7	1,598
Loss on settlement of debt	2,500	–	2,500

Net loss	(64.242)	(4,872)	(687,578)

Net loss per share, basic and diluted	–	–

Weighted average number of shares outstanding	44,126,257	14,620,000

(The accompanying notes are an integral part of these financial statements)

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Statements of Cash Flows

(unaudited)


	For the Three Months Ended November 30, 2009 $	For the Three Months Ended November 30, 2008 $	Accumulated from June 26, 2007 (Date of Inception) to November 30, 2009 $

Operating Activities

Net loss for the period	(64,242)	(4,872)	(687,578)

Adjustments to reconcile net loss to net cash used in operating activities:
Accretion expense	3,150	–	3,600
Loss on settlement of debt	2,500	–	2,500
Shares issued for services	7,500	–	453,770
Warrants issued for services	2,938	–	2,938

Changes in operating assets and liabilities:
Other assets	–	(962)	(770)
Accounts payable and accrued liabilities	35,050	962	103,403

Net cash used in operating activities	(13,104)	(4,872)	(122,137)

Financing Activities

Proceeds from issuance of common stock	–	–	81,130
Proceeds from convertible notes payable	–	–	7,200
Proceeds from promissory note payable	12,203	–	12,203
Proceeds from related parties, net	1,036	–	21,746

Net cash provided by financing activities	13,239	–	122,279

Increase (Decrease) in cash	135	(4,872)	142

Cash, beginning of period	7	5,198	–

Cash, end of period	142	326	142

Supplemental disclosures:

Interest paid	–	–	–
Income taxes paid	–	–	–

Non-cash investing and financing activities:

Beneficial conversion expense of convertible notes	3,150	–	3,600

(The accompanying notes are an integral part of these financial statements)

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

November 30, 2009

(unaudited)

Nature of Operations and Continuance of Business

Sino Payments Inc. (the “Company”) was incorporated in the State of Nevada on June 26, 2007. The Company is a Development Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s principal business is to provide credit and debit card processing services to multinational retailers in Asia.

Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and is unlikely to generate significant revenue or earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at November 30, 2009, the Company has not generated revenues, has a working capital deficiency of $144,410, and has accumulated losses totaling $687,578 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Summary of Significant Accounting Policies

Basis of Presentation

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company’s fiscal year end is August 31.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Interim Financial Statements

These interim unaudited 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 necessarily indicative of the results expected for a full year or for any future period.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

November 30, 2009

(unaudited)

Summary of Significant Accounting Policies (continued)

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, and amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2009 and 2008, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

Foreign Currency Translation

Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income. Foreign currency transactions are primarily undertaken in Hong Kong dollars.

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

November 30, 2009

(unaudited)

Summary of Significant Accounting Policies (continued)

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Recent Accounting Pronouncements

In June 2009, the FASB issued guidance now codified as FASB ASC Topic 105, Generally Accepted Accounting Principles, as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s consolidated financial statements, but did eliminate all references to pre-codification standards.

In May 2009, FASB issued ASC 855, Subsequent Events, which establishes general standards of for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of ASC 855-10 did not have a material effect on the Company’s consolidated financial statements. Refer to Note 6.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Notes Payable

In July 2009, the Company issued $7,200 of convertible promissory notes to a third-party company for services rendered. Under the terms of the note agreement, the amount is unsecured, non-interest bearing, due on demand, and convertible into common shares of the Company at $0.04 per common share at the discretion of the note holder commencing from the issuance date. In accordance with ASC 470, Debt – Debt with Conversions and Other Options, the Company determined that the multiple financial instruments issued in the convertible promissory notes resulted in an allocation of the fair value between the convertible note and the share purchase warrants which resulted in a discount on the convertible notes of $3,600 that was recorded against the note payable and a corresponding credit to additional paid-in capital. As at November 30, 2009, the Company has recognized accretion expense of $3,600, which increased the carrying value of the promissory note to $7,200. Refer to Note 6.

On November 13, 2009, the Company issued a note payable of $12,203 to a third-party company for payment of expenditures on the Company’s behalf. Under the terms of the note payable, the amount is unsecured, due interest at 10% per annum, and is due on demand. As at November 30, 2009, accrued interest of $96 was recorded.

