Value Exchange International, Inc. - Quarter Report: 2013 November (Form 10-Q)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X .QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2013
.TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number: 000-53537
SINO Payments, Inc. |
(Exact name of registrant as specified in its charter) |
Nevada |
| 26-3767331 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
Unit G, 18th Flr. Legend Tower |
7 Shing Yip Street, Kwun Tong |
Kowloon, Hong Kong |
(Address of principal executive offices) (Zip Code) |
|
+852-49504288 |
(Registrant’s telephone number, including area code) |
|
|
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed 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 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 during the preceding 12 months (or 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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | . | Accelerated filer | . |
Non-accelerated filer | . (Do not check if a smaller reporting company) | 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 .
As of January 9, 2015, there were 26,566,930 shares of common stock issued and outstanding.
FORM 10-Q
SINO Payments, Inc.
INDEX
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| Page |
PART I — FINANCIAL INFORMATION |
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Item 1. Financial Statements |
| 3 |
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Condensed Consolidated Balance Sheets |
| 4 |
Unaudited Condensed Consolidated Statements of Operations |
| 5 |
Unaudited Condensed Consolidated Statements of Cash Flows |
| 6 |
Notes to the Unaudited Condensed Consolidated Financial Statements |
| 7 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation |
| 11 |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk |
| 14 |
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Item 4. Controls and Procedures |
| 14 |
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PART II — OTHER INFORMATION |
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Item 1. Legal Proceedings |
| 15 |
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Item 1A. Risk Factors |
| 15 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| 15 |
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Item 3. Defaults Upon Senior Securities |
| 15 |
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Item 4. Mine Safety Disclosures |
| 15 |
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Item 5. Other Information |
| 15 |
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Item 6. Exhibits |
| 15 |
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Signatures |
| 16 |
2
ITEM 1. FINANCIAL STATEMENTS
SINO PAYMENTS INC.
Financial Statements
November 31, 2013 (unaudited) and August 31, 2013
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| Page |
Balance Sheets (unaudited) |
| 4 |
Statements of Operations (unaudited) |
| 5 |
Statements of Cash Flows (unaudited) |
| 6 |
Notes to the Financial Statements (unaudited) |
| 7 |
3
SINO PAYMENTS, INC.
Balance Sheets
(Expressed in US dollars)
4
SINO PAYMENTS, INC.
Statements of Operations
(Expressed in US dollars)
(unaudited)
|
| For the Three Months Ended November 30, |
| For the Three Months Ended November 30, |
|
| 2013 |
| 2012 |
|
| $ |
| $ |
Revenue |
| – |
| – |
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
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General and administrative |
| 25,744 |
| 8,278 |
Foreign exchange loss |
| 105 |
| – |
|
|
|
|
|
Total Operating Expenses |
| 25,849 |
| 8,278 |
|
|
|
|
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Operating loss |
| (25,849) |
| (8,278) |
|
|
|
|
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Other Income (Expense) |
|
|
|
|
|
|
|
|
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Interest expense |
| (745) |
| (985) |
Loss on settlement of accounts payable |
| (124,662) |
| – |
Write-off of accounts payable |
| – |
| 42,744 |
|
|
|
|
|
Net income (loss) |
| (151,256) |
| 33,481 |
|
|
|
|
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Net income (loss) per share, basic and diluted |
| (0.01) |
| 0.00 |
|
|
|
|
|
Weighted average number of shares outstanding |
| 13,808,688 |
| 12,000,030 |
5
SINO PAYMENTS, INC.
Statements of Cash Flows
(Expressed in US dollars)
(unaudited)
|
| For the Three Months Ended November 30, |
| For the Three Months Ended November 30, |
|
| 2013 |
| 2012 |
|
| $ |
| $ |
Operating Activities |
|
|
|
|
|
|
|
|
|
Net income (loss) |
| (151,256) |
| 33,481 |
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
Loss on settlement of accounts payables |
| 124,662 |
| – |
Write-off of accounts payables |
| – |
| (42,744) |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
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Accounts payable and accrued liabilities |
| 22,146 |
| 9,263 |
Line of credit – related party |
| 4,448 |
| – |
|
|
|
|
|
Net cash used in operating activities |
| – |
| – |
|
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|
|
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Change in cash |
| – |
| – |
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Cash, beginning of period |
| – |
| – |
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Cash, end of period |
| – |
| – |
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Supplemental disclosures: |
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Interest paid |
| – |
| – |
Income taxes paid |
| – |
| – |
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Non-cash investing and financing activities: |
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Shares issued for prepaid expenses and to settle accounts payable |
| 210,000 |
| – |
6
SINO PAYMENTS, INC.
Notes to the Financial Statements
November 30, 2013
(Expressed in US dollars)
(unaudited)
1.
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’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, 2013, the Company has not generated any revenues and has accumulated losses totaling $1,428,897 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.
2.
Summary of Significant Accounting Policies
a)
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.
b)
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.
c)
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.
d)
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 consolidated 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
7
SINO PAYMENTS, INC.