On November 13, 2009, the Company converted $3,300 of amounts owing to the President of the Company into a convertible promissory note. Under the terms of the note agreement, the amount is unsecured, non-interest bearing, due on demand, and convertible into common shares of the Company at $0.05 per common share at the discretion of the note holder commencing from the issuance date. The Company evaluated the convertible note pursuant to ASC 815, Disclosures about Derivative Instruments and Hedging Activities, and determined that it did not qualify for derivative treatment. Refer to Note 6.

SINO PAYMENTS, INC.

(formerly China Soaring, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

November 30, 2009

(unaudited)

Related Party Transactions

As at November 30, 2009, the Company owes $9,609 (August 31, 2009 - $13,214) to the President of the Company for payment of general operating expenditures. The amounts owing are unsecured, non-interest bearing, and due on demand.

As at November 30, 2009, the Company owes $1,461 (August 31, 2009 - $120) to a Director of the Company for payment of general operating expenditures. The amounts owing are unsecured, non-interest bearing, and due on demand.

As at November 30, 2009, the Company owes $7,376 (August 31, 2009 - $7,376) to a shareholder of the Company for payment of general expenditures. The amounts owing are unsecured, due interest at 4% per annum, and due on demand.

Refer to Note 3(c).

Imputed interest on the notes is not considered to be material.

Share Purchase Warrants

On October 20, 2009, the Company issued 50,000 share purchase warrants to a third-party company. Each warrant grants the warrant holder the option to purchase one additional common share of the Company at $0.075 per common share for a period of three years from the date of issuance. The Company valued the share purchase warrants using the Black-Scholes Option Pricing model with the assumptions of useful life of three years, volatility of 271%, and a risk free rate of 1.44%.

During the three months ended November 30, 2009, the Company issued the following share purchase warrants:


		Number of Warrants	Weighted Average Exercise Price	Weighted Average Contractual Life (years)	Aggregate Intrinsic Value
Balance – August 31, 2009		–	–
	Granted	50,000	$0.075
Balance – November 30, 2009 (unaudited)		50,000	$0.075	2.90	–

As at September 30, 2009, the following share purchase warrants were outstanding:


Number of Warrants	Exercise Price	Expiry Date
50,000	$0.075	October 20, 2011

50,000

Subsequent Events

On December 4, 2009, the Company converted the convertible promissory note issued to the President of the Company referred to in Note 3(c) totalling $3,300 plus $28 in accrued interest into 66,550 common shares of the Company, converted at a rate of $0.05 per common share.

On December 14, 2009, the Company converted $7,200 of convertible promissory notes referred to in Note 3(a), $12,403 of notes payable referred to in Note 3(b), and a further cash contribution of $4,000 in addition to accrued interest of $195 into 471,961 common shares of the Company, converted at a rate of $0.05 per common share.

In December 2009, the Company issued 4,086,175 common shares to settle accrued compensation expense to management and consultants, and amounts owing to related parties.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-Q contains 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”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:

The availability and adequacy of our cash flow to meet our requirements;

Economic, competitive, demographic, business and other conditions in our local and regional markets;

Changes or developments in laws, regulations or taxes in our industry;

Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities;

Competition in our industry;

The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;

Changes in our business strategy, capital improvements or development plans;

The availability of additional capital to support capital improvements and development; and

Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC.

You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Terms

Except as otherwise indicated by the context, references in this report to “Company,” “SNPY,” “we,” “us” and “our” are references to Sino Payments, Inc. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.

Description of Business

We were incorporated in the State of Nevada on June 26, 2007. On November 26, 2008, China Soaring Inc. effected a name change to Sino Payments, Inc. Since inception, we incorporated the company, hired the attorney, and hired the auditor for the preparation of all quarterly and annual reports and we have made significant steps to develop and further our business plan, including creating our Global Processing Platform (“SinoPay GPP”) and establishing our website ww.sinopayments.com. We are a credit card processing and merchant acquiring services company that provides credit card clearing services to merchants and financial institutions in China. Sino Payments’ objective is to be a provider of IP (Internet Protocol) processing services in Asia to bankcard accepting merchants.

The Chinese market for credit cards, in terms of total credit card loans, is expected to grow over the next few years at a compounded annual rate of growth in of 88%, from US$300 million in 2003 through US$13.2 billion in 2009. Yet the transaction processing sector remains significantly underserved. Sino Payments will pursue merchants with large regional retail locations across Asia Pacific as potential customers of its’ IP and related credit card and debit card processing systems. No providers are currently dominant. Competitors are expected to include Chinese banks’ in-house solutions and their affiliated technical solution partners. Sino Payments expects to offer superior interoperability, a highly-efficient infrastructure and exceptional knowledge of the IP processing market throughout our SinoPay GPP platform, which when completed, will be fully-integratable, widely-deployed, and developed in conjunction with strategic partners. Sino Payments intends to deploy the most flexible and lowest-cost IP processing system in Asia with a focus on China, Hong Kong, Thailand, Philippines, Malaysia, Korea, and Japan.

Sino Payments’ strategy is to continue to market credit card processing services to retail merchants in targeted markets, offer its merchant acquiring base to selected banks, provide support using world-class technology platforms, and maximize strategic partnerships to accelerate market development. Our initial focus is on China and Hong Kong based multinational retailers with expansion into other Asian markets as we develop. Development objectives have been selected and an organization for executing on those objectives has been put in place.

The senior executives of Sino Payments are well-known and respected in the transaction processing industry throughout the Asia-Pacific region. The directors bring extensive international and public company experience to bear and have built an impressive track record of successful start-ups. As of the date hereof, the Company has completed the following:

On August 1, 2008 we completed a public offering whereby we sold 4,860,000 shares of common stock to 50 investors raising $81,000.

On April 23, 2009 , we completed our Global Processing Platform (“SinoPay GPP”) and we have deploy ed this solution in Shanghai to provide IP credit and debit card processing services to customers in China and to use the platform in basically its existing state for processing retail card at point of sale throughout Asia and elsewhere . This updated SinoPay GPP system will facilitate the processing of all credit card types (Visa/MC/AMEX/Diners/Discover/JCB) and will be integrated with China UnionPay to provide processing of UnionPay Debit cards in China. The SinoPay GPP can be deployed in any country to provide efficient IP processing of all credit card types and has been specifically designed for roll out around the region in Asia.

On April 29, 2009, we entered into a Service Agreement with PowerE2E China, a Chinese corporation (“PowerE2E”) to provide credit and debit card processing services in China. The agreement is for card processing services for PowerE2E’s clients as well as directly for PowerE2E transactions. The first project is for an ecommerce client site and PowerE2E and Sino Payments are working on additional joint business development opportunities to provide service to PowerE2E’s existing customer base. The SinoPay GPP system is being deployed on site at PowerE2E’s Headquarter location in Shanghai.

On May 27, 2009, we signed a Memorandum of Understanding with BCS Holdings, Inc., a California corporation (“BCS”) to cooperate in identifying and acquiring additional merchants in China and Asia. Sino Payments and BCS have undertaken to cooperate to develop a merchant sales and marketing program for Greater China and other in Asia by the end of 2009 on behalf of Sino Payments. BCS is a full service payment solutions provider for traditional and internet businesses, with strategic partnerships and alliances with Chase Paymentech, National Processing Company, First Data, Bank of America, Telecheck, Verifone, Discover Network, China UnionPay, JCB International Credit Card Co., Ltd. and United Commercial Bank.

On September 22, 2009, we signed a pay sourcing agreement with PAY.ON Asia, Ltd., a Hong Kong Company (“PAY.ON”) whereby PAY.ON has agreed that we shall have the right to use and incorporate PAY.ON technologies relating to the handling of services related to payment and fraud control in the operation of our business. Such technologies shall be provided to us at a minimum monthly price of EUR 1,500 and a maximum monthly price of EUR 1,800.

On September 29, 2009, we executed a Reseller Agreement with eNETS Hong Kong Ltd. (“eNETS”), whereby eNETS and we have agreed we shall have the right to market and sell the eNETS payment gateway system, which is a direct debit and credit card payment gateway that allows users to receive payment of transactions electronically. Pursuant to the terms of the Agreement, we shall pay to eNETS a pre-determined rate for each transaction processed as fully set forth in the Agreement.

Our Strategy

We intend to provide credit and debit card processing services primarily to retail stores located in Asia. Our new CEO & Chairman, Matthew Mecke will be responsible for providing these services. We intend to target companies that maintain regional retail store operations in Asia. We intend to provide credit and debit card processing services to retailers such as large department stores, regional supermarket chains, and other retailers with a presence in multiple markets in Asia to specifically include China.