Notes to the Financial Statements
November 30, 2013
(Expressed in US dollars)
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
e)
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 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 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, 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.
f)
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.
g)
Revenue Recognition
The Company recognizes revenue from its processing services in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.
8
SINO PAYMENTS, INC.
Notes to the Financial Statements
November 30, 2013
(Expressed in US dollars)
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
h)
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 and August 31, 2013, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
i)
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.
j)
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.
k)
Recent Accounting Pronouncements
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard and will not report inception to date financial information.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial statements.
3
Investment in Joint Venture
On November 26, 2010, the Company entered into a joint venture agreement with TAP Investments Group Limited (TAP) and agreed to issue 1,000,000 common shares of the Company with a fair value of $10,000 in exchange for 51% interest of TAP. As at November 30, 2013, the Company’s interest in the joint venture was a net loss of $5,758 (2013 - $5,758), of which $10,000 was reflected against the investment in joint venture.
9
SINO PAYMENTS, INC.
Notes to the Financial Statements
November 30, 2013
(Expressed in US dollars)
(unaudited)
4.
Loan Payable-related party
As at November 30, 2013, the Company owes $33,338 (August 31, 2013 - $28,890) to two related parties for payment of operating expenditures. The amount owing is unsecured, due interest at 8% per annum, and due on demand. Accrued interest of $6,842 (August 31, 2013 - $6,236) has been recorded in accounts payable and accrued liabilities.
5.
Note Payable
As at November 30, 2013, the Company owes $4,876 (August 31, 2013 - $4,876) to a third party (former director of the Company) for payment of general operating expenditures. The amounts owing are unsecured, due interest at 10% per annum, and due on demand. Accrued interest of $2,425 (2013 - $2,303) has been recorded in accrued liabilities.
6.
Common Shares
On November 8, 2013, the Company issued 1,000,000 common shares at $0.21 per share with a fair value of $210,000 for the settlement of professional fees totaling $85,338. The settlement resulted in the recognition of a loss on settlement of debt of $124,662.
7.
Subsequent Events
a)
On November 24, 2011 and December 1, 2013, the Company entered into a share exchange agreement and a supplementary agreement with TIG Investments Group Limited (“TIG”), a Hong Kong limited company and the Majority Shareholders of TIG whereby the Company acquired 100% of TIG issued and outstanding shares in exchange for the issue of 12 million shares representing 50% of issued and outstanding common shares to the Majority Shareholders of TIG. The agreements were formally signed and closed on January 1, 2014.
10
EXPLANATORY NOTE
This is the periodic report of SINO Payments, Inc. (the “Company”, “we”, “us”, and “our”, unless the context indicates otherwise) covering periods ending November 30, 2013. Readers should be aware that some aspects of this Quarterly Report on Form 10-Q differ from other quarterly reports. Notably, it reflects the events, management, and financial numbers as of November 30, 2013, and not since then. Accordingly, this quarterly report is intended to be a historical document disclosing the status of the Company as of November 30, 2013 and does not include any subsequent events (except “Recent Developments”).
In addition, we intend to file, as soon as practicable, our Quarterly Reports on Form 10-Q for each of the quarters ended February 28, 2014, and May 31, 2014.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This report contains forward-looking statements. These forward-looking statements include, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” “projects,” “will,” and other words of similar import or the negative of those terms or expressions. Forward-looking statements in this report include, but are not limited to, expectations of future levels of research and development spending, general and administrative spending, levels of capital expenditures and operating results, sufficiency of our capital resources, our intention to pursue and consummate strategic opportunities available to us.. Forward-looking statements subject to certain known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to those described in “Risk Factors” contained in the Company’s reports filed with the Securities and Exchange Commission.
CORPORATE OVERVIEW
We were incorporated in the State of Nevada on June 26, 2007 under the name China Soaring Inc. On November 26, 2008, we changed the Company's name to Sino Payments, Inc. Our objective is to become a credit card processing and merchant-acquiring services company that provides credit card clearing services to merchants and financial institutions in China. Since inception, we have made significant steps to develop and further our business plan, including creating our Global Processing Platform (“SinoPay GPP”) and establishing our website, www.sinopayments.com.
The Company’s objective is to be a provider of Internet Protocol (IP) processing services in Asia to bank card-accepting merchants. We market our services to local merchants with regional retail locations across Asia Pacific as potential customers of its IP and related credit card and debit card processing systems. We offer interoperability through a highly-efficient infrastructure and exceptional knowledge of the IP processing market through our SinoPay GPP platform. The SinoPay GPP system facilitates 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. Sino Payments intends to deploy the SinoPay GPP platform throughout Asia with a focus on China, Hong Kong, Thailand, Philippines, Malaysia, Korea, and Japan.
Recent Developments
On June 7, 2013, SINO Payments, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain investors pursuant to which the Company issued and 1,566,900 shares of the Company’s restricted common stock for an aggregate purchase price of $282,042, pursuant to the rules and regulations of Regulation S promulgated under the Securities Act of 1933, as amended.