Regulatory Requirements

We do not need to pursue nor satisfy any special licensing or regulatory requirements before establishing or delivering our intended services other than requisite business licenses. If new government regulations, laws, or licensing requirements are passed that would cause us to restrict or eliminate delivery of any of our intended services, then our business would suffer. For example, if we were required to obtain a government issued license for the purpose of providing coaching and consulting services, then we could not guarantee that we would qualify for such license. If such a licensing requirement existed, and we were not able to qualify, then our business would suffer. Presently, to the best of our knowledge, no such regulations, laws, or licensing requirements exist or are likely to be implemented in the near future that would reasonably be expected to have a material impact on or sales, revenues, or income from our business operations.

Marketing

Our services are promoted by Mr. Mecke. He will discuss our services with contacts he has established. We also anticipate utilizing several other marketing activities in our attempt to make our services known to corporations and attract clientele. These marketing activities will be designed to inform potential clients about the benefits of using our services and will include the following: development and distribution of marketing literature; direct mail and email; advertising; promotion of our web site; and industry analyst relations.

Revenue

Initially, we intend to generate revenue from three sources:

Term Fee - By charging a fee for given services;

Fixed Fee - By charging a fixed fee;

Transaction Fee - By charging a transaction fee for processing credit or debit card transactions.

We intend to develop and maintain a database of all our clients so that we can anticipate various needs and continuously build and expand our advisory services. There is no assurance that we will be able to interest any retail store operators in our target market.

Insurance

We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party to a liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.

Network Security

We will, if successful, compile and maintain a large database of information relating to our merchants and their transactions. We intend to focus significant resources on maintaining a high level of security in order to protect the information of our merchants and their customers.

Competition

The payment processing industry is highly competitive. We compete with other providers of payment processing services on the basis of the following factors:

quality of service;

reliability of service;

ability to evaluate, undertake and manage risk;

speed in approving merchant applications; and,

price.

We will be competing with both small and large companies in providing payment processing and related services to a wide range of merchants. Our competitors sell their services either through a direct sales force, generally concentrating on larger accounts, or through Independent Sales Organizations, telemarketers or banks, generally concentrating on smaller accounts. There are a number of large payment processors, including First Data Corporation, Bank of America Corporation, Global Payments Inc., Fifth Third Bank, Chase Paymentech Solutions and Elavon, Inc., a subsidiary of U.S. Bancorp, that serve a broad market spectrum from large to small merchants; further, certain of these provide banking, ATM and other payment-related services and systems in addition to bank card payment processing. There are also a large number of smaller payment processors that provide various services to small- and medium-sized merchants.

Some of our competitors have substantially greater capital resources than we have and operate as subsidiaries of financial institutions or bank holding companies, which may allow them on a consolidated basis to own and conduct depository and other banking activities that we do not have the regulatory authority to own or conduct. Since they are affiliated with financial institutions or banks, these competitors do not incur the costs associated with being sponsored by a bank for registration with card networks and they can settle transactions quickly for their own merchants. We do not, however, currently contemplate acquiring or merging with a financial institution in order to increase our competitiveness.

Offices

Our offices are currently located at Unit T25, GF Bangkok Bank Building, 18 Bonham Strand West, Sheung Wan , Hong Kong and our telephone number is (852) 8121 4220 . This is the rental office that we maintain where we sublet desk space, telephone, office services and space for computer equipment. As of the date of this filing, we have not sought to move or change our office site.

Employees; Identification of Certain Significant Employees

Matthew Mecke, our chief executive officer and director will be devoting approximately 60 hours a week of his time to our operations. We currently have no other employees, other than our officers and directors. We intend to hire additional employees on an as needed basis.

Government Regulation

We are not currently subject to direct Chinese, federal, state or local regulation other than regulations applicable to businesses generally or directly applicable to electronic commerce. However, the Internet is increasingly popular. As a result, it is possible that a number of laws and regulations may be adopted with respect to the Internet. These laws may cover issues such as user privacy, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights and information security. Furthermore, the growth of electronic commerce may prompt calls for more stringent consumer protection laws. Several states have proposed legislation to limit the uses of personal user information gathered online or require online services to establish privacy policies.

We are not certain how business may be affected by the application of existing laws governing issues such as property ownership, copyrights, encryption and other intellectual property issues, taxation, libel, obscenity and export or import matters. The vast majority of such laws were adopted prior to the advent of the Internet. As a result, they do not contemplate or address the unique issues of the Internet and related technologies. Changes in laws intended to address such issues could create uncertainty in the Internet market place. Such uncertainty could reduce demand for services or increase the cost of doing business as a result of litigation costs or increased service delivery costs. In addition, because our services are available over the Internet in multiple states and foreign countries, other jurisdictions may claim that we are required to qualify to do business in each such state or foreign country. We are qualified to do business only in Nevada. Our failure to qualify in a jurisdiction where it is required to do so could subject it to taxes and penalties. It could also hamper our ability to enforce contracts in such jurisdictions. The application of laws or regulations from jurisdictions whose laws currently apply to our business could have a material adverse affect on our business, results of operations and financial condition.

RESULTS OF OPERATIONS FOR THE PERIOD ENDED NOVEMBER 30, 2009 COMPARED TO THE PERIOD ENDED NOVEMBER 30, 2008.

Operating Revenues

We have not generated any revenues since inception.

Operating Expenses and Net Loss

Operating expenses for the three months ended November 30, 2009 were $61,556 compared with $4,865 for the three months ended November 30, 2008. The increase of $56,691 was attributed to management fees of $18,000 for the President and directors of the Company, accretion expense of $3,150 relating to the beneficial conversion feature of the convertible note, increase in general and administrative costs of $23,133 relating to stock based compensation from issuance of share purchase warrants and for travel and operating costs incurred with travelling to secure agreements for the Company’s credit card processing platform, and an increase of $14,400 in professional fees relating to the increase in legal and accounting work relating to SEC filings.

Net loss for the three months ended November 30, 2009 were $64,242compared with $4,872 for the three months ended November 30, 2008 and included operating expenses of $61,556, loss on settlement of debt of $2,500, and interest expense on the promissory notes and convertible notes totaling $186.

Liquidity and Capital Resources

As at November 30, 2009, the Company’s cash balance was $142 compared to $7 as at August 31, 2009 and its total assets were $912 compared with $777as at August 31, 2009. The increase in total assets is attributed to contribution of funds from a promissory note, of which a significant portion was used to pay outstanding liabilities of the Company. As at November 30, 2009, the Company had total liabilities of $144,552 compared with total liabilities of $93,113 as at August 31, 2009. The increase in total liabilities was attributed to an increase of $18,653 in notes payable of which $3,150 was attributed to accretion expense of an existing convertible note, $12,403 of proceeds received from a third party for operations, and $3,300 of related party note payable that was converted from outstanding amounts owing to a related party in the prior period. Furthermore, overall accounts payable and accrued liabilities increased by $35,050 attributed to professional fees of $9,200 for audit, accounting, and legal services incurred during the Company’s August 31, 2009 audit engagement and relevant SEC filings, and an increase of $22,935 in accrued compensation to management and consultants for the development of the credit and debit processing systems.

As at November 30, 2009, the Company had a working capital deficit of $143,640 compared with a working capital deficit of $93,106 as at August 31, 2009. The increase in working capital deficit was attributed to the increase in accounts payable and accrued liabilities of $35,050 due to the lack of sufficient cash flow to pay its obligations and an increase of $18,653 in notes payable for financing of day-to-day obligations of the Company.

Cashflow from Operating Activities

During the three months ended November 30, 2009, the Company used $13,104 of cash for operating activities compared to the use of $4,872 of cash for operating activities during the three months ended November 30, 2008. The increase in cashflows used for operating activities is attributed to the fact that the Company obtained financing of $13,239 of net financing from third parties and related parties of which the majority was sent on payment of outstanding obligations for the Company’s day-to-day obligations compared with the same period in the prior year where the Company settled obligations with outstanding cash in the Company’s bank accounts.

Cashflow from Investing Activities

During the three months ended November 30, 2009 and 2008, the Company did not have any cash transactions related to investing activities.

Cashflow from Financing Activities

During the three months ended November 30, 2009, the Company received $13,239 of cash from financing activities compared to $nil for the three months ended November 30, 2008. The increase in cashflows provided from financing activities is based on the fact that the Company received $12,203 of financing from a third-party and $1,036 from related parties to settle outstanding obligations of the Company during the day-to-day operations.