11
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 2013 COMPARED TO THE THREE MONTHS ENDED NOVEMBER 30, 2012
Working Capital
|
| November 30, |
| August 31, |
|
| 2013 |
| 2013 |
|
| ($) |
| ($) |
Current Assets |
| 4,500 |
| – |
Current Liabilities |
| 160,601 |
| 214,845 |
Working Capital (Deficit) |
| (156,101) |
| (214,845) |
Cash Flows
|
| Three Months Ended November 30, | ||
|
| 2013 |
| 2012 |
|
| ($) |
| ($) |
Cash Flows from (used in) Operating Activities |
| – |
| – |
Cash Flows from (used in) Financing Activities |
| – |
| – |
Net Increase (decrease) in Cash During Period |
| – |
| – |
Operating Revenues
During the three months ended November 30, 2013 and 2012, the Company did not record any revenues.
Operating Expenses and Net Loss
During the three months ended November 30, 2013, the Company incurred operating expenses of $25,849 compared to operating expenses of $8,278 during the three months ended November 30, 2012. The increase in operating expenses was attributed to an increase in general and administrative expenses relating to professional fees incurred for the Company’s SEC filings.
The Company incurred a net loss of $151,256 for the three months ended November 30, 2013 compared with net income of $33,481 during the three months ended November 30, 2012. In addition to operating expenses, the Company incurred a loss of $124,662 for settlement of outstanding accounts payable to the Company’s SEC lawyers as well as interest expense of $745 on outstanding related party loans. During the three months ended November 30, 2012, the Company recorded a write-off of accounts payable of $42,744 relating to professional services that were forgiven by the Company offset by interest expense of $985 for related party loans.
During the three months ended November 30, 2013, the Company recorded a loss per share of $0.01 compared to $nil for the three months ended November 30, 2012.
Liquidity and Capital Resources
As at November 30, 2013 and 2012, the Company had $nil cash and total assets of $4,500 and $nil, respectively. Assets relate to prepaid professional fees for services that have not been performed as of November 30, 2013.
As at November 30, 2013, the Company had total liabilities of $160,601 compared to $214,845 as at August 31, 2013. The decrease in total liabilities is attributed to the settlement of $80,838 of professional fees with the issuance of 1,000,000 common shares with a fair value of $210,000 based on the end of day trading price of the Company’s common stock on the date of settlement. The settlement was offset by additional increases in accounts payable for professional fees incurred (accounting and auditing) as the Company did not raise any additional financing during the period.
12
As at November 30, 2013, the Company had a working capital deficit of $156,101 compared to $214,845 as at August 31, 2013. The decrease in the working capital deficit was due to the settlement of $80,838 of outstanding accounts payable with the issuance of common shares.
Cashflow from Operating Activities
During the three months ended November 30, 2013 and 2012, the Company did not incur any cash inflows or outflows from operating activities as the Company had no cash.
Cashflow from Investing Activities
During the three months ended November 30, 2013 and 2012, the Company did not have any investing activities.
Cashflow from Financing Activities
During the three months ended November 30, 2013 and 2012, the Company did not have any financing activities.
Off-Balance Sheet Arrangements
We have no 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.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note (1) of the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for the reporting period. Significant areas requiring the use of management estimates relate to the valuation of its mineral leases and claims and our ability to obtain final government permission to complete the project.
13
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.
Recently Issued Accounting Pronouncements
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
At the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our President and Chief Financial Officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to our management, including our President and Chief Financial Officer, or officers performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our internal control over financial reporting is not effective based on those criteria due to the following:
There is a lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the related disbursements due to our limited staff and accounting personnel. Management is aware that there is a lack of segregation of duties due to the small number of employees dealing with administrative and financial matters. Since an officer of the Company is a partner with an accounting firm which provides support services to the Company, in the future, management intends to continue to utilize additional staff of the accounting firm to handle certain administrative financial duties.
There is a lack of effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in the financial statements. Management is working to ensure that all permanent file documents are maintained in a working file which becomes an essential component of the financial closing process.
There is a lack of controls over the control environment in that the Board of Directors is comprised of three members who are officers of the Company. As of yet, there are no independent members, no formal audit committee and no compensation committee. As the Company matures, management will expand the Board of Directors accordingly.
Changes in internal control over financial reporting
There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
14
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
Item 1A. Risk Factors
Not Applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
Exhibit No. |
| Title of Document |
31.1 |
| Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
| Certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
| Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 |
| Certification of the Principal Financial and Accounting Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS |
| XBRL Instance Document |
101.SCH |
| XBRL Schema Document |
101.CAL |
| XBRL Calculation Linkbase Document |
101.LAB |
| XBRL Label Linkbase Document |
101.PRE |
| XBRL Presentation Linkbase Document |
101.DEF |
| XBRL Definition Linkbase Document |
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SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SINO Payments, Inc.
January 20, 2015
/s/ Kenneth Tan
By: Kenneth Tan
Its: President and Director
(Principal Executive Officer)
January 20, 2015
/s/ Alex Chan
By: Alex Chan
Its: Chief Financial Officer
(Principal Financial and Accounting Officer)
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