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 our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors.

Critical Accounting Policies

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to valuation allowances on accounts receivable and inventory, valuation and amortization policies on property and equipment, and valuation allowances on deferred income tax losses. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Revenue Recognition

The Company will recognize revenue from the sale of its fuel reformulating products in accordance with ASC 605, Revenue Recognition. Revenue will be recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is provided, and collectibility is assured.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Recent Accounting Pronouncements

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard is effective commencing January 1, 2011 and is not expected to have a material effect on the Company’s financial statements.

In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard is effective commencing January 1, 2011 and is not expected to have a material effect on the Company’s financial statements.

In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard is effective for the Company on October 1, 2009 and is not expected to have a material effect on the Company’s financial statements.

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

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company carried out an assessment, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as of November 30, 2009. The Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of November 30, 2009.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of August 31, 2009 and updated for November 30, 2009, the Company determined that there were control deficiencies that constituted material weaknesses, as described below:


	1.	We do not have an Audit Committee or a financial expert on our Board of Directors – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, consisting of three members, including two independent members. All members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities.

	2.	We did not maintain appropriate cash controls – As of November 30, 2009, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to perform monthly bank reconciliations. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts during the three months ended November 30, 2009 and that the Company’s quarterly and year-end financial statements and audit working papers and supporting documents were prepared and reviewed by an independent accounting firm prior to submission to our external auditors, which mitigated the risk of misappropriation of cash.

Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of November 30, 2009 based on criteria established in Internal Control—Integrated Framework issued by COSO.

M&K CPAS, an independent registered public accounting firm, was not required to and has not issued a report concerning the effectiveness of our internal control over financial reporting as of November 30, 2009.

Continuing Remediation Efforts to address deficiencies in Company’s Internal Control over Financial Reporting

Once the Company is engaged in a business of merit and has sufficient personnel available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:


	1.	Our Board of Directors will nominate an audit committee or a financial expert on our Board of Directors in fiscal 2010.

	2.	We will appoint additional personnel to assist with the preparation of the Company’s monthly financial reporting, including preparation of the monthly bank reconciliations.

Changes In Internal Control and Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the fourth quarter of fiscal year 2009 that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Issuance of Equity Securities in exchange for services:

On November 17, 2009 the Registrant issued 250,000 shares of its common stock as payment for services rendered. The shares were valued at $7,500, which represents the value of the services provided.

On December 7, 2009 the Registrant issued 2,650,000 shares of its common stock as payment for services rendered.

On December 7, 2009 the Registrant issued 120,000 shares of its common stock as payment for services rendered.

On December 10, 2009 the Registrant issued 584,286 shares of its common stock to Mathew Mecke representing 320,000 as payment for services rendered and 264,286 for reimbursement of expenses.

On December 10, 2009 the Registrant issued 111,298 shares of its common stock to Paul Manning representing 82,080 as payment for services rendered and 29,218 for reimbursement of expenses.

On December 10, 2009 the Registrant issued 82,080 shares of its restricted common stock as payment for monthly services rendered by Anthony Robinson.

Convertible Securities:

On December 7, 2009, the Registrant issued 66,550 shares of its common stock to Mathew Mecke pursuant to the conversion of a Note, the principal and interest converted were valued at $3,327.50.

On December 7, 2009, the Registrant issued 471,961 shares of its common stock to Moon Gate Limited pursuant to the conversion of a Note, the principal and interest converted were valued at $23,598.03.

Outstanding Warrants:

Sales of Equity Securities for Cash:

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS

The following exhibits are filed with this Quarterly Report on Form 10-Q:


Exhibit
Number	Description of Exhibit
3.01	Articles of Incorporation⁽¹⁾
3.01	Restated Articles of Incorporation⁽¹⁾
3.03	Bylaws⁽¹⁾
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14⁽²⁾
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14⁽²⁾
32.01	CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act⁽²⁾

_____________


	(1)	Incorporated by reference to our Registration Statement filed with the SEC on November 19, 2007.
	(2)	Filed herewith.


*	All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document.

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.

SINO PAYMENTS, INC.

Dated: January 19, 2010

/s/ Matthew Mecke

By: Matthew Mecke

Its: President and CEO